> How much better of a job could have been done if the cleaner got a 60% raise? How much better would the local economy be if all of that money stayed local?
Let's be honest here, if you got rid of their advertising expense it's not going to cause the company to offer the contractor more when they're willing to do the job for less. In a competitive market what happens is that the price goes down, so that you pay $227.50 instead of $350, the cleaner still gets $125, and now there is $102.5 in overhead instead of $225.
But that's still good. Overhead is inefficient and you could use the extra money to hire other people which increases labor demand which is the thing that does cause people to get paid more. Or maybe some of the gig workers are doing jobs for people who are themselves not rich and paying less helps them out.
The real question is, how do you replace the function of the advertising expense? Suppose you even want to set up a non-profit gig marketplace that doesn't take anything, it just hooks people up with customers and people accept payment with cash or Venmo or whatever. That's pretty much just a website. But then how do you get people to find out about it and use it?
I belong to a local Muslim Chamber of Commerce that is basically this. Every business that wants to be a part of the network pays a membership fee (like $300 a year) and gets put into a directory. We have Muslim plumbers, contractors, real estate agents, etc.
I think such things can only work at small scales. Once there are too many competing interests it's not as effective.
I feel like you're just describing a different form of advertising (pay $300 to be listed in the directory) rather than an alternative to it.
In general it seems like the problem is that a marketplace has a network effect. The sellers go where the buyers are and the buyers go where the sellers are. And then the marketplace gets captured by the likes of Google or Facebook who, instead of showing results based on reviews or customer ratings or some other kind of useful curation that allows high quality providers to rise to the top even if they're small, just sell the top slot to whoever bids the most.
Perhaps, but the difference between what the comment I was replying to and the Chamber is just the membership fee. Maybe that's just what distinguishes advertising from organic networks.
Yelp used to be pretty good until it started putting ads pretty much everywhere. I'd see reviews for a totally different restaurant when looking at one restaurant.
Let's be honest here, if you got rid of their advertising expense it's not going to cause the company to offer the contractor more when they're willing to do the job for less. In a competitive market what happens is that the price goes down, so that you pay $227.50 instead of $350, the cleaner still gets $125, and now there is $102.5 in overhead instead of $225.
But that's still good. Overhead is inefficient and you could use the extra money to hire other people which increases labor demand which is the thing that does cause people to get paid more. Or maybe some of the gig workers are doing jobs for people who are themselves not rich and paying less helps them out.
The real question is, how do you replace the function of the advertising expense? Suppose you even want to set up a non-profit gig marketplace that doesn't take anything, it just hooks people up with customers and people accept payment with cash or Venmo or whatever. That's pretty much just a website. But then how do you get people to find out about it and use it?