The reality is that the contractor part of this is to hide them(GrubHub) from the risk involved. That's what no one understands here. Bicycle messengers were notoriously the original "gig economy" job. The reason no one wanted to make them employees is that they would then be responsible for workers compensation when they got in an accident.

This is the same as GrubHub. You were lucky. You did not get in an accident. Someone else working for GrubHub somewhere else in the country probably did. And they very likely had very expensive medical expenses. Workers compensation also covers permanent long term disability payments if someone is injured and can no longer work. This can be millions of dollars.

When anyone does the math with these gig jobs, they leave out risk. That's the difference. GrubHub is pushing the risk of long term disability, and other things like unemployment due to business slowdown, entirely onto you. As well as other risks they are free from if you are not an employee.

I think you are missing a large part of it. The "gig" economy is "on-demand" labor. There is no schedule to coordinate at the "worker level". Just a network of demand and a worker pool that grows and shrinks to meet demand.

"Oh, I'm free for the next 3 hours, maybe I'll make some money"

vs.

"I need to let my boss know I'm not coming in tomorrow so we have coverage"

That marketplace effect is "freedom".

Most companies don't let their employees work such flexible hours, but there's no reason why they couldn't.

Yes there is. Workers compensation insurance and other benefits have significant fixed costs per employee. If someone is treated as an employee, they'll be required to work a minimum number of hours to cover those costs.

In many states regulations prevent customizing employee insurance packages to that extent. There are cookie cutter obligations that employers have to meet regardless of the hours an employee works.

Gig economy jobs get around the inefficiencies imposed by labor regulations.

It's not unusual for some departments (like HR) to operate at a loss, with the costs covered by other parts of the business, or for one product to be a loss leader that guides customers to more profitable products and services.

In any case, the problem of covering those costs doesn't go away by making the employee a contractor, but it pushes the cost off to the worker.

it is a unit cost, not a fixed cost.

It's generally quite the opposite. It's employer regulations hiding the cost of insurance from you. There is nothing stopping you as an individual from buying disability or unemployment insurance.

But insurance typically has a negative expected value. With perfect efficiency the expected value is zero; probability of claim times payout from receiving claim equals average premium. Then you add the costs of administration and insurance fraud and it goes into the red. Whether the peace of mind from having the insurance is worth that cost to you is your own decision.

Requiring employers to provide it does two things. The first is that it hides the cost from you. The employer is a corporation and corporations don't really pay for anything, employees, customers and investors do. It'd be nice to think the investors are paying for it, but the kind of employers who hire unskilled workers are typically not in high margin industries. In practice it's generally going to be the workers and customers. And then people ask for more and more things like that, thinking someone else is paying for it when it's really still them.

Which leads to the second problem, which is that when it's required you can't decline it. If some double digit percentage of the people on unemployment are committing insurance fraud, you may be better off to just put the money you would have paid in premiums into a brokerage account to rely on if you lose your job, but you no longer have that option. You no longer even realize its cost, because you never receive a bill for unjustifiably high insurance premiums, you just get paid that much less or pay more when you buy stuff.

I'm talking to an individual. Please refer the comment I was replying to. I'm not trying to make generalized ideological debates about the gig economy or taxation or any other of the typically religious arguments people shout at each other about online.

To an _individual_ it is important for them to realize that they need to account for the risk involved in what they are doing. If you drive for a company as an employee and get injured and can never work again, you will receive payments from them for the rest of your life. If you do it as a contractor you will be disabled and at best be able to receive the very limited US government disability which would force you to live in poverty. Remember, driving all day is one of the most dangerous types of professions. And absolutely no, you cannot get an individual workers compensation policy because it would cost more money than the income from the gig. Its absurd you would think that exists.

Please do not go into online forums and just shoot idealism everywhere. We get it, you hate big government and taxation is theft. We've all heard it 10 million times. Unless it has a unique connection to the topic being discussed, you are just derailing the conversation.

You value security and loyalty, because that's what your generation was raised with.

My generation has no delusions of job security. It does not and will not exist in our future. We value independence and freedom, and the opportunity to pursue our careers.

I've done contract work my entire life and wouldn't have it any other way. I do not want to be tied to a company. I earn much, much work working independently.

My insurance is my savings account. My insurance is my adaptability. My insurance is my skillset.

Your reply indicates that you think that has something to do with idealism, and it doesn't. We want to do work, get paid for it, and fuck off to the next thing.

You don't have to agree with it, just don't participate in it if you don't. But don't try to get in the way of other people doing what they want because you don't understand it.

It's not realistic. It's not scalable to all people. It's survivalistic. You will get tired. You will get sick. You might have a family. You will affect others. You will die one day.

Your skill set won't save you. Your adaptability won't save you. Your material possessions won't save you. And your savings might not be able to even save you.

You will live in a community and by extension affect one. It is a fool's game to act as if youth and health are infinite.

We can have work freedom, that's fine. But without a community, a caring society, a caring government, something to back us up. When the work is gone and we are sick, distressed, and at out most helpless we will have nothing but our hopeful savings to help us. And honestly that's naive to think is a enough imo.

How could you possibly know that much about the person you're responding to? He only state he's "older", but didn't say which country, city, religion etc. Even if he did so, it wouldn't say much.

I know people in their 60s that believe in may things you stated, and others in their 20s who disagree with you about everything you said (and I mean high income young software engineers, not someone in need of state help).

Also, it's just my personal opinion from now on:

Don't reason in such absolute ways, everything is much more complex than "your generation" and "my generation" could possibly convey, and even inside a specific age/region/education/income group, the way people think and act varies wildly (and they are probably all both right and wrong depending on subject).

Don't put so much trust on your adaptability and skillset, you never know how the world will change and how you will react to it. I really hope it will just get better, be you never know. I'm only 39yo and saw quite a few highly skilled people go down because of unexpected physical/mental health issues.

Anyway, please don't take it as me trying to "prove you wrong". Well, as humans we almost always do a little of it, but it seems to em I used to think like you at some point and it brought me quite some pain. Maybe I'm misinterpreting you and am just an idiot, but I felt like writing.

Have a great week!

contract work is just great

I was replying to an individual. And then someone decided to add a reply to my comment with typical internet free market talking points. I was not discussing these debated to death boring religious debates about government and taxation. I was talking to an individual. Please refer to the comment I was originally replying to for context.

For an individual, the loss of worker compensation is a very very significant thing to consider. Driving is a very dangerous job. Most police officer deaths each year are from automobile accidents. Whether they should make that choice, or if a society should allow it, was absolutely nowhere in any way at all in my comment. Please reread my comment as it appears you seem to have missed that.

If you want to rehash the same typical talking points we've all heard 10,000 times, please do it in a different thread. I have a very difficult time seeing how repeating things that have been said so many times does anything but waste all of our time here.

It is a temporary thing that happens to any generation at a certain age range.

You are in a discussion attached to an article about a piece of proposed legislation. It was a policy discussion from the start.

> To an _individual_ it is important for them to realize that they need to account for the risk involved in what they are doing.

That is true, but is it novel information that nobody is aware of? That seems to be the standard you want to apply.

> And absolutely no, you cannot get an individual workers compensation policy because it would cost more money than the income from the gig. Its absurd you would think that exists.

Disability insurance is typically 1-3% of your income because the payout in the event of a claim is proportional to your income. For the low income in most of these professions that comes to somewhere around $50/month. They may decide it isn't worth that much, but there is no basis to the idea that it would cost more than their overall compensation.

> Please do not go into online forums and just shoot idealism everywhere.

This feels like a double standard that in practice just means that you would prefer it if people with contrary opinions to yours would shut up.

No. Those opinions on either side of the debate have been done to absolute death online. I can't imagine a single person you could find on this forum that could not list for you the common talking points(for and against) government taxation and regulation. That is what these comments are about. Not detailed, unique, and specific insight into this particular situation. Just mindless regurgitation of the same stuff we've all heard way more times than is needed.

> That is true, but is it novel information that nobody is aware of? That seems to be the standard you want to apply.

Most people I talk to about workers compensation do not realize how different the outcomes are for them between contractor and employee. The most common ones people are aware of is that they have to pay both sides of their social security. Unemployment insurance is also something that some people do not realize. During that last economic slowdown, the US government extended unemployment benefits for years to millions of US workers. Contractors will not be eligible for any of that assistance in the next economic downturn.

See how that information is relevant and specific to the original comment(not article) I was responding to? They discussed how they did not see many downsides with being a gig worker. I was bringing up a couple, especially workers compensation because of how dangerous driving jobs are.

I never said GrubHub should or should not provide that. I certainly never mentioned if the US government should do anything. I would recommend that you please go back to my original comment and the comment I was replying to originally for more information and context.

It is the misfortune of large online discussion forums that between filter bubbles and user churn, there are always people who actually haven't heard those arguments before. And the longer we avoid rehashing old arguments, the more people around who haven't heard them yet.

So it's never very long before we have the same arguments again and again. Except that they're not the same, because it's different people around each time. You may say the same thing you've said before but they're hearing it for the first time. Then maybe they give you a different response than you've ever heard before, and one or the other person is convinced. At least that's the idea.

What's the alternative? Stop discussing things that are still happening and affecting people, because some different people discussed them last year?

> During that last economic slowdown, the US government extended unemployment benefits for years to millions of US workers. Contractors will not be eligible for any of that assistance in the next economic downturn.

But that's policy. Maybe we should get rid of the distinction entirely, make everyone contractors, but then have taxpayer-funded unemployment compensation for everybody. Maybe we shouldn't have unemployment compensation at all and instead have a UBI.

Even if you're only making decisions as an individual, the possibility of those kinds of policy changes happening by the time it becomes relevant to you may be something you want to consider when making your decision.

Discussing government regulation and taxation may have been discussed by every single human being on the planet at this point(joking). It's absolutely worn out. There are likely fewer topics(especially around HN) that are more overused at this point.

If you seriously have something new and different to add, I am all ears. And I would say that is a good time to bring it up again. But all of the comments I have read in this thread have exactly the same stuff.

One side: People should be free to decide what to do with their money and the government should stay out of the way because people understand their lives better and governments can be corrupt.

Other side: Governments should impose restrictions and fees as society as a whole will be effected by certain actions of individuals and governments have a responsibility to look out for the people's best interest.

It's been done to absolute death dude. Its the same points, over and over and over and over again. We all have heard all of this 10,000 times.

Speak for yourself "dude". I, for one, find these discussions to be valuable. If you don't like them or are fed up with them, then don't partake. Even if you aren't in a position to change your mind, spectators like me are.

> Other side: Governments should impose restrictions and fees as society as a whole will be effected by certain actions of individuals and governments have a responsibility to look out for the people's best interest.

I feel like people are always talking past each other. In general what happens is that the policies enacted by Democrats and Republicans are both crap but in different ways, and then both sides argue for their ideal that their party doesn't actually uphold but against the other side's actual results which are in both cases terrible.

So they're both right. Markets are more efficient than governments but we don't want people starving in the streets. The Republicans' policies are terrible in practice and the Democrats' policies are terrible in practice. What now?

I tend to think the answer is a UBI, but the difficulty is in getting it passed. The right-wing objection is obvious; it's the purest incarnation of redistribution of wealth. But we already have such policies and replacing them with an equally-redistributive UBI is probably an easier sell than it is on the left, because it would evaporate their world. Unemployment insurance, disability, social security? Redundant, not required. Minimum wage? Food stamps? Housing subsidies? Same. Progressive income tax? Don't need it, flat tax plus UBI results in negative effective rates for low income people and low effective rates for middle income people.

So "employee benefits"? Bad policy, let's get rid of them all and do a UBI instead. Which is the right policy precisely because it would dismantle a century of accumulated inefficient bureaucracy -- but that very fact makes it hard to enact.

So in the meantime I end up arguing against all of this other stuff, as just more to repeal when we finally get the votes to do it properly, and more institutional inertia that makes it harder to get where we ought to be.

But I sometimes lean on the traditional arguments because, ironically, I'm less tired of those than having the same "does a UBI cause inflation" "not really but if it did that's what we need right now anyway" discussion for the hundredth time.

You are completely derailing the conversation with common discussions that have been had tens of thousands of times all over the internet. The information exists in excessive quantities for anyone to find.

Wouldn't it be better use of time to go find a discussion specifically about what you are talking about? There is a reason no one is upvoting stories about this stuff here. I imagine most people here don't find it as interesting because we've read this exact stuff so many times.

It is a policy proposal that allows them to do so without suffering the risks you identified. If they like to be an independent contractor but don't like those risks, they should ask the government for a UBI rather than a law requiring them to be reclassified as an employee, which then mitigates those risks without requiring them to indirectly overpay for unemployment insurance that suffers from an insurance fraud problem that a UBI doesn't (among other advantages).

> Wouldn't it be better use of time to go find a discussion specifically about what you are talking about?

Here's one:

https://news.ycombinator.com/item?id=20069094

Based on their comment, the person there was apparently not aware of the details of the discussions that have been had about this numerous times by other people. Which is fine -- many people really are only having these discussions for the first time. There is nothing wrong with that.

But why do you assume that no one reading this thread has never been exposed to this information before? Some people have, but no one requires that they participate in a similar discussion again.

It's not as if we're on a totally irrelevant tangent here. The fact that some people have discussed it in the past doesn't reduce its relevance as a policy alternative.

Okay, you're obviously a troll. I fell for it. Lesson learned. I'm going to disengage. Got me, nice work.

In my opinion anyway the individual perspective is a moot point. Unless there's some serious shortage of access to information the main consideration should be the benefit to society as a whole and not just a single company. How much more stable will a business and its impact on commerce be if it does provide reduced-premium insurance is the more important question to ask.

This is one of those cases where you're just abstracting things away from the issue at hand to justify your position, which hides nonsense like this because you're talking theoretically rather than concretely. But if we look at the actual companies targeted, no, GrubHub, Uber, DoorDash et al are NOT low-margin industries. With worldwide services like this where your costs per-unit are basically only server costs, the margins are extremely high because your costs approach zero as users increase. The costs these companies incur are mostly money they reinvest into business development.

For example, Uber taking a loss on rides should be seen as reinvestment into the business (trying to undercut competitors and drive them out of business) rather than a result of the fixed costs of a ride.

> You no longer even realize its cost, because you never receive a bill for unjustifiably high insurance premiums, you just get paid that much less or pay more when you buy stuff.

You don't think employees notice when they are paid less? You don't think customers realize when they pay more? If you really want to make the claim that employees don't notice lower pay and customers don't notice higher prices, that's tantamount to admitting that the free market doesn't work.

Yes, obviously investors will pass the cost off to employees and customers, but if they pay an unjustifiably high insurance premium and try to pass that cost off, they open up a business opportunity for a competitor to pay employees better and/or charge customers less by buying cheaper insurance and passing off less of that cost. There are additionally some regulations in place that prevent employers from passing off too much of the cost to employees or customers (i.e. minimum wage or fixed taxi fares).

The advantage that a big company has is that when they shop around for insurance, they're much more likely to be able to get a good price than an individual because they're a large, valuable customer.

The dominant unit cost by far is paying the drivers, which doesn't go down with scale. Then you get a bunch of other stuff like credit card processing fees and customer service that also doesn't scale much if any better with volume either.

The server cost is barely a unit cost at all. That's fixed cost. Though it still needs to be paid from something.

> You don't think employees notice when they are paid less? You don't think customers realize when they pay more? If you really want to make the claim that employees don't notice lower pay and customers don't notice higher prices, that's tantamount to admitting that the free market doesn't work.

They notice how much they're paying and being paid, but they lack the information to know how much they would be paying or being paid in the alternative. So they think they're getting "free" insurance when they're really getting insurance instead of a cost of living increase.

> Yes, obviously investors will pass the cost off to employees and customers, but if they pay an unjustifiably high insurance premium and try to pass that cost off, they open up a business opportunity for a competitor to pay employees better and/or charge customers less by buying cheaper insurance and passing off less of that cost.

You're assuming that the problem is caused by which insurance company the employer chooses and not that it is difficult to accurately detect insurance fraud without using invasive methods, so all the insurance companies charge rates that exceed the value of the insurance and the companies only buy it at that price because it's required by law.

> There are additionally some regulations in place that prevent employers from passing off too much of the cost to employees or customers (i.e. minimum wage or fixed taxi fares).

There are two options here. One is that the money comes from somewhere. The other is that it doesn't, the cost of the service now exceeds its value, and you lose your job.

> The advantage that a big company has is that when they shop around for insurance, they're much more likely to be able to get a good price than an individual because they're a large, valuable customer.

Insurance companies compete aggressively on price for all customers. Historically larger buyers had a slight advantage because they could get a discount to account for the lower per-customer acquisition cost of getting many customers at once, but now that insurance is a thing that you buy from a website after comparing prices on the internet, even that is becoming an increasingly negligible advantage.

Meanwhile if you buy it yourself you get to choose the policy that you want rather than whatever your employer stuck you with.

When I lived in NYC, I talked to a lot of Uber drivers and cab drivers. Many Uber drivers are cab drivers and have been cab drivers. They're quite capable of making the comparison.

> You're assuming that the problem is caused by which insurance company the employer chooses and not that it is difficult to accurately detect insurance fraud without using invasive methods, so all the insurance companies charge rates that exceed the value of the insurance and the companies only buy it at that price because it's required by law.

No, I'm simply ignoring the possibility you're bringing up, because it's no less a problem for individuals buying their own insurance. This is just a red herring.

> There are two options here. One is that the money comes from somewhere. The other is that it doesn't, the cost of the service now exceeds its value, and you lose your job.

But we already know the answer to that. The cost of the service doesn't exceed its value because people payed for taxis for decades before Uber (and in fact, they paid a lot more than the insurance, since medallions were a humongous additional cost).

> Insurance companies compete aggressively on price for all customers. Historically larger buyers had a slight advantage because they could get a discount to account for the lower per-customer acquisition cost of getting many customers at once, but now that insurance is a thing that you buy from a website after comparing prices on the internet, even that is becoming an increasingly negligible advantage.

Alternative hypothesis: insurance companies compete aggressively on advertising for individual customers, which allows them to overcharge because the average person doesn't have the time to find cheaper alternatives. Larger customers can devote more resources to researching so competition is actually more based on price.

> Meanwhile if you buy it yourself you get to choose the policy that you want rather than whatever your employer stuck you with.

Which seems to be very okay with the drivers.

Only if you ignore externalities, like uninsured permanently disabled people begging on the streets or starving to death.

What you're getting at is that there is a reason people buy insurance anyway -- the peace of mind that that won't happen to you, as I mentioned. Because a million dollars in claims money even if you have to multiply it by the only 2% probability of that happening is worth more to you than the $20,000 in guaranteed premiums you'll have to pay over your life, because if the claim actually happens you need the money more. The value of the same dollar is higher to you then, which you can predict from the beginning and account for.

But that value still has to be balanced against the losses to administration and fraud, and balanced against what you need the money for today. If losing $100/month to premiums causes you to starve now, it doesn't matter that there is a 2% chance that you starve in ten years from now. If the majority of insurance claims are fraudulent, the higher value of the money in case you have a legitimate claim may no longer exceed the losses from buying the insurance.

It's possible that buying insurance makes sense. It's possible that it doesn't. But people should be able to make that choice for themselves instead of having it imposed on them.

It is an externality. Maybe you don't mind having the streets of your town full of homeless people, but I do. In fact, I mind it very much. When someone ends up on the street, that makes my life less pleasant even though I'm not the one who was uninsured.

Of course that is true. That doesn't mean that the cost imposed on others is zero.

It's never zero. But you're making it out to be a significant cost relative to the effect on the person making the decision. Having a way to internalize the cost of others' displeasure at being aware of their possible misfortune wouldn't materially affect their decision one way or the other, because it's so much smaller a factor than the possible misfortune to begin with.

But you're making a fine argument for charity. If a thousand people don't want to see a person go homeless, it doesn't take much from each of them to make it so they don't have to.

And if 1000 is not a big enough number to make you think twice, then make it 10,000. Or 100,000. (The number of homeless in the U.S. is considerably larger than that BTW.)

You're comparing the entire US homeless population to one person. The actual ratio is less than one in five hundred.

That doesn't make the cost of feeding people who can't afford food any less of an externality.

That doesn’t work if you lose your job after a short amount of time.

Why is unemployed casual employee better than employeed contractor for you? Because its definitely not for the gigers: if it were, only 1 of the gig companies has to offer the contract, take that into account into the pay they give the employees (or substitutes like insurance) and then they would get all the workers.

There are definite market failures, but the vast majority of denouncing of market failures are people not understanding the market has made a good decision.

We should have either a heavily government-subsidized user-pay system like Japan, or a real open market without the absurd straitjacket or US healthcare market regulations. With needs-based welfare in both cases.

If the medical part of the economy wasn't so ridiculously wrongly regulated, it wouldn't be so distorting the rather academic difference between "contractor" and "employee".

The primary reasons appear to be the giant tax subsidy for employer plans and the fact that insurers aggressively discriminate against people who don’t have employer plans.

Also what subsidy are you referring to?

Could you cite some data?

The subsidy is the fact that employer contributions to health insurance are not taxed. Here’s an estimate that this costs about $280 billion/year. This is more than Elizabeth Warren’s tax!

https://www.taxpolicycenter.org/briefing-book/how-does-tax-e...

If they ever lose/leave their job and try to get COBRA the sticker shock is intense. At that point it’s almost always better to get a Marketplace plan if you can, because the subsidized price will be much lower, if not even the unsubsidized price.

The exclusion from income of health insurance premium payments is the largest tax break on the books;

“According to a Joint Committee on Taxation analysis for 2007, the average savings for tax filers with incomes less than $30,000 was about $1,650 compared to about $4,580 for those with incomes over $200,000.” [2]

But I don’t agree that it should be eliminated. By comparison, ACA subsidies are about $6,300 per person on average. [1]

If you look at the exclusion in isolation it looks regressive. If you plot it alongside the ACA subsidies, in fact it’s not, it acts to smooth out the hyper-progressive ACA subsidy drop off.

[1] - https://www.cbo.gov/system/files?file=2018-06/51298-2018-05-...

[2] - https://www.nytimes.com/roomfordebate/2015/04/14/the-worst-t...

I'm not following why this is a subsidy per se. I can deduct health insurance premiums from my self employment after all.

Its hard to take your words that _most_ people want it without anything backing.