The Difference Between Middlemen and A Real New Economy

One thing about the new economy is that many of these supposedly new jobs are pretty much the same old ones:

When I look at the jobs most of the people who left [Amazon] had, these don’t appear to be extremely high skill jobs. No, you can’t just bring in five guys off the street to do the work: some business-related and professional skills are required. But these don’t seem to be the people who invent a new algorithm or possess a body of knowledge that is very hard to come by (‘domain expertise’). Their skills seem to be rather general (managing and service). In other words, many (or perhaps enough) college-educated people could do these jobs.

When there’s a lot of competition and you don’t have a concrete advantage (i.e., skills or specialized knowledge), the only way to stay ahead of your competitors–or at least not fall behind them–is to work really long hours while sniping at your competitors.

In a sense, while people think of the white collar jobs in the tech industry as requiring specialized skills such as coding, at Amazon, it appears they’re just the same middle management that U.S. industry has always had, just squeezed harder.

At the corporate level, we often see the same principle in ‘tech companies in name only’–the business model really isn’t novel:

You might have heard about the rash of non-compete agreements being inflicted on workers. These prohibit workers who leave a company from working for a competitor for a specific period of time (for the record I oppose these agreements–if you want to keep your secrets, do what it takes to keep your workers). While they traditionally have been applied to high-tech workers, they are now being applied to low-tech workers, such as Jimmy John’s sandwiches and Camp Bow Wow, a ‘doggy day care’ franchise (Jimmy John’s is all the more galling since they have been sued twice for wage theft).

These policies (which, at the low-tech end, many experts think are unenforceable) suggest that there’s a large bullshit economy. What I mean is that most of these businesses aren’t providing anything novel–there’s no reason why one couldn’t ‘clone’ Camp Bow Wow or a sandwich chain. These companies make money by being ‘first past the post’, large (allow expansion and business policies that chase out weaker competitors), and beating the shit out of their workers. But there’s very little that’s actually creative or truly proprietary.

… most companies aren’t providing something novel, so in a winner-take-all system (i.e., not local or regional businesses) the ‘breakthroughs’ aren’t technological at all, but time-honored monopoly, monosopy, worker exploitation, and political maneuvering.

So it’s very interesting that the CEO of the transportation company Bridj has this to say (behind paywall; boldface mine):

To put it bluntly, the latest boom in our industry has come on the back of the underemployed and poor. Rather than using the tremendous wealth our companies have generated for our teams and shareholders, companies in our industry have leveraged driving wages down to drive valuations up. It can’t go on….

As technology begins to control more and more of our physical world, the safety and social justice components of our technology become even more important. That’s why today, we’re announcing that we are the first major American technology startup to stand in solidarity with the #FightFor15 movement, by offering driver positions that have wages of at least $15 an hour with full benefits.

In our industry’s collective march to higher valuations, higher growth, and bigger IPOs, we’re divorcing our industry from the values of fair compensation for fair work may produce short term gains. Our choice, if left uncorrected, will be fatal as the harsh cloud of unmet promises to those who have built our businesses, buries our short term gains.

Well paid, well cared for people are the foundations of stable long term businesses, and the foundation of the next great wave of American technology companies.

One thing to note is that Bridj actually has physical assets (vans), unlike Über. In other words, their labor costs, while not trivial, aren’t the only cost that can be reduced. Uber, on the other hand, can only increase–or maintain–its profits by squeezing workers. That applies to most internet middlemen. Or if you prefer, “Service economy + smartphones = service economy.”

The other difference is that Bridj uses its own people–not subcontractors–to provide a service. That gives Bridj an incentive to retain its workforce.

Sometimes the 21st century isn’t all that different from the couple that preceded it…

This entry was posted in Internet, Transportation. Bookmark the permalink.