Sunday, September 28, 2014

Are we relying too much on apps to do our chores?

This is from Claire Cain Miller at the New York Times:
Near the top of the list of tiresome tasks that the Internet has yet to solve is this one: trekking to the post office.

Enter a San Francisco start-up called Shyp, which is expanding to New York on Monday. For a small fee, it fetches, boxes and mails parcels for you. The other week, I had a get-well package to mail to my cousin. I opened the app, snapped a photo of the items I wanted to send and entered her address. Fifteen minutes later, someone was at my door — and that was it. No boxes, no tape, no weighing, no buying stamps, no standing in line.

Are Shyp and similar tech start-ups for outsourcing chores the realization of the laziness economy? Or are they the opposite — a giant step toward unleashing the human productivity and creativity that technologists have prophesied?

Technology has conditioned us to expect ease, efficiency and speed in almost everything we do. Once it came from sewing machines and dishwashers, later from Google and Kayak, and most recently from start-ups that provide on-demand services like Uber for cars, Instacart for groceries and Munchery for dinner.


How do we judge whether technology is making us more productive, or just lazy and impatient?
Miller certainly raises an interesting question on the role of technology and labor-saving devices.  The example she gives is this new phone application Shype, where you can open up a phone app and have someone pick up and mail your packages for you.   She raises such outsourcing of chores in the economic terms of opportunity cost--the cost that you could be doing something more productive during that time you spent mailing a package, which could have been a better use of your time.  In a sense, she is right. 

The problem I have here with Miller's Shype example is that she is not distinguishing the technology of labor-saving devices and services.  In regards to the technology of labor-saving devices, I have the choice of either manually washing my clothes by hand in a running stream, or using the technology of a washing machine to automatically wash my clothes.  Either way, I am still performing the chore of washing the clothes myself.  When I think of services, I am paying someone else to perform the chore, rather than doing it myself.  For the chore of washing my clothes,  I could take my clothes to a dry cleaning business and pay them to wash my clothes.  Or I could hire a house-keeper to wash my clothes for me.  I am entering into a contract with another individual or business to pay them money in return for performing a chore, such as washing clothes.

Miller delves into this idea of outsourcing chores:
Outsourcing individual chores to other people, as opposed to machines or software, has been made possible by location-aware mobile phones. Few people can afford a full-time personal assistant, but many more can pay a few dollars to outsource chores here and there. Shyp costs $5 to mail an unlimited number of boxes; you pay the postage.
So perhaps the bigger problem for people using apps like Shyp is becoming too dependent on something that might not be around for long. The mortality rate for start-ups is sky high — and particularly for delivery start-ups. The implosions of Webvan and Kozmo during the dot-com bust taught web entrepreneurs some clear lessons: It’s expensive to build warehouses, hold inventory and hire drivers to go to people’s houses.
Shyp, however, just a year old, is already earning money. That is because most of its revenue comes not from the $5 pickup fee, but from taking advantage of the deeply discounted bulk shipping fees for high-volume mailers. It charges its customers the retail price for the least expensive shipping method — the Postal Service, FedEx, U.P.S. or DHL — and keeps the difference.

Whereas some of the on-demand businesses lose more money the more people that use them, Shyp makes more money when more people use it — the kind of business school basic that much of Silicon Valley seems to have forgotten. Some customers have actually moved from one home to another using Shyp, paying just $5 for messengers to retrieve their belongings and package them. Kevin Gibbon, Shyp’s co-founder and chief executive, said he welcomes that because Shyp makes a lot of money on the difference between the bulk shipping fees it pays and the retail fees customers pay to mail such heavy boxes.
 Welcome to the world of sharing economy.  This is an economy where individuals seek out miscellaneous services from sellers using e-commerce middleman web applications.  This is a world where such individuals seeking work are independent contractors, taking small, one-time gigs on a variety of services.  Such gigs could be anything from driving customers to an appointment, after-school babysitting, picking up groceries or dry-cleaning, organizing a closet or desk, handyman work, or anything else.  The pay on these gigs are minimum wage, and no benefits.  This sharing economy has been growing due to the long-term unemployed not being able to find stable jobs and are using the sharing economy to survive. TaskRabbit, Uber, Lyft and Sidecar are all examples of e-commerce middleman web applications matching the buyers and sellers in this sharing economy. 

The problem with this type of sharing economy, is that these e-commerce middleman companies view their websites as arenas--an eBay for gigs.  They do not assign independent contractors to individual gigs, but rather channel these tasks to either the fastest taker, or lowest bidder, pitting workers in a labor elimination match that lowers wage and pay rates.  There is no minimum wage for these contractors.   There are no employee benefits, unemployment benefits, Social Security, health insurance, or even workers comp.  These companies can pretty much change their pricing and pay structure with impunity, and if the contractors complain, they are "deactivated."

I can't say how Shyp runs their business model, or how they pay their contractors--Shyp calls them "Heros."  But I will guess that Shyp hires independent contractors, and then uses email or cell phone to immediately contact those contractors whenever pickups are required.  Shyp does not say how much they will pay their contractors, however Miller says that Shyp will pay $5 for messengers to retrieve and package a customer's items.  I also doubt that Shyp provides any sort of contractor benefits or protections, but I can not say. 

The more I think about this story, the more I wonder if Shyp is just another example of where the U.S. economy is turning into a servant economy?  Where the wealthy and privilege can log into Shyp or TaskRabbit on their iPhones and have a low-paying servant perform whatever menial task these individuals need at a moment's notice?  When I look at this, I see two people laughing all the way to the bank here.  The first is the rich and privilege, for having to pay a low rate for a servant to perform such menial tasks.  The second is the e-commerce middleman, where the jobless recovery and wage stagnation has created such an over abundance supply of cheap labor, willing to take such menial, low-paying jobs for survival. 

The menial servant get screwed.

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