Thursday, June 18, 2015

Last Call For Like Uber, But For Employees

Glad to see that somebody's business model just got "disrupted" in their home state.  California just told ride share service Uber that yes, their drivers are employees and not contractors.

A San Francisco-based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission. 
The ruling, filed on Tuesday in state court in San Francisco, was the latest in a host of legal and regulatory challenges facing Uber and other highly valued start-ups in the United States and other countries. 
The commission said Uber is "involved in every aspect of the operation."

Classifying Uber drivers as employees opens the company up to considerably higher costs, including Social Security, workers’ compensation and unemployment insurance. That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and other services. 
Uber had argued that its drivers are independent contractors, not employees, and that it is "nothing more than a neutral technology platform." 
But the commission said Uber controls the tools driver use, monitors their approval ratings and terminates their access to the system if their ratings fall below 4.6 stars.

The ruling affects only California. However, the state is Uber's home base, one of its largest markets, and sets a path often followed by regulators and courts in other states.

It's hard to overestimate just how big of a sucker punch this is to Uber's gut.  Uber is able to compete on price because it doesn't have to pay payroll taxes, FICA, worker's comp or the big one in California, provide Obamacare.  It can pay drivers straight cash and not worry about that because everyone's a contractor.

If it now has to do that, suddenly the whole Uber business model goes out of business.  They won't be able to pay drivers nearly the money they were offering before, and that's going to hurt them.  They just become a glorified taxi service after that.  It's certainly going to be a hell of a lot harder for them to raise capital in an IPO with this ruling hanging over their heads.

Imagine the press Uber's going to get when it fights this, too.  It's a lose-lose situation for them and they know it.  There was never anything super "disruptive" about Uber, they just took contractor rules to the extreme and tried to price taxis out of business with rock bottom labor costs (all assumed by the contractors of course) and they just got barbecued for it.

Couldn't have happened to a nicer company, or a nicer industry for that matter.  There's nothing revolutionary about exploiting the hell out of the people who work for you.

Out Of The Pressure Cooker

A lot of fanfare, not to mention a lot of history, occurred when the St. Louis Rams drafted Michael Sam as the first openly gay player in the NFL last summer.  Sam left the NFL almost as suddenly as he arrived however, and he drifted for months, finally ending up with the Montreal Alouettes of the CFL.

But last week Sam left Montreal with virtually no warning, and Mike Freeman of Bleacher Report believes he knows why: the relentless pressure of history was simply too much to shoulder.

This is Michael Sam's last fight, and it doesn't look good.

I believe I know what happened to Sam—why he suddenly bolted from his last, great chance to be a professional football player. 
Some of you, holding a predisposition to dislike Sam because he's gay, won't understand what I'm about to say. Some of you, who understand nuance and human frailty, will get it.
I believe that Sam has reached this point—where he left the CFL's Montreal Alouettes last week with little explanation to the team—because the pressure of being the first finally got to him. In this case, the pressure that came from becoming the first openly gay NFL player. 
Sam will always be a hero to me, but I also know he is made of flesh and blood. Like other pioneers in sports, he carried the weight of many people on his shoulders. 
My belief is that that weight, increased by the anvil of social media, is far too heavy for Sam—for the moment at least. I think he just got tired…and so he left. 
He may come back to Montreal. But for now, he's gone. The truth is, I'm surprised it took this long for the pressure to build and for Sam to finally succumb to it. 
None of this is an excuse for Sam. Some people are built to be the first. They have layers of armor under already thick skin. Insults and slurs are deflected like bullets off Superman's chest. 
Jackie Robinson was like this. Roberto Clemente was like this. James Harris, one of the pioneering black quarterbacks in the NFL and a longtime team executive, was like this. Amy Trask, the sport's first woman team executive, working for the Raiders, remained an exemplary human being in the face of bigotry. Same with Art Shell, the first black head coach in the NFL, and the first Latino coach in the league, Tom Flores. 
But not everyone is superhuman, and not every story has a perfect Hollywood ending. 
Sometimes, understandably, the hero doesn't say to the bad guys "Yippee ki-yay" and walk off into the sunset.

Michael Sam is a human being like the rest of us, and none of us are perfect.  I hope he finds the peace he is looking for in his life, and a place to showcase his obvious talent.  But for now, like the rest of us, he's still looking for where he fits in, in a sport where he is notably different from everyone else. The pressure coming from both those who despise him -- and from those who have the highest hopes for him -- seems to be too much.

I do not and cannot blame him for that.  His decisions are his own.

I only hope he finds a way.

The Legend Of The Lone Star Gold, Con't.

On Monday I talked about that truly weird state bullion depository that Texas Republicans will set up with legislation this week, a move that reeks of nullification and secession in an increasingly unhinged Republican party afflicted with Obama Derangement Syndrome. As TPM's Brian Murphy explains, the reality behind this move is far more disturbing.

As I said, if this looks like Ron Paul goldbug insanity to you, that's because it is.

According to this narrative, then, Texas isn’t just setting up its own depository, payments system, and a safe haven for gold that can’t be confiscated by the federal government. Instead, it is signaling a loss of confidence in the United States by pulling its gold out of the largest gold vault in the world eighty feet below the Federal Reserve Bank of New York’s Florentine-inspired headquarters in lower Manhattan. There, a special police force guards some 530,000 gold bars protected behind a 140-ton airtight steel and concrete framed door sealed with a 90-ton steel cylinder and time locks. Nobody enters the vault alone, ever; three people are present, even if it’s just to change a light bulb. Most of the gold in the vault belongs to other nations; the Fed stores and guards it as a courtesy to allies. Thus, the idea that Texas is somehow taking on an unwise risk by lodging $1 billion in bullion in the vault – so much so that it regards the New York bank as a foreign entity from whom gold ought to be justly “repatriated” – is to reject the practical and geopolitical realities of gold ownership in the 21st century. Even in fiction it is hard to recall a more secure site that has at its disposal more robust resources to guard and defend itself.

This is why, if you were suspicious about Gov. Abbott’s claim that “the [depository] law will repatriate $1 billion of gold bullion from the Federal Reserve in New York to Texas,” you were on to something.

Oh, but it gets worse.  This is all smelling like a giant gold bug con job, especially since the the work of guarding and administering the gold depository will be privatized.

But where did Texas get this gold anyhow?  That's an even stranger story.

Indeed, Texas has no gold bars in the Federal Reserve’s New York vault. And what the state has is not worth a billion dollars. Instead some 4,200 gold bars bought in 2011 by the University of Texas’s endowment fund (the second largest in the country after Harvard’s) are stored in the basement vault of HSBC’s headquarters at 450 5th Avenue in New York City, just south of the New York Public Library. For the last four years, the endowment has paid an estimated $1 million per year to store their gold there. (If it had been at the New York Fed the cost would have totaled about $15,400 over that period). And the new depository law does not require the university’s endowment fund to relocate the gold to Texas. 
In case you’re wondering why the university’s endowment fund ever bought real physical gold to begin with (not just paper assets), that's a story almost as odd as the state's new effort to bring its gold back to Texas to ward off financial Armageddon in the country's other 49 states. That story seems to begin and end with a hedge fund manager named Kyle Bass. Bass, a former Legg Mason and Bear Stearns managing director and outspoken Fed critic, was named to the endowment fund’s board of directors (listed – and pictured – here… ahem) and immediately began pressing his apparently suggestive colleagues to shift their gold options investments into a stake of physical gold.

Bass isn’t just a casual metals speculator. When he believed nickel was undervalued he bought 20 million nickel coins to prove his point (they’re stored on a pallet in a Brinks vault). A brave new world mix of country club and prepper compound, in a Michael Lewis profile, Bass revealed that he’d prepared for a collapse of the government and economy by accumulating – in his words – “guns and gold.”

Like the others mentioned in this story, Bass believes that gold has an intrinsic value. In 2010 and 2011, he steered the University of Texas Investment Management Company’s board of directors to put nearly 5% of the then-$19 billion university and pension fund they manage into physical gold by converting options into bullion. Many large institutions invest in gold through paper investments like options. But most agree that owning actual physical gold bullion is a poor choice for a number of reasons - unless you're expecting a financial cataclysm so great you need actual physical possession of the metal. But coming off the 2008 financial crisis that's what Bass was expecting and he managed to convince his fellow board members. So for $764 million, the fund bought 664,300 ounces of the stuff in 100-ounce bars. Each of those 6,643 bars has enough of what Auric Goldfinger called “divine heaviness” that they can chip a concrete vault floor if dropped.

And the best part?  Over the last couple of years that investment in physical gold has lost money.

No, this is 100% Tea Party nutjob territory we're in with this story, and it only will get worse. Remember, not even Rick Perry went this far.


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