The case for well structured 1099 work

In America, 1099 is a tax form used for contract positions. In other words, 1099 workers aren't full time employees with benefits. Many people assume that if you are a 1099 worker, you are basically being exploited. This is often the case, but most of my earned income is as a 1099 worker with an online service. I would actually like to see a lot more 1099 opportunities that are done well. I usually refer to this idea on this blog as "Gig work done right."

Home Hero recently announced that they are shutting down. They provided a marketplace for home care providers who were 1099 workers. Yesterday, I left a comment on Hacker News about my ambivalent feelings about Home Hero.

I don't know a lot about Home Hero or that problem space, but their article announcing their shut down suggests that it is probably hourly work that didn't pay all that well on an hourly basis. This is inherently problematic for the worker. It essentially puts a hard cap on their earnings.

I do piece work as a 1099 worker. The effective hourly wage can vary a lot and there are many factors that influence it. I have written about that elsewhere in some detail.

The main point I want to make here is that when I first started and was making vastly less than minimum wage due to my personal situation, I could see the potential for this to grow into something that paid better than minimum wage. I could also see that a large part of that was on me. It depended a lot on me getting my act together and learning how to do this better.

Because of my medical situation, a regular position as a full time employee is inherently problematic and not desirable. I also don't want to see people like me simply excluded from the work force entirely. I firmly believe we need markets for piece work where someone who is slow at it for some reason can still get access to work, even if the de facto hourly rate is below minimum wage.

If it is structured such that it is possible for them to improve that hourly wage and, if you get good at it, you can make better than minimum wage, then I don't find it offensive that some people are working for dirt. Founders of big companies often work for dirt at the start. They may be living on savings and not taking a salary at all. But there is potential there for long term pay off.

When 1099 work is well structured, you can see that same pattern where you may start out making dirt, but the long term potential is there. I have trouble seeing how Home Hero could have led to substantial increases in hourly wage for its 1099 workers.

There are basically two roads to riches when you start a company. One is to add so much value to the system that it grows the pie and enhances the lives of essentially everyone involved, including customers and employees. The other is extractive. It is about structuring things such that the people at the top take out all the value they can in a way that can be a terrible experience for the employees.

I don't have any problem with people getting rich. I am fine with the wealth that Bill Gates has. Bringing the PC to the world was revolutionary and grew the pie for everyone. The fact that he got a big slice of this larger pie is not inherently problematic for the world.

But a lot of companies today, like Uber, are in the news a lot for paying "slave wages" and generally mistreating their employees. For people who want to have 1099 workers, I want to say there is nothing inherently evil in that choice. But please try to structure the work and compensation such that it is possible for people to make substantially better than minimum wage and, ideally, have some control over their time and schedule.

If you can do those two things well, I am totally on your side. I would very much like to see more gig work opportunities in the world that are handled such that it is genuinely more attractive for some people (people like me) than being a regular employee.

These days, on a good day, I can make upwards of $20/hour when I work. On a bad day, I can tend to my health issues and not live in terror that I am taking too much time off and it might cost me my job. I will still have access to work when I feel better. On a so-so day, I probably still sometimes make less than minimum wage, but my income has been steadily going up and my financial problems are gradually resolving. I could not be pulling that off without access to well done gig work.

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