If sharing economy companies can make it work, what about California and New York?
By Heesun Wee
CNBC, April 5, 2016
As more states move to lift the minimum wage, a small crop of businesses has surprisingly emerged as supporters of higher mandated pay and worker benefits — sharing economy companies. Start-ups in the on-demand space, which by and large recruit 1099 contractors, are opting instead to hire W-2 employees and offer perks including wages well above the federal minimum of $7.25 an hour — plus benefits such as health care.
Boston-based Bridj (pronounced "bridge") is an on-demand carpool service in which passengers use an app to hail shared rides. Last year, Bridj committed to $15 an hour for its employees, who make up more than half its total workforce. It also hires freelance drivers.
At New York City-based Hello Alfred, a subscription-based start-up that helps customers with chores like laundry and groceries, starting pay for employees is a whopping $18 an hour.
Both start-ups pay more than double the federal minimum, and are among the first in the sharing economy space to offer $15 an hour or more. But why?
At a macro level, the sharing economy is shifting. Uber's business model, focused on hiring an army of contractors, isn't the only game in town. Funding conversations are changing, and investors are asking about sustained growth models. ... And some start-ups embracing worker benefits including higher pay are looking to the legal future. They anticipate judicial rules that are likely to conclude classifying de facto employees as contractors just won't cut it for much longer. ...
California will lift minimum pay to $15 by 2022. New York City will see $15 wages by the end of 2018, with slower increases elsewhere in the state. ...
And again while there are many business owners who strongly disagree with $15 mandated wages, others argue businesses should follow in the footsteps of start-ups like Bridj and Hello Alfred.
San Francisco-based Fireclay Tile is a manufacturer of eco-friendly, handmade tiles. With around 90 employees, the small business last year lifted minimum pay to $11.50 an hour. Its manufacturing plant is located south in Aromas, which is dominated by agricultural jobs. Think strawberry and artichoke field pickers. For local residents, $15 an hour matters.
"Their wage is the defining factor. That baseline number is how people budget their life," said Eric Edelson, Fireclay Tile's chief executive. Fifteen dollars an hour "sets a precedent. And it's up to businesses and business leaders to find a way to get there."
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