After a six-year-long battle through all the courts in the land, two people have finally won the right - to the minimum wage. Nothing exemplifies the failure of the job market in the UK more than this, on all sides.
The rise of Uber and their ilk represent a challenge to the way job markets are arranged in modern democracies and how work is viewed. Innovation must be allowed to proceed so that processes can be improved, however people still have to work to live. Yet, if this entire sad saga has shown anything, it’s that the present system isn’t serving either side very well at all.
The problem with employment legislation is that it is based around the paternalistic assumption that businesses are like community centres, there to provide warmth and cosy chats while supplying a wage. It’s the old job for life attitude where you work for the same firm for 40 years, climbing the ranks from floor sweeper to chairman. It was never true in the Victorian era and it certainly isn’t true today. It stifles innovation and flexibility and prevents competition from doing its job.
Corporates love the idea though. Not only do they lock workers in, but every time there is a crisis they can play the “what about the jobs” card and get panicky politicians to sign off on the necessary bailout. They may get a direct subsidy or, more likely, indirect employment subsidies in the form of tax credits to prop up substandard wages.
Uber et al just took all this to the next level, as you can see from some of the comments defending them.
At a time when we are facing huge levels of unemployment, making it harder to join the gig economy could take away someone’s last chance at employment.
With rising costs of employing drivers and fewer Ubers to go around as a result, prices will inevitably rise for consumers.
Making it more difficult for a company to employ people will inevitably have knock-on effects for the entire labour market and fundamentally crippling Uber’s business model may make the company unviable - ultimately employing no one at all.
At a stroke, the Supreme Court has made Britain one of the world’s toughest jurisdictions for the treatment of such workers, potentially significantly pushing up the costs of employing an estimated 5.5m people who rely on the sector to earn a living.
(I love that last one. Pushing up the costs of employing = workers earning a better living - just in case cognitive dissonance was getting in the way of making that link).
Apparently, according to these commentators, if we force firms to pay enough to live on without state subsidies then they won’t bother employing anybody at all, and that would be terrible. But mostly, prices may go up for people like them, and that’s actually what they are really bothered about.
Of course, we’re not forcing firms to pay enough to live on. Uber et al can just ignore the ruling and every single person who wanted to get the pay they are entitled to by law would need to undertake a potential six-year battle to get the minimum wage. How many are going to be prepared to do that?
All of the problems we have stem from one source: the belief that people should work in private sector jobs with specific firms and nothing else. Yet a systemic analysis shows that there is always insufficient work to be had and private provision can never be enough. For every 100 dogs, there will be 92 bones, because eventually matching people to jobs runs out of road. You need to have something that creates jobs and matches them to the remaining people.
That something is a Job Guarantee - a full-time job, at a fixed rate of pay, for anyone willing and able to work.
Let’s see how this case would have turned out with a Job Guarantee in place.
Firstly Uber would have struggled to attract sufficient drivers since people would prefer the 9-5 Job Guarantee work close to home. To attract drivers, rates of pay would have to rise so that the capital costs of being an Uber driver were covered and the work paid more than the basic living wage paid by the alternative guaranteed job. Either Mr Farrar and Mr Aslam would have earned enough from their cab work for Uber, or they’d be supporting their families doing a nice job near where they live and Uber would be short of two drivers.
In other words, Uber would have had to compete for labour at a living wage, net of costs, as they should have to.
All the arguments about Uber being the ‘last chance for employment’ fall away, and we no longer care if they ‘employ no one at all’. That means that the firm can be subject to the full force of Capitalist competition. If it dies, nobody cares except the shareholders. And if we are to have a Capitalist system then we shouldn’t care whether any particular business lives or dies. The market has to be sufficiently competitive, with sufficient alternative options, so that businesses disappearing has no effect overall - other than to drive innovation forward.
Because Uber would have to compete for labour, they would be more likely to invest capital in driving forward their plans for automated vehicles, leading to more investment and higher-paid, higher-skilled jobs. This accelerates the transformation of low-level drudgery jobs into higher-skilled engaging jobs. Society gains a higher standard of living overall as we finally break the productivity trap that has been holding the UK back.
Black cab/private hire competition would now be fair and that would control how far Uber could push prices. Even then we wouldn’t care if the alternative shrank, because ex-drivers would be able to get a guaranteed job on the Job Guarantee.
Ultimately, if there is no further innovation to be had and fierce competition drives all the profit-seeking firms to the wall because Capital can add no extra value, or they form an oligopoly to try on push prices, then the social entrepreneurs can step in and use Job Guarantee labour to provide the service on a non-profit basis. With a Job Guarantee we no longer care whether profit-seeking firms provide any particular service.
Even then, if a profit-seeking operation suddenly discovers a new way of running the service, all they have to do is hire the people away from the non-profit operation by offering better wages and better conditions, paid for from their new productivity MacGuffin. The non-profit cannot respond because the Job Guarantee wage is fixed and automatically backs off to make space for new innovation.
It’s time to reject both the forces of Paternalism and the forces of Corporatism that try to prop up dying business models for their own benefit. They are the two sides of the same coin.
Let’s have a default job option with decent terms and conditions that pays a living wage, then turn market competition up to 11. We will all be better off by doing so.
It’s not as if the corporatists could object. After all, competition is good isn’t it?