A new workplace model is arising where the workers actually take most of the profit for certain kinds of start-up companies. Economists and other experts are asking, how might this change the way we live?
Over the last several decades, workers have been driven into increasingly compromised working conditions with lower pay, the required signing away of the right to be paid extra for overtime, the growing scarcity of full-time employment, as well as full-time employment benefits.
Workers have adopted the habit of preemptively quitting to avoid being laid off, as loyalty and trust between employers and employed has steadily eroded.
So suppose we told you that a new business model is emerging where the workers take most of the profits? You might say it’s impossible. But that fact is that this new type of work environment could be just what the doctor ordered in the preservation of workers, craftsmen, artists, and the American Dream.
What’s most surprising about this revolutionary practice is that it actually has been with us for some time now. One of the most famous examples is the Uber taxi service. While Uber does take, what is, in essence, a finder’s fee for the app, the drivers take the lion’s share of every transaction.
So how does this work?
For one thing, when you look at a company like Uber, the whole concept would collapse if the drivers were not receiving most of the money that comes in for the service.
Uber prices range between $1-11 cheaper than traditional taxi services. The savings get passed on to the customer, and the driver takes the largest cut, but the company enjoys a competitive edge over transport companies from coast to coast.
So, if you think the company is taking a hit just to undercut the competition, you’re both right and wrong. They are providing a cheaper service, and they are getting far less money per transaction than the traditional transport companies are getting. But they have a much larger pond to swim in.
This kind of business dynamic is sweeping the world economy. It has no borders, outside of those arbitrarily imposed by nations that restrict Internet service, like China and Egypt.
It’s also covering far more types of services than just transportation to and from the bars on Friday nights. Writers, artists, craftsmen, caregivers, nurses, and many more types of skilled people are finding gainful employment through online vendors that allow them to ply their skills for pay.
One drawback is that the area you live in may in some cases disrupt the service you intend to provide. In Philadelphia, for example, a taxi service is actually about 40 cents cheaper than the Uber service before tip averages are calculated in. After tips are accounted for, Uber is still cheaper- but that’s more for cultural reasons than anything else.
Governmental regulations can still hold workers back in some cases. One state may require more licensing than another where a given worker is just as capable in either place.
Worse, certain business interests are looking to use lobbying to change these types of rules to suit their interests. But, for the time being, things are looking up for Uber.
At the moment, unfortunately, not every type of work can be marketed this way. It’s easy for short term “gigs” like putting together an article, selling a photograph, or giving a lift to club hoppers to be sold on a per-performance basis.
Other types of services can be contracted by the day or shift. But long term work like electrical engineering, for example, is harder to fit into what is being called the Gig Economy.
This is expected to change, however. As more and more people break away from traditional stifling workplaces, fewer organizations will look on traditional employment as a norm.
For the time being, it’s worked out very well for those able to work on a gig to gig basis, and for those who only want to make a little extra money here and there.
But for those whose skills are difficult to mete out in small increments- entry into the gig economy is still somewhat distant.
For the time being, those who must go to a traditional place of work can still find a way to market their hobbies- and these frequently turn into full-time work. So keep your eyes peeled, because your ticket to the freedom economy may be coming soon.
Regards,
Ethan Warrick
Editor
Wealth Authority
