Your next payday could be all digital.
- Cryptocurrencies are constantly becoming more mainstream.
- With the changing landscape of work and workers, financial systems also need to evolve.
- Cryptocrrencies have a lot to offer workers in this new age, but they still have some hurdles to face before they become the norm.
Since 2018, cryptocurrencies are no longer operating just on the fringes of the financial system.
Digital currencies have made significant inroads at traditional financial institutions so much that many banks already offer Bitcoin investment options. Several prominent retailers, including Starbucks, Whole Foods, and Nordstrom, are already accepting Bitcoin at checkout. More importantly for the future of the currency, global regulatory oversight has matured since Bitcoin and other cryptocurrencies burst on the scene a few years ago.
With cryptocurrencies becoming more mainstream all the time, it only makes sense for them to be affecting other elements of the financial system, which is exactly what we are starting to see in the significant sector of employee wages.
While it's true that right now those receiving their salaries in crypto are an oddity, this won't be so in the long run.
The way we view work is changing
There is a shift happening in the very way work and compensation are viewed in the world today. Rather than working traditional 9-5 jobs, many employees, particularly younger ones, are joining the gig economy, choosing to be their own bosses and work for short-term, temporary contracts for everything from freelance work to driving an Uber.
In the U.S. alone, 57 million people participate in the gig economy, where transfers and transaction costs are the norm. This is a landscape in need of secure, fast, and cheap solutions that will improve participants' lives significantly.
Currently there are many pain points and regularly occurring annoyances in the market.
For example, 58% of freelancers have experienced not getting paid for their work, an issue that can be easily solved with the usage of smart contracts—a blockchain-based technology that enforces contracts without the need of a third party.
As Saif Benjaafar, director of the Initiative on the Sharing Economy at the University of Minnesota, notes, "Technology has emerged in the last couple of years, including blockchain and cryptocurrencies, that could in principle take the platform out of the business of payment processing and disbursement and enable peer-to-peer payments."
If the future of work looks anything like the gig economy, then it needs the future of financial technology to moderate the movement, making crypto payments a natural next step for this evolution. What's more, these developments are within reach. Already, platforms like BitPay make it possible for employees to receive compensation in crypto, with funds deposited directly into their bank accounts. It's a seamless process that reflects the ease-of-use necessary to make crypto paychecks a reality.
Eynat Guez, CEO of fintech payroll company Papaya Global, stated:
''We're seeing more and more companies inquiring about the possibility of integrating crypto payments within their payroll. At the moment a lot of the demand comes from companies having to make payments in currencies prone to fluctuations such as Chinese yen, Brazilian real and Russian ruble, but we see this broadening out to dollar, euro and pound salary payments as companies see the viability and effectiveness of crypto payments''
Of course, crypto paychecks aren't just prescient for the gig economy. They have implications for the global economy as well.
The global economy
Today's economy is undoubtedly a global economy. Still, not everyone has the same access to financial services.
It's estimated that 1.7 billion adults around the world operate outside of the financial system for various reasons, making their work compensation both incredibly important and increasingly difficult. This is why, among other reasons, Facebook recently released a white paper for Libra, a stable cryptocurrency that will allow users around the world to send and receive payments for the goods and services that they provide.
As TechCrunch explains, "It could be used to offer low or no-fee payments between friends or remittance of earnings to families from migrant workers abroad who are often gouged by money transfer services"
In this way, cryptocurrencies are equipping an entire portion of the population to better acquire and manage their financial well-being.
At the same time, today's global economy continually relies on cross-border payments, and many digital currencies, including Bitcoin, Bitcoin Cash, and Ripple can make this entire process more seamless, raising the specter that cryptocurrencies will be used to remit people's paychecks.
What's standing in cryptocurrency's way?
While some companies are already compensating their employees in crypto, hurdles to broad adoption certainly remain.
Perhaps most obviously, cryptocurrencies can be extremely volatile. Employees can't afford to see their paychecks significantly diminished because of erratic market movements. At the same time, the regulatory infrastructure surrounding digital currencies still treats cryptocurrencies as appreciable assets, something that doesn't adequately account for using crypto as a payment methodology.
However, each of these problems have developing solutions, and it's easy to presume that crypto payments will become more palatable as the industry evolves further.
Even now, many companies are offering their employees compensation in crypto. SC5, a Danish, a cloud services development company, has been paying their employees in Bitcoin since 2013. Moreover, GMO Internet, an internet provider based in Tokyo, allows employees to be paid up to $880.00 of their monthly salaries in Bitcoin.
These compensation experiments underscore the fact that there is a burgeoning demand for crypto-funded paychecks, and there are several opportunities to bring that to fruition. From making the gig economy more reliable to equipping employees in emerging economies with quick and secure payments, cryptocurrencies could be coming to more paychecks soon.
On Friday, Uber will start publicly trading on the New York Stock Exchange, and drivers want to see some of that money.
- Uber and Lyft drivers have organized small-scale protests and strikes in about 20 cities worldwide.
- They're demanding benefits, higher wages, and better worker protections.
- It seems like the situation might only get worse for drivers after Uber goes public, considering the company will face pressures from shareholders to turn profits.
Uber and Lyft drivers around the world are staging protests on Wednesday, demanding the ride-sharing companies provide them benefits, better pay and status as full-time workers. The protests come two days before Uber's highly anticipated initial public offering on the New York Stock Exchange on Friday.
The protests are occurring in about 20 cities, including London, New York City, Boston, Chicago, Sydney, and San Francisco. An American independent contractor group called Rideshare Drivers United appears to be one of the organizations who organized the strikes. The group lists several demands on its website, including:
- 10% commission cap for Uber and Lyft
- Pay drivers per mile and per minute rate en route to the passenger
- Show drivers the estimated fare payment and the trip destination before accepting trip
- Uber and Lyft recognition of our independent, driver-led organization, to negotiate on behalf of drivers
- Rideshare vehicle cap to eliminate unnecessary traffic and carbon emissions
Uber and Lyft drivers' status as independent contractors means they don't enjoy the same labor protections, so it's difficult for them to negotiate with employers like a traditional labor union would.
"We have no sick leave, and are forced to drive long hours to make ends meet," Robin Thomas, 37, a full-time Uber driver, told The New York Times, adding that he makes about $8.50 per hour after expenses.
Because of the low pay at the General Assembly, I've been driving for Lyft on the side to make ends meet. I'm stri… https://t.co/cqi2BjOHGY— Lee J. Carter (@Lee J. Carter)1557157568.0
Muhumed Ali, who's been an Uber driver for four years, joined the London protest. He told the Times he now works 60 hours a week to make ends meet, and while wages are falling but expenses are rising.
"It's unfair," he said of Friday's IPO. "The bosses are getting billions in their pockets while drivers are living on poverty wages."
In recent statements, Uber and Lyft didn't substantively address any of the general demands brought by their protesting drivers.
Uber said in a statement, "Drivers are at the heart of our service ─ we can't succeed without them ─ and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road."
A spokesman for Lyft said, "We know that access to flexible, extra income makes a big difference for millions of people, and we're constantly working to improve how we can best serve our driver community."
How much do Uber drivers really earn?
Not much, at least after you consider expenses. A couple recent reports show:
- Uber drivers make an average wage of about $9.21, according to the left-leaning Economic Policy Institute. (Note: This study factored in expenses such as fuel and vehicle maintenance, self-employment taxes, and the cost of health benefits)
- Another study from MIT found that Lyft drivers make approximately $8.55 to $10 per hour.
- One-third of Uber drivers in the Washington, D.C. area took on debt as a result of working for the company, according to a study from Georgetown University.
Big tech is making its opening moves into the health care scene, but its focus on tech-savvy millennials may miss the mark.
- Companies like Apple, Amazon, and Google have been busy investing in health care companies, developing new apps, and hiring health professionals for new business ventures.
- Their current focus appears to be on tech-savvy millennials, but the bulk of health care expenditures goes to the elderly.
- Big tech should look to integrating its most promising health care devise, the smartphone, more thoroughly into health care.
Health care spending in the United States reached $3.5 trillion in 2017, roughly 18 percent of the nation's GDP. With so much to gain, big tech companies like Apple, Amazon, and Uber are making incipient moves into the space. Such moves from large economic players will alter traditional models of health care, no doubt in ways we can't fully envision.
But will it help? Potentially. In recent years, big tech has gathered the resources and creative minds to change the way we approach many aspects of our lives, even in conservative fields like health care. But to create lasting change, big tech will need to collaborate with traditional health care players to ensure all patients, not just the tech savvy, benefit.
Big tech's opening moves
Last year, Amazon purchased online pharmacy service PillPack for a cool $800 million. This has Angela Chen at The Verge wondering if we'll see PillPack integrated into Amazon's other services, allowing Prime members to order medication through the company's website. Such a prediction makes sense, but it's some ways off. Amazon just recently announced that Nader Kabbani, an Amazon veteran, would lead the pharmacy initiative.
Other tech giants have been making their opening moves, too.
Apple added a Health Records section to its iPhone, allowing users to view their medical records from participating health systems, and the FDA recently cleared an electrocardiogram accessory for the Apple Watch. Uber hired health consultant Aaron Crowell to head its health business venture to offer medical transport. And Microsoft has introduced a Healthcare Bot to provide virtual health chatbots to assist medical personnel.
Alphabet, Google's parent company, has made several health-centric efforts. These include investing in companies like 23andMe and Oscar health, collaborating with Fitbit to create patient-generated electronic health records, and experimenting with its AI platform Deepmind to improve health services and records.
Eyes on the patient, not the prize
What does telemedicine look like? Dr. Maurice Cates, Orthopedic Surgeon, conducts a live Orthopedic consultation remotely by video with a patient.
(Photo by Brooks Kraft LLC/Corbis via Getty Images)
As is evident, big tech's opening moves are less about disruption and more about positioning. Although we aren't seeing grand overhauls yet, we can predict where these companies plan to make their entry point. And the focus appears to be on their traditional base: tech-savvy, middle-class millennials.
That's a potential problem as Michael Dowling, CEO of Northwell Health, told Big Think:
"I welcome all of these players. Because the more players that you get coming in with a different perspective, the better we can get. But it's important for people to understand that most of these players are focusing in on the easy parts of health care. They're focusing in on non-hospital business. They're focusing in on people that are not that sick primarily. And they're dealing with the consumer who's 30 years old, 40 years old, 25 years old."
But the bulk of health care expenditures, Dowling notes, go to the elderly, specifically people in the last year to year-and-a-half of their lives. And because people are living longer, into their 80s and 90s, they'll spend more years drawing upon health care.
Devising apps for digital watches that generate electronic health records is amazing. But how many people do you know own a Fitbit or Apple Watch? How many elderly people take an Uber to the hospital, and how many Ubers are wheelchair accessible? The market for such devices remains niche, if growing, even among millennials.
Another consideration: Would Medicare cover such costs?
Even when tech is designed for the elderly or ill, it rarely considers their needs and partialities. In another Verge article, Chen surveyed the growing category of "aging tech" to discover airbag belts, smart shoes, and smart lamps, all designed to assist in the case of a fall.
As Chen notes: "So many of these devices seem to rely on the ability of caregivers to coerce their elderly relative or patient into using the solution. But if someone doesn't want to wear your shoe or your belt or your watch, it's hard to make them."
Despite these hurdles, big tech can still be a benefactor for health care, and its most serviceable offering is already here. The smartphone.
Unlike other devices trying to break in, the smartphone has already been widely adopted. Seventy-seven percent of Americans own smartphones, and 46 percent of Americans over 65 own one. Comparatively, only 18 percent of Americans own a fitness tracker and 13 percent a smartwatch.
The result is a health care device that requires little training for any demographic. Americans already use their smartphones for finances, travel, communications, reservations, photography, and a host of other daily activities. Adding health care to the mix would be a small ask, even for the elderly.
In his book Health Care Reboot, Dowling discusses a Northwell initiative that had patients televisit with their nurse through tablets and smartphones. The initiative hoped to better serve patients at home while limiting unnecessary travel and hospital visits. Initially, there was concern that older patients would have trouble adapting, but even patients in their 80s found the connection intuitive and helpful.
"The use of technologies such as smartphones, tablets, and laptops signals the beginnings of the age of the consumer in health care," writes Dowling. "In a general sense, as patient, a person is subservient to the provider. As consumer, the person is more empowered with greater access to information and an ability to behave as consumers do in other fields."
Like big tech, health care revolves around data — a patient's family history, their medical records, their current prescriptions, and the ever-evolving medical literature. The easier and faster it is to collect and coordinate this data between patient and provider, the better health care can become.
Smartphone architecture is already designed to collect and deliver data in a user-friendly manner. By pointing it in the direction of health care, big tech can help expand its definition beyond hospital visits to make the patient an active participant.
Why health care should start long before you reach the hospital
This economy has us in survival mode, stressing out our bodies and minds.
- Economic hardship is linked to physical and psychological illness, resulting in added healthcare expenses people can't afford.
- The gig economy – think Uber, Lyft, TaskRabbit, Handy – is marketed as a 'be your own boss' revolution, but it can be dehumanizing and dangerous; every worker is disposable.
- The cooperative business model can help reverse wealth inequality.
The report outlines some bleak numbers for drivers who work for ride-hailing apps like Lyft and Uber, though those companies don't quite agree with the researchers' methodology.
- A new report suggests earnings have been steadily falling for drivers with companies like Uber and Lyft.
- Uber suggests the results are misleading because they don't examine hourly earnings.
- However, other reports suggest that even hourly earnings for ride-sharing drivers are often comparable to minimum wage.
Drivers for apps like Uber and Lyft are, as a whole, earning significantly less money compared to a few years ago, according to a new study from the JPMorgan Chase Institute.
The study examined 38 million payments made through 128 online platforms, which also included leasing apps like Airbnb, to 2.3 million distinct Chase checking accounts between October 2012 and March 2018.
It showed that, between 2013 to 2017, the average monthly payments to drivers who worked for a transportation app in a given month declined from $1,469 to $783, a decrease of 53 percent.
Why are driver wages apparently declining? The study offers several reasons, including drivers working fewer hours, lower trip prices, decreased rider demand and increased driver supply, and platforms paying drivers lower rates.
However, the study didn't examine hourly wages, but rather looked at "only their product, earnings."
A different perspective from Uber and Lyft
Uber says this makes the results misleading.
In a blog post, Libby Mishkin, a senior economist at Uber, notes that the number of total drivers with the company increased from 160,000 in 2014 to 900,000 in 2018. Most of those drivers only work part time. In fact, the study found that, among people paid by ride-sharing services in a given year, 58 percent of drivers earned money in just three or fewer months.
Uber says the number of its occasional drivers is growing, which lowers total monthly earnings statistics.
"The distinction between monthly and hourly average earnings in this context is an important one: if the share of our partners who drive only occasionally has increased over time, as it has, it stands to reason that the average of every driver's monthly (or, for that matter, weekly or yearly) earnings would decrease," wrote Mishkin.
"In our view, a more appropriate metric for evaluating earnings among the diverse and evolving group of drivers would be average hourly earnings, which according to academic research produced in partnership with Professor Alan Krueger of Princeton and John Horton of NYU have remained stable over time."
A spokesperson for Lyft echoed a similar sentiment."The fact that this study did not examine hourly earnings, the metric that drivers care most about, has resulted in misleading headlines," the spokesperson said. "Many more drivers are choosing to earn with Lyft on a part-time basis, often fewer than ten hours per week, and they tell us they truly value the flexibility Lyft provides."
How much do Uber drivers earn hourly?
A pair of studies from 2018 provide an idea of how much an Uber driver earns by the hour.
One study, published in February from researchers at the Massachusetts Institute of Technology's Center for Energy and Environmental Policy Research, found that the median profit of Uber drivers was $8.55 to $10 an hour. (Note: The study authors arrived at this figure after revising their findings.)
Another study, from the Economic Policy Institute, a left-leaning think tank in Washington, D.C., showed that Uber drivers earn 24.77 in hourly passenger fares. However, after accounting for vehicle expenses, health insurance and Uber's commissions and fees, drivers earn just $9.21 in hourly wages–an amount comparable to the minimum wage of many states.
Again, Uber criticized the report, suggesting it doesn't factor in "the flexibility drivers tell us they value and cannot find in traditional jobs."
In any case, both Uber and the recent JPMorgan Chase study seem to agree that most drivers for ride-sharing companies are working to supplement a more traditional income.
"...we do not find evidence that the Online Platform Economy is replacing traditional sources of income for most families," reads the JPMorgan Chase study. "Taken together, our findings indicate that regardless of whether or not platform work could in principle represent the "future of work," most participants are not putting it to the type of use that would usher in that future."