Some time ago I wrote a column saying that the “gig” system is no different from the Old South’s sharecropper system. It’s essentially the same business model and instead of the “gig economy” I call it the “share-worker economy.”
The fundamental argument against share-workers getting the same wage and hour rules as minimum-wage workers is, at its very core, that it would make the services they perform too expensive to get a high enough level of sales revenue for the business model to work.
What this argument is really saying is that the company, Uber or whatever, needs to make its 30% or whatever markup on labor payments plus costs (gas, insurance, etc.) and that if the people who actually do the work are paid a minimum wage, enough people won’t pay enough money for the services being sold to cover the cost of the worker earning a minimum wage AND the company adding a 30% overhead charge on top of that labor cost.
Suppose Burger King said that their employees should be exempt from paying overtime and a minimum wage because enough people won’t buy burgers if Burger King has to charge prices high enough to both pay a minimum wage AND made a profit equivalent to a 30% markup on their labor costs?
Clearly, that would not be a valid argument for exempting Burger King from the wage and hour laws. And, it is not a good argument to justify exempting Uber or any other company whose business is taking a percentage of the wages of workers they send out to be exempt either.
Pay what you need to pay. Charge what you need to charge, and see if your product has enough customers at that price for your company to be successful. If not, then you don’t deserve to be in business in the first place. That’s how capitalism is supposed to work.
— David Grace