You are never going to get ahead unless you own the business. This has always been true but even more so today. Achieving the dream often does not lead to the success it once did. For generations in Rush, family farms were the norm. A family assumed the risks and rewards of owing their own business. Transactions between farmers and merchants were always straightforward. Sometimes it was crops for credit.
Being your own boss and owning your own business has always been a gamble with risk for an uncertain reward, but today the risk is more often way greater that the reward. In my opinion it is caused by something I call "The Taxicab Economy".
I graduated from Rush Henrietta in 1980 and then from Syracuse University in 1984. I met friends from the New York City area and got a job in my field, which was Television Production. Back then, there were no computers running things and TV never sleeps. Commercials are what the network is on the air to broadcast and programming is what comes in-between the commercials. Programming and commercials come from different sources and we workers were at the broadcast factory to assemble them into TV, 24 hours a day, 365 days a year. My college buddies and I worked for USA Network at the satellite uplink in Smithtown, Long Island. It was the HBO transmission point in the highest of high tech buildings. I found a place to live on the North Shore, near the town of Port Jefferson.
Since I was the "new guy", I got the graveyard shift: 11:00PM to 7:00 AM From Thursday to Monday. Besides the crummy salary and working "vampire hours", there were small but important benefits. My shift partner from New York City drove east to work. That meant if he left work at 7AM, he would be in the morning rush hour from hell going west to NYC after working all night. So we did a deal. We split the shift that made my start time 3 AM. I doubled my salary by working half a shift. He would be on the road home before the traffic rush. I lived east of work, so I too drove home on an empty road. There was no micromanager with an iPhone tracking app to hunt us down and end this arrangement.
I had one of the worst, lowest entry level jobs in television on the overnight shift with Tuesdays and Wednesdays off. The only worse thing to do would be to switch back to day living on days off. You can't break the rhythm when you are on that shift. What was I going to do? I needed money and I had to stay up all night on my "weekend".
I became a part time cab driver.
Port Jefferson had a train station. NYC commuters needed a ride to and from their homes. There was a ferry from Connecticut. Foot passengers needed rides to the rail. Poor Medicaid patients without cars needed rides. Being a gentleman, the dispatchers sent me to take strip club employees to and from work. My driver colleagues wondered how I drew the choice assignment. I could sleep from about 8:00 AM when I got home until 2:00 PM. I'd pick up a cab and take home commuters from the rail. The ferry would come in and of course the gals needed to get to and from work.
I not only got an education IN people, but also an education in economics. here's how it worked:
If you were a "newbie" cab driver, you filled out some paperwork and showed a dispatcher a driver's license. If you had a pulse and a license you could get a cab. If he thought you might be a risk, he could charge you a "bond" of $20 in lieu of you returning the cab gassed up and giving the company their "cut" of "the book". You might also pay a dispatch fee. These things were "optional" for regular drivers. "The book" was just that. You kept a notebook and so did the dispatcher. The dispatcher would give you a call over the radio and tell you where to go. He would tell you how much the fare was based on distance or a deal or whatever popped into his head. If someone jumped into your cab, you called the dispatcher and told him where they were going and he would give you the fare amount. You scribbled everything your "book". At the end of the shift, you gassed up the car and returned to the yard. You gave the keys to the dispatcher and he would divide the total of "the book" in half and that's what you owed him. He would return your bond if you paid one. You kept the tips and you paid the gas out of your half.
Here's comes the economics lesson:
If A cab company always keeps half of the book? How many cabs do they want on the road?
Simple:
Infinity
All of them. As may cabs as they have. The more the cabs on the road means the more business they can get and they always get half. If the company books $500, when all the drivers come back they keep half or $250. Say there are 10 drivers on the road. They split the other half and walk away with $25 each (minus gas plus tips). But if there are 25 drivers on the road, the cab company still gets their $250 and the drivers each get $10 (minus gas plus tips). So the cab company is never going to deny another driver getting on the road, even if it is a slow night and there are too may cabs vacant already.
If you were a talented driver who liked risk, you could cheat the system a bit. There were no cameras or GPS trackers. A dispatcher didn't know where you were unless you told him. He didn't know if you had one or three people in the cab. If you didn't tell him, you could pick up fares and make up your own price and keep it "off the book". You could craft an elaborate fantasy that you would broadcast over the radio as to where you were (as long as no one saw you and when dispatched you got to an assigned call in time). There were two cab companies in town. If you had a portable scanner, you could try to "clip their calls" by getting to a rival's fare first. Most riders had no loyalty, so the first cab to the fare won. Sometimes you told the dispatcher what you did, and sometimes not. Of course if a driver who lost a fare told his dispatcher, and everyone monitored each other's radios, you needed to be careful when "clipping calls". Rival dispatchers sometimes chatted over the telephone. You were at risk if you were stupid and greedy, but most nights luck would prevail. You could come back after a 5 hour shift with $20 to $50 dollars. This was better than minimum wage and you had freedom! There was no boss micromanaging and you could go wherever and do whatever in the area. Food? Coffee? Stop and see a friend? With the hand scanner you could get radio traffic while out of the car and have a fairly good time doing a menial job. Once every five or six shifts you would get a long call for big money (to a distant town.) Highway driving meant better gas mileage and the tips were bigger.
My two weird, poorly paid jobs with freedom lasted for a year or so. A few guys senior quit at USA Network so I was bumped to a day shift, and I tired of cab driving. I suppose if you have this condition and some freedom you can do this kind of a job longer. Sadly, this freedom rarely exists today.
And what does this have to do with TODAY'S economics?
Everything. Almost every business you are dealing with today has adapted some form of "The Taxicab Economy" model to their business. Many workers are not full time employees, but are "independent contractors" that do not have the security or benefits.
The most obvious members of "The Taxicab Economy" are called "Gig Workers".
More than one-third of US workers (36%) participate in the gig economy, either through their primary or secondary jobs. This number comprises around 59 million Americans. It’s not just multiple job holders; for 29% of US workers, their primary job is actually an alternative work arrangement. Of these, 23% are full-time workers and 49% work part-time. Here's a good list of all the companies that fit this model.
Drivers for Amazon, Uber, Lyft, Doordash, Grubhub, Drizly are all "gig" workers. They are the closest thing to the real "Taxicab Economy" model with a few important differences and it's all because of technology.
GIG WORKERS HAVE NO FREEDOM OTHER THAN NOT TO WORK
The technology today has totally optimized "The Taxicab Economy" model and it is tilted completely towards the owners. Today a driver for most of these services is using their own car. Some like Amazon use trucks leased to drivers. The routes or fares or deliveries or tasks are all coming from a computerized dispatch center via a phone or some computer device which also in most cases is also provided by the worker. There is no way to "cheat the system". With constant monitoring via GPS tracking and extra camera surveillance installed in leased vehicles, most every aspect of a gig worker's experience is controlled. The pricing model is no longer a simple percentage of a fixed fee. The price to the customer can be determined by demand and the payout to the driver can be conditional as well. Do you need a ride during a busy period? You'll pay more. Late to pick up a fare or not deliver a package on time? You'll be paid less. None of this is transparent and all of it favors the big companies that create the technology. Worst is that Gig company owners treat their workers as they are "owners of their own businesses" and that they have "freedom as an owner". They promote working for a big tech company as a non-employee contractor with no benefits or security to be an "owner" with "freedom". This is an illusion which some "owners" may have begun to realize. It's no wonder that if a business has "overly optimized" its "owner" workforce to the point that some are facing poverty that there might be a backlash.
The worst thing about "The Taxicab Economy" is the "infinity" part.
Real owners running businesses on "The Taxicab Economy" have absolutely no need to care for workers or customers or suppliers as long as there is an infinite supply. Consumers want to be satisfied at a low price and a global economy provides an infinite supply of consumers. If the supply of anything is infinite, it is cheap. If something cheap is "marked up" 50% (or more) and only a few owners get the money, then all the other people are left to scramble for only 50% (or less). What is cheaper than a product made in a third world factory or workers willing to work for less than minimum wage because they are told that they are "owners" with "freedom"?
In Port Jefferson there were two cab company owners and I met and knew them both. There were a dozen cab companies on Long Island and I knew where they were based and they all had owners that I could meet. Today there is only one Uber and one Lyft and they cover the entire planet. I'm sure that 99.9% of the drivers couldn't even tell you the owners/founders names. These two companies and a relatively small group of owners and investors take home more than 50% of all the business. And we won't even get into the destruction of the taxi business in places like New York City.
Cab drivers on a bad night didn't understand the "infinity" thing either. If there were eight cabs in the rail and only two got a ride off a train, then the company made half the fare and the other six cabs idled in the station parking lot. Me? I would go home if this happened after two trains came in. Some poor drivers would stay the whole shift and end up paying money out of their own pocket to gas their cab. It is my opinion that today there are many younger people involved with "The Taxicab Economy" that don't understand the economics of it, and it scares me.
In my opinion, the Town of Rush should get together and create the infrastructure for people to become owners of their own businesses owned by local people. There is a great opportunity to create something better than "The Taxicab Economy" which would benefit the people of the town. No "big box" or "chain store" things. Create unique and wonderful things that people would want. The type of infrastructure created would determine what kinds of businesses would be encouraged. There is "a whole lot of nothing" available in Rush to do something with because it is easier to do nothing than to do something. This isn't a problem with a quick and easy answer. Please tell these people what you think. They are working on it and they need your help.
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