It makes sense. Why pay someone $20 for a job they would have done for $10. There needs to be some logic to guess what this value is so AI would be useful. Trying to make this illegal would make the economy less efficient than it could be.
Maybe in the fantasy land of an economics text book. In reality, minimum rate is a maximizing function of availability, capability, conditions and the wage. People will usually choose the highest wage job with the best conditions that they can obtain and perform, Dunning-Kruger aside. If the only jobs around pay poverty wages, people will take those. GP is saying that the economy no longer functions when businesses minimize wage. There has to be fat in the wage, or our economy becomes an economy of only basic life sustaining staples.
Poverty isn't a single state; it's a spectrum. If every company making maximally efficient decisions causes people to only have the option to take a wage that isn't enough to lift them from poverty or no wage at all, people will still take it.
I'm not saying that I think you're wrong or right compared to the parent comment that responded to you; I just don't think it's obvious that something being more efficient inherently implies that it should be legal. Maybe I'm incorrectly inferring that you're stating that "trying to make this illegal would make the economy less efficient than it could be" is implying that this means that it would be bad to make it illegal, but it definitely sounds like that to me.
Price discrimination is efficient. You don't have to like it, but you can't claim it isn't.
Your claim that wages being below someone else's is "societally harmful" requires some proof beyond your intuition.
This is not a method of cutting all wages in the country, it is a method of directing wages to higher productivity workers.
It only shifts relative amounts.
Just as we expect a cleaner to be paid less than the software engineer whose cubicle is being cleaned, there is no "societal" objection to the 3x engineer being paid more than the 2x engineer.
I can't tell if this is a sarcastic suggestion or not.
This might be controversial in the private sector, but wage transparency is the norm in the public sector in my area of the world... and many people are employed in those positions.
When it comes to splitting up surplus value in a transaction, being efficient for one party means being inefficient for the other party. So I absolutely can claim it's not efficient, by not implicitly favoring the employer over the employee.
And we're not changing the number of transactions here with these wage calculations.
you absolutely are, that's the whole point of it being more efficient. the pie grows and everyone wins.
you are also starting the story in the middle. there is no two parties haggling value. there is a market of providers and a market of sellers. Uber/Lyft/DiDi all compete for drivers by offering bids to drivers. Drivers pick the highest bid. What's the inefficiency here?
the value from gig work and ride sharing, like nearly every single normal economic act is not fucking zero sum.
If you manage to always offer drivers the minimum they will accept, you don't grow the pie, you just take more of it.
> Uber/Lyft/DiDi all compete for drivers by offering bids to drivers. Drivers pick the highest bid. What's the inefficiency here?
The inefficiency is when there aren't plentiful rides from multiple platforms, so the competition part goes away.
> the value from gig work and ride sharing, like nearly every single normal economic act is not fucking zero sum.
The value of the work isn't zero sum but the way the surplus is distributed is often zero sum.
Though if a worker is aiming for a specific amount of profit, and you manage to cut their pay to get more hours out of them, it's not zero sum but the effect on the worker is even worse.
> I’m sick to death of naive tech bros thinking that every other field is so easy that their sheltered intuition is enough to understand it.
There are two problems here:
1. People learn the simplest toy models in some subject area - here, the economics of perfect competition markets - and then apply the results of it to real world scenarios that don't even remotely satisfy the assumptions of the toy model.
2. The ethics in some subject area is almost always a separate theory from the mathematical theory. Introduction to economics assumes humans are utilitarian because it makes the maths easy. But then, people use the metrics derived from that "utilitarian" econ theory, and again apply it to the real world scenarios, not realizing the humans not utility maximizing agents. Hence, what is "right" or "just" can't be derived from the simple econ theories.
There is the largest number the employer would be willing to pay, and there is the smallest number the employee would be willing to accept, and in a just world the two parties would have equal footing in the battle to arrive at a number in the middle. However, the employer has powerful systems dedicated to pushing the value toward the lower number, while the employee has only their intuition and fear.
This type of thinking might be acceptable if access to necessities like housing, health care, food, utilities, child care, and education didn't require you to make money. As it is, the end result of your efficiency is real human suffering.
The fact that those things you mentioned as necessary for life exists today is _because_ of efficiency. Without this efficiency, you'd get even more human suffering. Imagine how your life was back in the dark ages.
Are the wolves that eat the young and weak who cannot escape from predators "evil"?
The idea that corporations who optimize their costs is evil can be analogous to wolves above.
If you believe that corporations cannot be allowed to do this, then change the rules of "nature". Luckily, this rule of nature is easier to change in a democracy.
From the POV of corporations (which, these days, are basically paper-clip maximizing AIs that run on a mix of human brains and computer chips) this is not a problem.
Interesting Uber commented on whether or not they manipulate the fares paid to drivers, but did not comment on whether or not they actively try to screw drivers out of bonuses.
If you talk to Uber drivers, you will find that they have widely believed this to be true for many years.
It's easy to think the drivers can't do stats. But if you get "10 rides in 6 hours and final 2 rides in 3-4 hours" enough number of times, it's not hard to believe.
Paying people different wages for the same work is normal. Does everyone taking your order at McDonalds make the same wage? When I have contractors bid on an SoW they all bid different prices. I’m sure they pay their workers different wages too.
Some people have weird ideas on how the world works.
That’s just not true. Different people value themselves differently. Someone in a certain location might value their time more than someone doing the same job elsewhere. Why else do you think we have outsourced labor to places where people need less to live on today?
Unless you're paid on commission or by output it should be same job same pay. You're selling the same hours as everyone else and have the same work expectation which you either meet or don't. If you have different work expectations that's a title difference which is fine. But paying two SWE II's different amounts is unfair.
It should be everyone of a given title makes the highest amount anyone with that title was able to successfully negotiate because you've proven the market rate and it smooths over a lot of different biases naturally.
Trying to vaguely estimate the output of different employees while not actually paying them directly for that output is silly.
Some SWE IIs (or McDonald's employees) do a better job than others, need less instruction, take more initiative, are more dependable, etc. even though they may have an identical job description as another employee who doesn't do as well at those things. Paying the better employee more, so they stick around, or just because you recognize the greater value they provide, is perfectly fair.
Did folks like you in this thread thinking along this path, actually read the article? The algorithms don’t appear to be taking on the output (such as star ratings) alone into consideration. This is the core of your argument.
The algorithms are allegedly manipulating workers into working longer than they would otherwise need to, by withholding opportunities so that it takes longer for their daily goal to hit. That’s horrible if true!
I read it and the article admits at the end there’s no proof this is actually happening. The companies say it’s not. There’s only an academic who is theorizing about it and an anecdote from a worker that claims it feels like they are cut off from jobs when they are approaching a bonus. And the academic wants to influence the creation of a law for their made up problem.
It’s just not reality you’re describing. Here’s some reasons why:
- 1 employee may just be better/more valuable than the other for a variety of reasons. Promotion isn’t always an option or even the right call. So we have a range/band we compensate into. This allows raises based on merit and adjustment when needed.
-location matters. Cost of living is a thing. I’m not going to debate if it ought to be this way, just that it is.
- 1 employee may have had a offer from an competitor. We want to keep them but can’t use a promotion to do so for a variety of reasons. For instance, promotions cone with equity and that means approval from a pool that may not have anything easily available. But money is there and easier. So we offer more money to stay. The employee earned that by seeing what the market values them at. The other employee isn’t automatically granted a raise because of that.
-negotiation matters. The time you’re hired natters. Your pedigree matters. There’s a lot of reasons 2 employees will have different pay.
Literally the opposite of a hundred years of research.
Consider this - I'm 65 and do Uber part time because I'm bored. Now I'm 20 on a student visa with a work limit, and not many ways to support myself.
Who should get the next Uber trip? Should Uber flip a coin? Must we be paid the same? If the student is willing to work for less than what the senior would get out of bed for, why would a free market not allow this?
How do these dynamics affect the prices that customers pay?
Easily one of the least surprising research findings I have ever read. This is completely normal in every firm. Places where everyone is paid the same despite their differences (eg public schools where the PE teacher is paid the same as the math teacher) are the exception.
Regardless, always good to have research data behind anything that is "least surprising".
Besides, are you really arguing that a PE teacher and math teacher are doing the same work? Seems like two different things to me, that requires two different backgrounds.
Obviously different subjects are different things, but there's substantial overlap between the duties and responsibilities of the two. They're both teacher in the educational bureaucracy so they have the same sort of paperwork to file and meetings to attend, and various identical non-classroom duties such as watching over study halls or lunch hour, bus duty, etc. Gym teachers often get tasked with classroom lecturing too (health/wellness, sex ed, etc.)
I don't think it's very far-fetched to pay people equally if the work they perform is equal, this is what the article is about. Two people performing exactly the same job duties, getting paid differently because of other variables, not involving what they actually currently do at the job.
> are you really arguing that a PE teacher and math teacher are doing the same work?
The PE teacher and the math teacher are paid the same because they are in the same union, and they collectively decided that they would be better off having a few broad classifications and equal pay for those across the board.
Usually this is explained as giving management fewer points in which to drive a wedge to separate union members, and hence divide and conquor the whole collective bargaining unit.
No sorry, this was terribly surprising to me. I am unironically stating that I’m unpleasantly shocked. I would be ashamed to work for these teams as a software engineer.
It’s weird, I always intuitively understood that knowledge workers were screwed in this way by HR re: pay equity, stating market dynamics. But even with my unhealthy level of cynicism, I couldn’t stomach hearing the same thing about gig work. It feels like the sacredness of these jobs as society’s unkind-ish fallback for anyone that needs it has been violated. Nothing is safe :(
Software engineers are also paid differently by company and within companies. I know you know this.
They give you different raises according to a highly imperfect measure of your productivity and value to the firm. Two people with identical tenure and identical titles likely have different salaries on average.
None of this should be remotely surprising. And what’s the alternative ???
Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't?
There's a reason subscriptions cost a lot less in the developing world than in rich countries - and everyone seems to think this is somehow fundamentally fair.
People are happy for software engineers to earn more than burger flippers, but not happy for 3x software engineers to earn more than 2x software engineers.
> People are happy for software engineers to earn more than burger flippers, but not happy for 3x software engineers to earn more than 2x software engineers.
I think that it's probably partially due to the historical difficulty of measuring developer productivity.
Sales compensation has always been heavily commission based. And for the most part people are fine with that.
The issue isn’t that the employer measures and rewards work output, which is not controversial itself (although some _methods_ of measuring are).
The issue is that they use everything they know about you to determine the lowest possible price you’re willing to accept, on an individual basis with droves of data that exist because of as-tech.
I never took a college-level economics course, but a book I read purporting to be an intro to economic thinking put it something like this (no warranty I'm remembering correctly):
If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value.
However, there is generally more than one price where both parties would benefit and should want to trade. Which price is agreed on in that range determines who gets what portion of the surplus value.
Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%.
A purely rational actor with no secrets is easily manipulated.
> If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value.
What you're describing is basically the "Subjective theory of value"[1].
> Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%.
Interestingly people don't really act like that[2].
> A purely rational actor with no secrets is easily manipulated.
Probably. Good thing that, in this case, the most important information like competing offers tends to be secret. Or at least strategically revealed.
You don't have to look any further than the deceit, sabotage, and selfishness that show up whenever commissions impact the financial status of the salespeople to see their downside.
I am not sure you read the article. For commissions to be relevant, the AI software would have to determine your commission and since it is intransparent it could decide to give some well performing employees less money because that motivates them to work harder as the AI has determined that this particular employee really needs the money for whatever reason.
> Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't?
If it turns out that any companies are trying to do the things the article alleged --- exploitative (e.g., using intimate data to determine the minimum they can offer each individual gig worker, while they have them over a barrel) and bad-faith (e.g., blocking an individual worker from gigs when they're about to hit a bonus threshold) -- the corpus of HN comments tells us that there will always be a tech worker with logic and values aligned with making it happen.
> Emotional reasoning abounds.
Many of us would do well to be more logical in our thinking, and many of us would do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them.
> do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them.
The right way to do this is via wealth redistribution via taxes. Not letting markets determine appropriate prices simply leads to society wide misallocation of resources.
One thing is to prevent the market to decide prices, and a very different thing is to let bad-faith actors to continue going around unchecked. The first scenario allows us to collectively make a bigger cake and then figure out how to share it. The second scenario allows the two biggest bullies to stomp over half of the cake while fighting who is to claim a bigger slice!
It is ok to let people with bigger appetites to eat more; but if you cannot be civil and keep wasting food, why wouldn't the others kick you out of the table?
> Not letting markets determine appropriate prices simply leads to society wide misallocation of resources.
So does wealth redistribution via taxes (and printing money, which is a significant component of wealth redistribution in all developed countries, and not to the advantage of the poorer people).
The right way to prevent exploitation is to equalize bargaining power. But doing that requires less government interference, not more; free markets aren't perfect, but they do better at equalizing bargaining power than the alternatives. For example, the reason Uber can exploit its gig workers is that its competition, taxis, is already regulated up one side and down the other by the government, and hence is horribly inefficient (and exploitative of its drivers), so Uber can compete simply by being a little bit less inefficient. Nobody has ever even tried to see what an actual free market in transit would come up with.
This equalizes companies but not workers. If we remove government restrictions to become a true free marker that's going to be removing labour laws as well. Given the already existing power discrepancy between employee and employer I can't see this helping.
The problem with removing regulation for corps so they can work a “free” “market” is that they will exploit. It’s what they’ve always done. It’s what they will always trend toward. See also: kids in auto plans, meat facilities, etc.
The issue is that the labor has no ability to correct the market - in the same fashion. (Ie: labor cannot exploit and downright _murder_ capital owners - like the owners can and have done. There are laws preventing that.)
If humans are not treated with a higher priority than roi or profit, the business is inherently evil. (Hint; they all are.)
If we have laws for some and not for all - that is to say privatization of all corps with no regulation - that is deplorable and will not end well.
A solution, imho, is for all services required for life, health, education, and safety to be public owned and not corporations.
All other services are owned equally by those that operate them, co-op like.
Free markets can still exist like this.
But hey. That’s not really what capitalists claim to want when they say “free market”; that phrase is a dog whistle for “legal exploitation of the labor pool.”
> If we remove government restrictions to become a true free market that's going to be removing labour laws as well.
Yes, but it will also be removing all the sweetheart deals that companies now have with governments. (Btw, patents are a big part of this.) The power discrepancy you describe comes from those sweetheart deals. Without them large companies, being extremely inefficient producers of wealth, are open to all kinds of competition.
Btw, the labor laws you speak of do not actually favor labor. For example, minimum wage laws make it harder for people in that wage bracket to earn a living--because minimum wage laws prevent many jobs in that bracket from existing at all. Companies don't mind that: they just automate those jobs. The ones who suffer are the workers who now find jobs much scarcer.
> The power discrepancy you describe comes from those sweetheart deals
I'm speaking of the power discrepancy between the employer and employee. Many of these sectors move towards a monopoly regardless of government interference. There's just no way a new infrastructure company is going to come in to destabilize, say, city sewers.
> The ones who suffer are the workers who now find jobs much scarcer.
This whole paragraph doesn't make a lot of sense to me. If the assumption is that a minimum wage job is the amount of money you'd need to make in order to survive (arguable) then the ability to create a ton of extra jobs below the subsistence level is useless to society but useful again to the employer.
To be more precise, I was thinking of things like laws that protect people at their workplace (work place safety) or those allowing employees to discuss their wages. The first set are obvious why they are important, and it would take a truly ghoulish argument to be against them, but the second are important as well. Without those there would be complete information asymmetry between the employer and employee. Information asymmetry is a huge problem.
> I'm speaking of the power discrepancy between the employer and employee.
Which only exists because the employer is in a privileged position due to government regulations that favor employers over employees.
That said, there is a fundamental power imbalance between someone who thinks of themselves as an employer (or more precisely, an independent wealth creator, who employs other people to help them) and someone who thinks of themselves as an employee--meaning, someone who just wants a "job" without wanting to think about the business risks that are inherent in any kind of wealth creation. That kind of employee will always be at a disadvantage in bargaining, yes. But you can't fix that problem by government regulation. You can only fix it by helping people to realize that they don't have to think of themselves as employees.
> Many of these sectors move towards a monopoly regardless of government interference.
What sectors are you talking about? Natural monopolies are extremely rare. The original meaning of the word "monopoly" was a government grant giving an exclusive right to sell a particular product.
> If the assumption is that a minimum wage job is the amount of money you'd need to make in order to survive
I made no such assumption. But it is true that many proponents of raising the minimum wage do make such an assumption, in order to argue that the current minimum wage is not enough to live on and so needs to be increased.
> the ability to create a ton of extra jobs below the subsistence level is useless to society
Nonsense. Every job I worked while I was in high school and college was below the subsistence level--I wasn't living on that money, because I was living with my parents (high school) or in a dorm the room and board of which my parents were paying for (college). I was using the money I earned to buy extras that weren't included in the room and board my parents were paying for, and to build up savings for the future. Doing that is a classic way of giving yourself a better start in life. But "you can't live on a minimum wage job" rhetoric takes all those opportunities away.
> Information asymmetry is a huge problem.
I agree. I don't agree, however, that the laws you say "protect" employees actually fix the problem. They don't. I have watched employer-union negotiations from up close. They don't actually help workers at all. In one case I saw, the union signed up to the same deal with the company on day ninety-three of a strike, that the company had offered on day two. Who suffered most because of those extra ninety-one days out on strike? The rank and file union workers. (In the next union election they voted out the union bosses who had managed the strike, but by then it was too late. Nor was the next set of union bosses any better.)
> That is what wealth redistribution via taxes does. For example, a universal basic income gives everyone at least some amount of bargaining power.
No, it doesn't, because universal basic income doesn't create any wealth. Money isn't wealth; you still have to go buy the things you need, and what help is UBI if the things you need are so expensive that UBI won't buy enough of them?
Bargaining power in economic terms means you have the ability to create wealth.
If the problem is a society does not have enough means to produce the basics like food/housing/energy, then that is a different discussion. But I am under the impression most developed countries can and do make enough of these things to keep their populations sheltered and fed.
That doesn't solve the problem I described. It makes it worse. See below.
> If the problem is a society does not have enough means to produce the basics like food/housing/energy, then that is a different discussion. But I am under the impression most developed countries can and do make enough of these things to keep their populations sheltered and fed.
Most developed countries are that way now, but that's without UBI. If UBI were widely available, wealth creation would decrease, because much, if not most, wealth creation in any country is done by people who have to create wealth in order to earn a living. UBI means people no longer have to create wealth to earn a living--at least, that's what the sales pitch will be, and failure to achieve that in the short term will create huge political pressure to increase UBI until it appears to achieve it. But any such achievement can only be temporary.
Now if we were to use advancing technology to make the necessities of life cheaper, that would indeed be progress--but it would be progress not by giving people handouts, but by making the necessities of life cheap enough that nobody needs a handout to get them.
It is nothing of the kind. It is a perfectly valid description of what government-backed central banks do in all developed countries. It is also a very helpful description since it substitutes plain language for obfuscatory phrases like "quantitative easing".
You've just conflated having low performance with low bargaining power, which is weakly correlated at best. So...
1) Why pay less productive employees the same as more productive employees (for the same position)? Because it can be hard to measure performance, and harder to demonstrate to what degree the poor performance is direct responsibility of the employee. To some degree, it is laziness and/or sentimentalism from the employer; but if pursued to the ultimate consequences you may end up expending way more in your super perfect performance measuring infrastructure than what you will end up saving in payroll. It's way easier to turn a blind eye to small inefficiencies and firing actual slackers.
2) Why pay employees with low bargaining power as much as employees with high bargaining power for the same (or better) amount/quality of work? To some degree, every employer does this unless their workforce is unionized. The problem is, greed is an actual invariant in human nature and you do not want to live in a society that lets it run unchecked. It may be nice to save on payroll by low-balling your employees, but then it will be equally nice for Microsoft to send a horde of salesmen to hardcall your client database and offer them juicy cash incentives to drop your business and sign up for their free service...
... or for the matter, for Beaves and Butthead to try and invade your home and take as much of your property as they see fit.
> If you hire two people for the same non piecework role they should be paid the same regardless of a whole host of things.
So by this logic it's fine for a manager to be paid 2x more than a subordinate, presumably because they're 2x more important/valuable/scarce/productive/whatever, but it's not fine for a software engineer who is 2x more productive to be paid 2x more than the less productive software engineer, all because it's "the same role", and such categorisations are arbitrarily chosen. Assuming I'm not strawmanning you, I don't see why this makes sense.
How do you measure sw productivity? And is that an appropriate metric by which to assign salary? If I resolve 3x the salesforce issues you do and implement with less post production fixes, but you are a VERY good “fixer” of that kind of “oh shit sky is falling” issue - and I am not available after hours like you are…
All we do here is normalize employee comparisons at the employee-employee level, and not at the employee-corp level thus *keeping our working class fighting itself* while the owners ensure we help them pay as little as possible for their labor.
You measure it the same way that you measure the relative difference in compensation that a manager should make versus a SWE. You make a subjective assessment. Why is such a subjective assesment OK in the case of manager vs SWE, but not OK in the case of SWE vs SWE? Both assessments are equally prone to mistakes and difficulties of the type you are talking about.
> All we do here
Convince me of this, because to me, this is necessary to being fair and just. As an employee, I would feel ripped off if I am clearly doing more quality work than a colleague, but I am being paid the same. It's unfair, I am de facto doing work that's uncompensated if I am doing 2*X but am being paid as if I was doing 1*X, which is de facto someone stealing money I rightfully deserve. In effect and outcome, it's no different to wage theft being done to me, due to the fact that half of my output is de facto uncompensated. And let's be real, sometimes it's super obvious when one person is more productive than someone else, even if in other cases it can be hard to measure and separate the contributions of two individuals, and even if in other cases those perceptions are distorted due to narcissism and information asymmetry.
Huh, who could have thought that indiscriminate data collection could be used against us?
I’m convinced this is just the tip of the iceberg, a lot of this stuff of course happens all the time in the shadows. And not just with gig workers but also things like regular employee comp and rental prices. In fact it would be surprising if it didn’t happen, all the incentives and preconditions are in place.
Information asymmetry is a highly underrated factor in markets. It’s not something to gloss over.
Economically, this outcome does not require imperfect information. Dispersion in workers’ marginal product of labor is sufficient. In this case workers may be heterogeneous in the value they place on the time - that may be observed by the firm. Imperfect information might play a role here but I doubt it’s a big one.
"One Uber driver Dubal interviewed, Domingo, recalled being one ride of short of unlocking a $100 bonus one evening, but then said he experienced 45 minutes of "dead time" in a popular area before he was able to get another ride.
"It feels like the algorithm is turned against you," he said, adding that it "literally feels like you're being punished by some unknown spiteful God."
Seems ripe for an app for gig workers to use to aggregate the data and provide info on what to accept/reject to optimize against the Tech-Giants' app. Would probably need to run on a different device, as they'll ban it as soon as they find out...
i agree. More information transparency is always good.
Something similar to https://camelcamelcamel.com/ but for various prices for various companies (including how gig workers get paid) would be invaluable to everyone, and make the free market even more efficient.
> Dubal said these instances could take the form of a food delivery driver being offered a lower rate than another driver would have been — because the AI algorithm predicted the first driver would be more likely to accept that rate. If a driver tends to work until they hit a certain daily mark, say $100, she said the algorithm might offer them lower rates to keep the driver working longer.
No, it’s actually very surprising to me. I genuinely (and super naively, I now realize) thought gig work was ‘fair’: as in subjectively unpleasant, but ‘equally unpleasant’ for everyone having to do it.
Gig work is the definition of flexible and transferable.
If your Uber jobs start paying less throughout the day, you will just start accepting more Lyft ones.
Uber gains nothing from underpaying their workers because of the huge competition for these gig workers.
IF Ubers AI is inefficiently distributing work to its workers, Lyft will get them for free, without doing anything. That's how a market works.
However, if this so called evil algorithm increases productivity for Uber and its workers - everyone will get paid more, Uber, drivers, customers, except direct competitors like Lyft.
It's a good thing they do this. Anyone here saying its bad needs to suggest with a model, that this decreases productivity or somehow adds a market inefficiency.
Worked at BlackRock. Bonuses are announced in person with your manager in the room. I was told this is because they want to record your facial reaction to getting the number. If you were happy they knew they didn't have to give you more next year. If you acted upset, then they knew they'd have to tweak or patch the bonus.
I have friends who from then on always acted upset and asked for more :)
If someone is perfectly happy with their salary why should the employer pay them more for the same work?
But that's why you leave when they don't increase your pay inline with inflation (at least).
If you can't leave or find a better paying job, then you are actually being paid the highest you could've already - as leaving would leave you worse off.
Also just in general convincing employees that it's ok for them to act against the employee's interests but the employee acting against the company's interests is a fireable offense.
The balance of power has skewed towards employers for far too long and they have gotten really comfy in their spots.
I have seen the same in FAANG. People who say they need/really want more money early will stick to the manager’s ear when comp planning season comes. I’ve had my biggest raise by simply printing out readily available stats for my cohort and indicating that comp is “important to me”.
Sometimes it’s just simple low barrier things like everyone who says they want X can have it. It’s still much cheaper for the company to give X only to those that ask (opt-in) than to everyone. Negotiating is sometimes as easy as insisting that you aren’t worthless, and it’s one of the best effort-reward activities you can do.
The thing that annoys me is that the same corporations that invest tons in their D&I image engage in these practices that have huge biases towards cultural and behavioral differences.
I always wonder why people are so naive. Do they really think the local engineer hired in a developing country would be payed the same salary as an engineer in New York? And what about outsourcing to the dirt cheap workers in India or Kenia? Or the illegal immigrants doing cleaning, construction or dishwashing in your neighborhood?
Even if the multinationals use different entities to hide the fact, it’s only a legal construct to hide the exploitation. Of course there are many subtleties and perhaps minor costs but THAT IS basically the reason why companies outsource/hire in low income countries. That’s the reason for the cheap shirts you can buy and the profit the capitalists enjoy.
Exploitation is the most fundamental mechanism for the buildup of the immense wealth people possess today. Innovation is on the other hand a very rare and relatively recent factor.
Regional prices differences are the result in differences in the ability to pay. Indian companies get less money to pay their workers. It's not like they are earning as much as American companies but decide to pay their workers less because they have a fancy AI price predictor. If Indian companies are as successful as American companies, then wage differences will disappear eventually.
Par for the course for HN really; Workers are just resources to use up, and if they don't want to be exploited, they should just stop being exploited and go find themselves a nice high-paying job and be happy.
HN due to its demographics has a huge disconnect with the plight of the average person.
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[ 0.20 ms ] story [ 216 ms ] threadI'm not saying that I think you're wrong or right compared to the parent comment that responded to you; I just don't think it's obvious that something being more efficient inherently implies that it should be legal. Maybe I'm incorrectly inferring that you're stating that "trying to make this illegal would make the economy less efficient than it could be" is implying that this means that it would be bad to make it illegal, but it definitely sounds like that to me.
This sort of shit has negative economic and societal consequences.
I’m sick to death of naive tech bros thinking that every other field is so easy that their sheltered intuition is enough to understand it.
Your claim that wages being below someone else's is "societally harmful" requires some proof beyond your intuition.
This is not a method of cutting all wages in the country, it is a method of directing wages to higher productivity workers.
It only shifts relative amounts.
Just as we expect a cleaner to be paid less than the software engineer whose cubicle is being cleaned, there is no "societal" objection to the 3x engineer being paid more than the 2x engineer.
This might be controversial in the private sector, but wage transparency is the norm in the public sector in my area of the world... and many people are employed in those positions.
And we're not changing the number of transactions here with these wage calculations.
you absolutely are, that's the whole point of it being more efficient. the pie grows and everyone wins.
you are also starting the story in the middle. there is no two parties haggling value. there is a market of providers and a market of sellers. Uber/Lyft/DiDi all compete for drivers by offering bids to drivers. Drivers pick the highest bid. What's the inefficiency here?
the value from gig work and ride sharing, like nearly every single normal economic act is not fucking zero sum.
> Uber/Lyft/DiDi all compete for drivers by offering bids to drivers. Drivers pick the highest bid. What's the inefficiency here?
The inefficiency is when there aren't plentiful rides from multiple platforms, so the competition part goes away.
> the value from gig work and ride sharing, like nearly every single normal economic act is not fucking zero sum.
The value of the work isn't zero sum but the way the surplus is distributed is often zero sum.
Though if a worker is aiming for a specific amount of profit, and you manage to cut their pay to get more hours out of them, it's not zero sum but the effect on the worker is even worse.
There are two problems here:
1. People learn the simplest toy models in some subject area - here, the economics of perfect competition markets - and then apply the results of it to real world scenarios that don't even remotely satisfy the assumptions of the toy model.
2. The ethics in some subject area is almost always a separate theory from the mathematical theory. Introduction to economics assumes humans are utilitarian because it makes the maths easy. But then, people use the metrics derived from that "utilitarian" econ theory, and again apply it to the real world scenarios, not realizing the humans not utility maximizing agents. Hence, what is "right" or "just" can't be derived from the simple econ theories.
explain who teaches this, explain why it is wrong, and explain the correct way to describe it.
> not realizing the humans not utility
then ubers algorithm will not work at all. and no pricing system would work either.
List negative economic outcomes in terms of consumer/producer welfare, deadweight loss, supply and demand.
The problem is that while the workforce is the most important part of the whole enterprise, each individual worker has very little bargaining power.
Workers should be able to form some sort of group, so they can negotiate on something resembling an even footing with huge corporations.
Companies have very little pricing power. The workers and the customers have all the power.
Are Americans being harmed here? Should a global union be formed to force Bangladeshi prices up to parity with the States?
Pricing discrimination is not "evil". It is emotionally unintuitive but that is not the same thing.
If Labour is treated like a business the it's time to change society and government. Businesses must adopt to labour needs ans laws.
The idea that corporations who optimize their costs is evil can be analogous to wolves above.
If you believe that corporations cannot be allowed to do this, then change the rules of "nature". Luckily, this rule of nature is easier to change in a democracy.
Different genders? Might be acceptable for some products but not others
Different states? Sure.
Sometimes services cost different groups more or less. That's not evil. Sometimes you can get away with it even if it doesn't. Probably evil
I mean - they can choose to violate them. That wouldn't be new.
45% of GDP is wages. Unless you don't understand the power of markets or pricing systems, you would not suggest this.
There are a lot of people, including Uber drivers who would fight for the ability to pick and choose what jobs they work for and at what price.
Of course we won't have optimized GDP if we give people rights. Acting like maximizing GDP is an unarguable goal is so HN.
You're talking about a completely different issue. And so is your other post talking about commissions.
If you talk to Uber drivers, you will find that they have widely believed this to be true for many years.
It's easy to think the drivers can't do stats. But if you get "10 rides in 6 hours and final 2 rides in 3-4 hours" enough number of times, it's not hard to believe.
I could easily say that example tracks with a normal shift starting in a busy period and petering off as demand drops moving away from peak hour.
If every Uber driver got the same number of trips every hour, at all hours of the day, something would be seriously wrong.
Some people have weird ideas on how the world works.
A working free market should tend towards people making the same amount for the same work
It should be everyone of a given title makes the highest amount anyone with that title was able to successfully negotiate because you've proven the market rate and it smooths over a lot of different biases naturally.
Trying to vaguely estimate the output of different employees while not actually paying them directly for that output is silly.
The algorithms are allegedly manipulating workers into working longer than they would otherwise need to, by withholding opportunities so that it takes longer for their daily goal to hit. That’s horrible if true!
- 1 employee may just be better/more valuable than the other for a variety of reasons. Promotion isn’t always an option or even the right call. So we have a range/band we compensate into. This allows raises based on merit and adjustment when needed.
-location matters. Cost of living is a thing. I’m not going to debate if it ought to be this way, just that it is.
- 1 employee may have had a offer from an competitor. We want to keep them but can’t use a promotion to do so for a variety of reasons. For instance, promotions cone with equity and that means approval from a pool that may not have anything easily available. But money is there and easier. So we offer more money to stay. The employee earned that by seeing what the market values them at. The other employee isn’t automatically granted a raise because of that.
-negotiation matters. The time you’re hired natters. Your pedigree matters. There’s a lot of reasons 2 employees will have different pay.
Consider this - I'm 65 and do Uber part time because I'm bored. Now I'm 20 on a student visa with a work limit, and not many ways to support myself.
Who should get the next Uber trip? Should Uber flip a coin? Must we be paid the same? If the student is willing to work for less than what the senior would get out of bed for, why would a free market not allow this?
How do these dynamics affect the prices that customers pay?
Besides, are you really arguing that a PE teacher and math teacher are doing the same work? Seems like two different things to me, that requires two different backgrounds.
Paying employees differently for similar work is pervasive and can be justified in several ways.
Calling it “cartoonishly evil” as a commenter did above is ridiculous.
If you don’t like this case, why not mandate a single uniform salary within or across firms?
Really looking forward to the inevitable comment from someone who will try to make a case for that wild idea.
The PE teacher and the math teacher are paid the same because they are in the same union, and they collectively decided that they would be better off having a few broad classifications and equal pay for those across the board.
Usually this is explained as giving management fewer points in which to drive a wedge to separate union members, and hence divide and conquor the whole collective bargaining unit.
It’s weird, I always intuitively understood that knowledge workers were screwed in this way by HR re: pay equity, stating market dynamics. But even with my unhealthy level of cynicism, I couldn’t stomach hearing the same thing about gig work. It feels like the sacredness of these jobs as society’s unkind-ish fallback for anyone that needs it has been violated. Nothing is safe :(
They give you different raises according to a highly imperfect measure of your productivity and value to the firm. Two people with identical tenure and identical titles likely have different salaries on average.
None of this should be remotely surprising. And what’s the alternative ???
Unionization.
Why pay someone who produces less, or can bear a lower wage, the same as someone who produces more or can't?
There's a reason subscriptions cost a lot less in the developing world than in rich countries - and everyone seems to think this is somehow fundamentally fair.
People are happy for software engineers to earn more than burger flippers, but not happy for 3x software engineers to earn more than 2x software engineers.
Emotional reasoning abounds.
I think that it's probably partially due to the historical difficulty of measuring developer productivity.
Sales compensation has always been heavily commission based. And for the most part people are fine with that.
They are deeply "unfair", using the logic of objections to the original article.
The issue is that they use everything they know about you to determine the lowest possible price you’re willing to accept, on an individual basis with droves of data that exist because of as-tech.
If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value.
However, there is generally more than one price where both parties would benefit and should want to trade. Which price is agreed on in that range determines who gets what portion of the surplus value.
Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%.
A purely rational actor with no secrets is easily manipulated.
What you're describing is basically the "Subjective theory of value"[1].
> Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%.
Interestingly people don't really act like that[2].
> A purely rational actor with no secrets is easily manipulated.
Probably. Good thing that, in this case, the most important information like competing offers tends to be secret. Or at least strategically revealed.
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1. https://en.wikipedia.org/wiki/Subjective_theory_of_value
2. https://en.wikipedia.org/wiki/Ultimatum_game
If it turns out that any companies are trying to do the things the article alleged --- exploitative (e.g., using intimate data to determine the minimum they can offer each individual gig worker, while they have them over a barrel) and bad-faith (e.g., blocking an individual worker from gigs when they're about to hit a bonus threshold) -- the corpus of HN comments tells us that there will always be a tech worker with logic and values aligned with making it happen.
> Emotional reasoning abounds.
Many of us would do well to be more logical in our thinking, and many of us would do well to discover more "emotional" values based wanting to lift up everyone rather than dominate them.
The right way to do this is via wealth redistribution via taxes. Not letting markets determine appropriate prices simply leads to society wide misallocation of resources.
It is ok to let people with bigger appetites to eat more; but if you cannot be civil and keep wasting food, why wouldn't the others kick you out of the table?
So does wealth redistribution via taxes (and printing money, which is a significant component of wealth redistribution in all developed countries, and not to the advantage of the poorer people).
The right way to prevent exploitation is to equalize bargaining power. But doing that requires less government interference, not more; free markets aren't perfect, but they do better at equalizing bargaining power than the alternatives. For example, the reason Uber can exploit its gig workers is that its competition, taxis, is already regulated up one side and down the other by the government, and hence is horribly inefficient (and exploitative of its drivers), so Uber can compete simply by being a little bit less inefficient. Nobody has ever even tried to see what an actual free market in transit would come up with.
The issue is that the labor has no ability to correct the market - in the same fashion. (Ie: labor cannot exploit and downright _murder_ capital owners - like the owners can and have done. There are laws preventing that.)
If humans are not treated with a higher priority than roi or profit, the business is inherently evil. (Hint; they all are.)
If we have laws for some and not for all - that is to say privatization of all corps with no regulation - that is deplorable and will not end well.
A solution, imho, is for all services required for life, health, education, and safety to be public owned and not corporations.
All other services are owned equally by those that operate them, co-op like.
Free markets can still exist like this.
But hey. That’s not really what capitalists claim to want when they say “free market”; that phrase is a dog whistle for “legal exploitation of the labor pool.”
Yes, but it will also be removing all the sweetheart deals that companies now have with governments. (Btw, patents are a big part of this.) The power discrepancy you describe comes from those sweetheart deals. Without them large companies, being extremely inefficient producers of wealth, are open to all kinds of competition.
Btw, the labor laws you speak of do not actually favor labor. For example, minimum wage laws make it harder for people in that wage bracket to earn a living--because minimum wage laws prevent many jobs in that bracket from existing at all. Companies don't mind that: they just automate those jobs. The ones who suffer are the workers who now find jobs much scarcer.
I'm speaking of the power discrepancy between the employer and employee. Many of these sectors move towards a monopoly regardless of government interference. There's just no way a new infrastructure company is going to come in to destabilize, say, city sewers.
> The ones who suffer are the workers who now find jobs much scarcer.
This whole paragraph doesn't make a lot of sense to me. If the assumption is that a minimum wage job is the amount of money you'd need to make in order to survive (arguable) then the ability to create a ton of extra jobs below the subsistence level is useless to society but useful again to the employer.
To be more precise, I was thinking of things like laws that protect people at their workplace (work place safety) or those allowing employees to discuss their wages. The first set are obvious why they are important, and it would take a truly ghoulish argument to be against them, but the second are important as well. Without those there would be complete information asymmetry between the employer and employee. Information asymmetry is a huge problem.
Which only exists because the employer is in a privileged position due to government regulations that favor employers over employees.
That said, there is a fundamental power imbalance between someone who thinks of themselves as an employer (or more precisely, an independent wealth creator, who employs other people to help them) and someone who thinks of themselves as an employee--meaning, someone who just wants a "job" without wanting to think about the business risks that are inherent in any kind of wealth creation. That kind of employee will always be at a disadvantage in bargaining, yes. But you can't fix that problem by government regulation. You can only fix it by helping people to realize that they don't have to think of themselves as employees.
> Many of these sectors move towards a monopoly regardless of government interference.
What sectors are you talking about? Natural monopolies are extremely rare. The original meaning of the word "monopoly" was a government grant giving an exclusive right to sell a particular product.
> If the assumption is that a minimum wage job is the amount of money you'd need to make in order to survive
I made no such assumption. But it is true that many proponents of raising the minimum wage do make such an assumption, in order to argue that the current minimum wage is not enough to live on and so needs to be increased.
> the ability to create a ton of extra jobs below the subsistence level is useless to society
Nonsense. Every job I worked while I was in high school and college was below the subsistence level--I wasn't living on that money, because I was living with my parents (high school) or in a dorm the room and board of which my parents were paying for (college). I was using the money I earned to buy extras that weren't included in the room and board my parents were paying for, and to build up savings for the future. Doing that is a classic way of giving yourself a better start in life. But "you can't live on a minimum wage job" rhetoric takes all those opportunities away.
> Information asymmetry is a huge problem.
I agree. I don't agree, however, that the laws you say "protect" employees actually fix the problem. They don't. I have watched employer-union negotiations from up close. They don't actually help workers at all. In one case I saw, the union signed up to the same deal with the company on day ninety-three of a strike, that the company had offered on day two. Who suffered most because of those extra ninety-one days out on strike? The rank and file union workers. (In the next union election they voted out the union bosses who had managed the strike, but by then it was too late. Nor was the next set of union bosses any better.)
That is what wealth redistribution via taxes does. For example, a universal basic income gives everyone at least some amount of bargaining power.
No, it doesn't, because universal basic income doesn't create any wealth. Money isn't wealth; you still have to go buy the things you need, and what help is UBI if the things you need are so expensive that UBI won't buy enough of them?
Bargaining power in economic terms means you have the ability to create wealth.
If the problem is a society does not have enough means to produce the basics like food/housing/energy, then that is a different discussion. But I am under the impression most developed countries can and do make enough of these things to keep their populations sheltered and fed.
That doesn't solve the problem I described. It makes it worse. See below.
> If the problem is a society does not have enough means to produce the basics like food/housing/energy, then that is a different discussion. But I am under the impression most developed countries can and do make enough of these things to keep their populations sheltered and fed.
Most developed countries are that way now, but that's without UBI. If UBI were widely available, wealth creation would decrease, because much, if not most, wealth creation in any country is done by people who have to create wealth in order to earn a living. UBI means people no longer have to create wealth to earn a living--at least, that's what the sales pitch will be, and failure to achieve that in the short term will create huge political pressure to increase UBI until it appears to achieve it. But any such achievement can only be temporary.
Now if we were to use advancing technology to make the necessities of life cheaper, that would indeed be progress--but it would be progress not by giving people handouts, but by making the necessities of life cheap enough that nobody needs a handout to get them.
It is nothing of the kind. It is a perfectly valid description of what government-backed central banks do in all developed countries. It is also a very helpful description since it substitutes plain language for obfuscatory phrases like "quantitative easing".
That's why we no longer have piece-work but hourly rates.
1) Why pay less productive employees the same as more productive employees (for the same position)? Because it can be hard to measure performance, and harder to demonstrate to what degree the poor performance is direct responsibility of the employee. To some degree, it is laziness and/or sentimentalism from the employer; but if pursued to the ultimate consequences you may end up expending way more in your super perfect performance measuring infrastructure than what you will end up saving in payroll. It's way easier to turn a blind eye to small inefficiencies and firing actual slackers.
2) Why pay employees with low bargaining power as much as employees with high bargaining power for the same (or better) amount/quality of work? To some degree, every employer does this unless their workforce is unionized. The problem is, greed is an actual invariant in human nature and you do not want to live in a society that lets it run unchecked. It may be nice to save on payroll by low-balling your employees, but then it will be equally nice for Microsoft to send a horde of salesmen to hardcall your client database and offer them juicy cash incentives to drop your business and sign up for their free service...
... or for the matter, for Beaves and Butthead to try and invade your home and take as much of your property as they see fit.
Because we're not living in an Ayn Rand novel.
If you pay someone widget wise - that’s entirely different.
Reminder: Capitalism will exploit any time it can.
So by this logic it's fine for a manager to be paid 2x more than a subordinate, presumably because they're 2x more important/valuable/scarce/productive/whatever, but it's not fine for a software engineer who is 2x more productive to be paid 2x more than the less productive software engineer, all because it's "the same role", and such categorisations are arbitrarily chosen. Assuming I'm not strawmanning you, I don't see why this makes sense.
All we do here is normalize employee comparisons at the employee-employee level, and not at the employee-corp level thus *keeping our working class fighting itself* while the owners ensure we help them pay as little as possible for their labor.
You measure it the same way that you measure the relative difference in compensation that a manager should make versus a SWE. You make a subjective assessment. Why is such a subjective assesment OK in the case of manager vs SWE, but not OK in the case of SWE vs SWE? Both assessments are equally prone to mistakes and difficulties of the type you are talking about.
> All we do here
Convince me of this, because to me, this is necessary to being fair and just. As an employee, I would feel ripped off if I am clearly doing more quality work than a colleague, but I am being paid the same. It's unfair, I am de facto doing work that's uncompensated if I am doing 2*X but am being paid as if I was doing 1*X, which is de facto someone stealing money I rightfully deserve. In effect and outcome, it's no different to wage theft being done to me, due to the fact that half of my output is de facto uncompensated. And let's be real, sometimes it's super obvious when one person is more productive than someone else, even if in other cases it can be hard to measure and separate the contributions of two individuals, and even if in other cases those perceptions are distorted due to narcissism and information asymmetry.
I’m convinced this is just the tip of the iceberg, a lot of this stuff of course happens all the time in the shadows. And not just with gig workers but also things like regular employee comp and rental prices. In fact it would be surprising if it didn’t happen, all the incentives and preconditions are in place.
Information asymmetry is a highly underrated factor in markets. It’s not something to gloss over.
"It feels like the algorithm is turned against you," he said, adding that it "literally feels like you're being punished by some unknown spiteful God."
My god.
Something similar to https://camelcamelcamel.com/ but for various prices for various companies (including how gig workers get paid) would be invaluable to everyone, and make the free market even more efficient.
Wow that is fucking disgusting.
There is no “other” employment when, in certain areas, every job at this “level” is like this or when this ai pattern/formula expands to other arenas.
If your Uber jobs start paying less throughout the day, you will just start accepting more Lyft ones.
Uber gains nothing from underpaying their workers because of the huge competition for these gig workers.
IF Ubers AI is inefficiently distributing work to its workers, Lyft will get them for free, without doing anything. That's how a market works.
However, if this so called evil algorithm increases productivity for Uber and its workers - everyone will get paid more, Uber, drivers, customers, except direct competitors like Lyft.
It's a good thing they do this. Anyone here saying its bad needs to suggest with a model, that this decreases productivity or somehow adds a market inefficiency.
I have friends who from then on always acted upset and asked for more :)
If someone is perfectly happy with their salary why should the employer pay them more for the same work?
To keep up with rising costs of living, for one.
Basically to ensure that the employee remains happy.
If they can’t match inflation you’re getting a pay cut and they are getting you for less than they did last year.
If you can't leave or find a better paying job, then you are actually being paid the highest you could've already - as leaving would leave you worse off.
Also just in general convincing employees that it's ok for them to act against the employee's interests but the employee acting against the company's interests is a fireable offense.
The balance of power has skewed towards employers for far too long and they have gotten really comfy in their spots.
Lot of times if you ask for a raise, hR will say now, if you find another job the same HR will come back with a small raise.
Sometimes it’s just simple low barrier things like everyone who says they want X can have it. It’s still much cheaper for the company to give X only to those that ask (opt-in) than to everyone. Negotiating is sometimes as easy as insisting that you aren’t worthless, and it’s one of the best effort-reward activities you can do.
The thing that annoys me is that the same corporations that invest tons in their D&I image engage in these practices that have huge biases towards cultural and behavioral differences.
I mean, whats the upside?
Even if the multinationals use different entities to hide the fact, it’s only a legal construct to hide the exploitation. Of course there are many subtleties and perhaps minor costs but THAT IS basically the reason why companies outsource/hire in low income countries. That’s the reason for the cheap shirts you can buy and the profit the capitalists enjoy.
Exploitation is the most fundamental mechanism for the buildup of the immense wealth people possess today. Innovation is on the other hand a very rare and relatively recent factor.
HN due to its demographics has a huge disconnect with the plight of the average person.