Well, that backfired

I received a flyer in the mail the other day from Uber, asking me to call my representative to complain about AB2293.  Well I went to the state's website and read the text of the bill.  I suggest you follow the link and read it for yourself, it is not very long.  But this is what I got from it. 

It you summon a ride on your Uber app, the car arrives and you get in, you will know that the driver is insured the way any other person offering transportation for hire is insured.  And if Uber has not done their job, and the driver done not in fact have appropriate insurance, then Uber's insurance will cover you.  Sounds pretty pro-consumer to me.

The business model of companies like Uber, and Postmates, whom I have written about earlier, is to classify the people who actually earn the money for them as independent contractors, putting all the risk on them.

I work as an independent contractor myself, and I choose to do that.  But what I charge is a negotiated fee, it is not set by fiat of my client.  I am required by my client to carry certain types of insurance, and have to produce certificates of insurance to demonstrate that I have them.  And my client never tells me “Say this, not that” because they are pretending to be a different business that they are.

So I called my representative and I said, “If Uber is trashing you, then you must be doing something right.”

I like to go to Reno for a weekend every now and then.  I have considered putting an add on Craigslist to see if I anyone around me would like to share gas in exchange for a ride.  That is ride sharing.  What Uber (and Lyft) are doing is running a taxi company.  They have been calling it something else to avoid the responsibility (and corresponding expense) that comes with running a taxi company.

No, they don't have meters.  But I have ridden in taxis that had no meters too.  Years ago, I had occasion to take a cab in Washington DC, and they looked up their rates on a printed sheet.  There was no meter, just a flat rate that you knew as soon as you got into the car.  Sound familiar?

The only difference I can see between them and a taxi, is that they cannot be flagged down on the street.  They are tied to the app for their income. 

The thing that ticks me off about this business model is the sense of entitlement, that they are just too fucking precious to have to assume the responsibility for anyone or anything other than themselves, or to follow laws that everyone else has to follow.
Tweet

The 'Independent Contractor' scam and a return to 19th Century values

For better than 20 years I have been a one-man business.  I have a corporation with one shareholder and one employee, and they are the same person.  I sell my time by the hour and I have done quite well for myself.

My client writes a check to my company for my services.  My company writes me a paycheck with all the appropriate taxes withheld.  My current client has certain stipulations in their standard contract, requiring my company to pay any employees a living wage, to offer health insurance, the sorts of things that responsible companies do for their employees.

But there is a flip side to all this, another side of the 'independent contractor' world.  That is the world where that label is used to absolve a business of any responsibility, pay a sub-minimum wage, and essentially treat the people who work for them, who are generating their income, as disposable pieces of equipment.

A number of years ago, we took in a foster child.  He is 24 years old now, and has recently returned.  He was out of work and we are letting him stay while he gets on his feet.  He took a job for Postmates, a delivery service in San Francisco (and elsewhere).  He delivers stuff all over the city on a bicycle.   Except, it isn't exactly a job, he is considered  and 'Independent Contractor'.

In order to work for them, you have to use their app.  It only runs on the iPhone, so if you don't have one they will lease you one.  They set the prices, not the riders.  In order to get any work, you have to commit to specific times.  If you have not committed to a specific time slot it is unlikely their software will offer you any deliveries.  They, on the other hand make no commitment to you on any particular amount of work.  His best days was a little over $129 working about 12 hours.  His worst was a big zero.

Should you be injured on the job, well that's your problem.  And if you should die at it (cyclists do get killed in the city), I am sure they will say all the right things as they wash their hands of the situation.  You see, they expect loyalty, but that loyalty is one-sided.

Oh, and just to add insult to injury, they pay by EFT only, and then charge their riders for the transfer.  Yes, it is a small charge, but if they were employees that would be illegal.  At least in the state of California it would be, they also operate in a couple of other locations.

As I think about the arrangement, the working conditions of 19th century coal miners comes to mind.  No they were not considered independent contractors, but the mine owners had the same level of concern for their employees, the same attitude, that this business model does.  Management controls the working conditions, while the workers take the risks. Unlike the coal miners, their workers take both the physical risk, and the financial risk

Tweet

Brief thoughts on SNAP

There are a lot of people who work full time, but qualify for food stamps. That, all by itself, is a damning indictment of their employers, and our society at large. And there are others (Walmart comes to mind) who intentionally hire multiple part time employees to fill a single full time position, in order to avoid having to treat those employees as human beings.

So the business model is to pay wages that nobody can live on, and let the taxpayer pick up the tab for the difference. And we do, with food stamps, WICK, section 8 housing, and the rest of the taxpayer funded safety net.

And the right (particularly those who suck their livings off the public tit) has be demonizing these people as somehow less moral, less deserving, less human, than the rest of us, because their employer is an asshole. To some degree this works, a lot of people buy into the 'welfare queen' fiction. But too many still notice that is the employer who denies people a living wage who is really at fault.

Of course the moral solution is to raise the minimum wage, and to enforce that labor laws for businesses like Walmart, so that the employees are actually able to organize without retaliation and intimidation. The right of course would never buy into that, because their constituency does not include people who do actual work.

But fear not, they do have a solution! Kick people off SNAP! Sure their children will be even more malnourished than they are now, but the workers will not be living on the public safety net. No more evil employers!

Don't you wish you had thought of this?

Tweet

What does a company owe to shareholders?

Who remembers the novel Catch 22?  Remember when M&M Enterprises bombed the base?  It was OK because "everyone has a share".  This is the situation we find ourselves in today.


You work for Behemoth Industry Inc, a Fortune 500 company, and you are also a shareholder.  Every paycheck a small amount of money is deducted for the Employee Stock Purchase program.  You also have automatic dividend reinvestment, so every quarter you are watching the number of shares you own grow, helping to build your retirement nest egg.


One Monday morning you come to work and find there is a chain on the front gate, the plant is closed.  You are now unemployed.  A company press release announces that the quarterly dividend will increase one half cent because of their cost saving measures of shipping much of their manufacturing offshore.


You are one of thousands out of work, and the ripple effect hits your town, your county, your state.  Many of those who's lives have been damaged are stockholders also, as they own shares via their 401K's, in mutual funds, and direct investments in their IRA accounts.  All these people get one half cent per share extra per quarter, in exchange for being thrown into poverty.


I am not saying I have an answer here, only that we are a shareholder society.  Shouldn't we as shareholders be getting better treatment?  Is that one half cent per share all that they owe us for our investment?


Tweet

A business model

To many people, knowing that Mitt Romney made a lot of money with Bain Capital is all they really need to know.  That means he must have done something that benefited the economy, the nation at large.  But that is only because they do not understand the business model of private equity firms.

So for the benefit of those people, I am going to publish a little history lesson, an object lesson that illustrates very clearly what role private equity plays in the world of business.

Mervyns was founded in 1949 by Mervin G Morris.  At it's peak it employed 30,000 people and had 257 stores.  It was acquired in 1978 by Dayton Hudson (now Target) and sold to the private equity firms Cerberus Capital Management, Sun Capital Partners, and Lubert-Adler in 2004.

At the time of the sale, the Mervyns stores were starting to show their age, Dayton-Hudson had been more interested in growing their Target brand than Mervyns.  But the business was still profitable.  It would have taken some work, but it was nowhere near a lost cause.

What happened?  The short version (the long version is a little more complicated but functionally the same), they sold off the real estate and the stores were compelled to lease it back at double the cost.  They sucked out $400 million in cash for themselves and left the company with $800 million in debt.  That was more than the company could survive.

The company was driven into bankruptcy, and 30,000 people lost their jobs.  But it was successful investment because the money borrowed to buy the company was debt to Mervyns, not to the private equity partners.  They got their money, everyone else got screwed.

This is the sort of capitalism that Mitt Romney represents.  It is the sort of capitalism that those who fund the tea party represent.  Yes, it really is legal.  But does this help or hurt anyone except the very few?  It is legal, but is it moral?  Is this really the sort of nation that we want to be?

Revival of the Whipping Boy

Today Rupert Murdoch revealed a little more of his belief system to the world.  The working class does not matter at all.  Two hundred people lost their jobs, while the managers who directed them walked free.  But that is how he thinks.  He will toss those people aside like so much garbage, he wants to buy Sky television.  

How much those people had anything to do with the policies that have publicly embarrassed him (for getting caught, you know he has no moral qualms what was done) is questionable.  They are not the policy makers.  But that is why they are so disposable. 

Those of you who watch and believe what you see on Fox News, that is how he thinks about you too.

When Dell's mistake is your problem

My wife's printer is running low on ink, so I went onto the Dell website to order more. Yeah, their ink is over-priced but it is convenient.  We had checked a couple of local stores, and none of them carried the specific size cartridges (do they make so many different types to discourage after-market ink?) that we needed.

The following week I received this in an email from Dell:

Dear Customer,We're sorry but your order will take longer to fulfill than previously communicated and is now scheduled to be delivered on or before 6/8/2011

Because we did not meet the date previously communicated to you, we need your permission today to continue your order with this new date. If we do not receive your permission, the Federal Trade Commission requires that we cancel your order.
I also received several robo-calls repeating the same message. 

Well my wife has a lot of stuff to print between now and when she is leaving on a trip, so I decided to look around online and see if I could find someone else that would have compatible ink.  I found some and ordered it.  It was cheaper and faster too.

So just to be sure, I went online to Dell, to 'Order Status', and selected the 'Cancel' link.  After all, I had just bought enough ink for the next year, who knows if the printer will even live past that.

Two days later, on the same day my ink arrived from the alternative supplier, an email came from Dell saying they had shipped my order.

Needless to say, I was pissed.  I called them and they started to tell me how I could return it for a full refund.  My response was essentially this.  This is your mistake, not mine, your problem, not mine.  You fix it.  Call FedEx and tell them to cancel the shipment, or don't, but I'm not paying for it.  I called my credit card company, and they had not billed me.  I figured I would be nice and leave a note on the door to tell FedEx that I was refusing the shipment, and that would be the end of the it.

Last night my wife noticed that they had billed us.  She goes online to check the credit cards regularly.  I called the credit card company and told them that this was a fraudulent charge, and I am disputing it.  Their response was "Have you returned the merchandise yet?".  They are essentially siding with Dell, that is is my problem not Dell's.  This is what the FTC Website says about this:

Whether or not the Rule is involved, in any approval or other sale you must obtain the customer’s prior express agreement to receive the merchandise. Otherwise the merchandise may be treated as unordered merchandise. It is unlawful to:

1. Send any merchandise by any means without the express request of the recipient (unless the merchandise is clearly identified as a gift, free sample, or the like); or,
2. Try to obtain payment for or the return of the unordered merchandise.

I run a business.  Sometimes I make a mistake.  But here is the difference.  If it is my mistake, I own it.  My customer will not pay for my mistakes, I will.