Travis Kalanick’s Loyalists Are Petitioning Uber to Let Him Return
By Grace Ballenger
Uber CEO Travis Kalanick may have been pressured into resigning on Tuesday after major investors demanded he do so, but now some of his former employees are demanding he remain in place in an “operational role.” Michael York, a product manager at Uber, sent around an email to staff on Wednesday with a petition for company employees to sign, as Recode and BuzzFeed have reported. The email received over 1,100 responses in favor of bringing back Kalanick, which amounts to about 10 percent of the company’s employees (excluding drivers). Their argument: Yeah, he was flawed—but he was also a unique inspiration.
Kalanick’s ouster followed an onslaught of reports of a sexist, dehumanizing culture at the company and increasing criticism from Uber users upset with company policies and action. But York and other Uber employees are advancing a different narrative, summed up in the note: “Uber is TK and TK is Uber." (Kalanick will remain on Uber’s board.)
America Is a Tough Place for Older People. The GOP Health Care Plan Will Make It Much Worse.
One of the expressed intentions of Republicans’ efforts to repeal and replace Obamacare is to undo some of the age-related distribution inherent in the system. Today, healthy young people pay more so that older, less-healthy people don’t have to pay quite as much.
The Republican plan unveiled in the Senate on Thursday sharply scales back the distributional nature of the system—on an income basis, and on an age basis. The tax credits that help people afford policies on the exchanges will be sharply scaled back. So let’s say you and your spouse are 60, your kids are grown, and you’re insured on the individual market. Poverty level for a family of two is $20,420. If you make $80,000 a year between you, you’ll have to pay as much as 16 percent of your income for a high-deductible plan under the Senate’s Better Care Act as its currently written. (CNN found that, if the House plan passed last month were to become law, a 64-year-old earning $24,600 in 2026 would pay a premium of about $14,600—about 60 percent of total income.)
Asking older people to pay so much for health care is particularly devastating given the ongoing structural changes in our economy. Most Americans don’t make that much money. The median household income in the U.S. is about $55,000. But the median household income for those in the 55–64 cohort is markedly below the median for those in the 45–54 and 35–44 cohorts. Most Americans don’t have much savings. The median retirement savings for people between the ages of 50 and 55 in 2013 was $8,000.
Now, the best way to avoid paying a large chunk of your income and savings for insurance for a few years until Medicare kicks in at 65 is to keep a payroll job with health insurance. But increasingly, American employers don’t want to keep people in their 50s on their payrolls. The closer Americans get to Medicare eligibility, they more likely they are to be pushed out of their jobs—and out of the workforce entirely. The data from the Bureau of Labor Statistics tells the tale. In 2014, 79.6 percent of Americans between the ages of 45 and 54 were in the workforce. But of those between the ages of 55 and 59, 71.4 percent were in the workforce, while 67 percent of those aged 60–61 were and just 53 percent of those between 62 and 64 were.
In virtually every industry, at virtually every level of the income ladder, employees are explicitly seeking to move people off the payroll as they age into their 50s. Which means more of those Americans must buy insurance on the market the Republicans are currently trying to remake.
After the financial crisis, the big autoworkers worked out two-tier wage systems with unions which protected existing wages and benefits for older workers while allowing them to add new people to the payroll at lower rates and with less extravagant promises. So, of course, these large employers have lots of incentives to hasten the retirement of older workers.
Earlier this year, Fidelity Investments offered voluntary buyout packages to employees over the age of 55. In April, Brigham and Women’s Hospital in Boston offered buyouts to employees over the age of 60. Last year the Museum of Modern Art in New York offered buyouts to, you guessed it, employees over the age of 55. In education, some states are trying to get rid of tenure, and Wisconsin has already taken steps in that direction.
You see it at the high end, too. Many professional services companies, like consulting and accounting firms, require partners to retire at the age of 60. Law firms routinely push older partners to go off counsel. At Goldman Sachs, it’s hard to find people working in senior positions past their mid-50s (unless they’re in the C-suite).
As for the media, I defy you to go into a television newsroom, digital media company, or newspaper and find more than a handful of people over the age of 50, let alone 60.
Given the relentless global competition and pressure continually to boost profits, it is likely that this dynamic will intensify in coming years. Which should push reasonable policymakers to make it easier for older people to afford health insurance on their own, either by maintaining existing premium support, or by, say, opening up Medicare to people over the age of 50. But of course, the Republican plans are going in precisely in the opposite direction.
There is one area where employees who enjoy generous payroll benefits, including health insurance, can age in place. The average age in the 115th Congress is 58.
The Klondike Kickback: How the Senate Health Care Bill Screws Blue States on Medicaid While Sparing Alaska
Buried deep in the Senate health care bill is a provision that is designed to penalize Northeastern states that have traditionally run generous Medicaid programs while carving out special exemptions for sparsely populated Western states like Alaska, which are conveniently represented by Republicans.
Call it the Klondike kickback.1 It is not the most egregious part of this legislation by any means, but it is one of the more infuriating bits if you happen to, say, live in New York.
As you probably know by now, Republicans want to make a historic change to Medicaid by capping the amount of money the federal government spends on each patient. Currently, Washington and the states split the program's costs, with the feds covering a set percentage of every enrollee's care—whether they rack up $500 in medical bills or $50,000. Under the new system, that open-ended commitment would end. States would instead receive a fixed amount of money per Medicaid enrollee. Those grants would grow over time with inflation, but initially, they'd be based on each state's historical spending.
Some states are worse off under this system than others. Places like Alabama, Nevada, or South Carolina that have traditionally spent very little per enrollee would have their federal contribution capped low. Places like New York or Massachusetts that that spend a lot per enrollee would have their federal contribution capped high, and may be able to continue their own state funds to sustain their programs. This is a political problem for the GOP, since Republicans represent a lot of parsimonious states that try to keep their Medicaid budgets small.
So they've added a caveat. On page 64 of the bill, it says that if a state spends 25 percent more than average per patient, Washington will reduce its Medicaid contribution by up to 2 percent the next year. (So, if were scheduled to grow by 2.4 percent, it might only grow by .4 percent). If a state spends 25 percent less than average, it will see its contribution increased by 2 percent. Essentially, states—including much of the Northeast—would be penalized for being generous, in order to fund more Medicaid spending in states that are not. It's only a one-year penalty—so it's not designed to ratchet down funding for, say, New York or Massachusetts over time. But “it really is hurting states that, for a variety of reasons, have higher spending per beneficiary,” Edwin Park of the Center on Budget and Policy Priorities told me.*
Except, that is, in states like Alaska. The bill states that this rule will not “apply to any State that has a population density of less than 15 individuals per 23 square mile, based on the most recent data available from the Bureau of the Census.” In other words, rural areas like Montana, the Dakotas, and the great white north will be spared from this redistribution scheme.
Of course, some might say this is only fair. Medical care is expensive in rural areas because there aren't very many doctors. Alaska and North Dakota simply can't help it that they spend more per Medicaid than any other states in the country.
Of course, there are perfectly good reasons why densely populated and urban states spend big, other than their desire to run generous social welfare states (which they shouldn't be penalized for). Services like medical care are expensive in New York and Boston too, after all. But Chuck Schumer and Elizabeth Warren aren't Republicans. Alaska's Lisa Murkowski, of course, is.
1Credit for the nickname goes to Jon Bosscher on Twitter. Thanks Jon!
*Correction, June 22, 2017: This post originally misstated that the penalty would be based on whether the federal contribution was 25 percent above average. It is in fact based on combined state and federal Medicaid spending.
Here Are the Six Lines of Text That Could Decimate America’s Biggest Health Care Program
The defining feature of the Senate Republican health care bill is that, over the long term, it would absolutely decimate Medicaid—moreso even than the House legislation passed last month. And it accomplishes this wrecking job with surprising efficiency, a mere six lines of text in a 142-page document.
Here's what that translates to. Like their House colleagues, Senate GOPers want to cap the amount of money Washington gives the states each year to pay for each Medicaid patient (currently, there's no limit to how much the feds can spend). Between 2020 and 2024, they would increase that funding each year based on the consumer price index for medical expenditures—which is already expected to grow more slowly than Medicaid would.
So far, this is the same as the House bill. Here's where those six lines come up. In 2025, the bill takes a draconian turn. Instead of using the CPI for medical expenditures, it would use the normal consumer price index—which includes everything from groceries to cellphones to home furnishings. This would amount to a devastating budget cut to Medicaid. As the Urban Institute has shown, we are talking about a difference of hundreds of billions of dollars over time.
Medicaid is America's largest health insurance program by enrollment. It covers 62 million Americans—almost as many as Medicare and the entire individual market combined. It helps the poor, the disabled, the elderly, and—thanks to Obamacare's expansion of it, which Republicans would roll back—many working-class families. As the New York Times recently noted, it insures about half of all births and 40 percent of children. It is indispensible, and Senate Republicans are planning to throttle it.
Details of the Senate Health Care Bill Just Leaked. Prepare to Be Appalled.
Details of the Senate’s “draft” health care bill, which Republicans were set to unveil Thursday after weeks of secretive negotiations, have finally leaked—and from the sound of things, Mitch McConnell and his cohorts have written a morally appalling piece of legislation that many conservatives will nonetheless find deeply underwhelming.
According to the Washington Post, which cites “a discussion draft circulating Wednesday afternoon among aides and lobbyists,” the plan looks much like the Obamacare repeal legislation passed last month by the House, with a few key depatures. Here's a brief rundown:
1) Instead of providing Americans tax credits to buy insurance based on their age, as the House bill does, the Senate would offer them based on “financial need”—which is more or less how Obamacare works. But under the GOP’s proposal, fewer Americans would qualify for help. Under the Affordable Care Act, households can receive insurance subsidies if they earn up to 400 percent of the poverty line. Senate Republicans would lower that threshold to 350 percent. Subsidies will also be smaller for those who still qualify.
In short, it sounds like McConnell’s working group is keeping Obamacare's subsidy structure but making it stingier. It is unclear who this will please.
2) The Senate bill eliminates all of Obamacare’s taxes except the “Cadillac tax” on expensive health plans. This will please the medical device makers, investors, high earners, and insurance companies that were taxed by the ACA.
3) It rolls back Obamacare's Medicaid expansion “more gradually than the House bill,” according to the Post, though how much more gradually is unclear. Senate Republicans have been haggling over whether to phase out the expansion over as little as three years or as many as seven—but the final outcome would be the same either way. Meanwhile, it sounds like the Senate is going to run with its plan to impose even more draconian spending cuts on Medicaid over the long term by capping per-patient spending, then increasing funding more slowly each year than the House would. (I wrote about that plot earlier this week.)
4) What about consumer protections? The House bill notoriously allowed states to opt out of Obamacare's insurance regulations, such as rules barring carriers from discriminating against patients with pre-existing conditions or requiring them to cover certain services. Sensing that it might be politically suicidal to strip cancer and heart patients of their protections, Senate moderates have reportedly resisted going down that path. Right now, it's unclear who won the argument.
Axios reports that the Senate will instead give states more leeway to use Obamacare’s existing waiver system, allowing them to jettison some of the law’s coverage requirements—though not the popular protection for pre-existing conditions. This approach would encourage carriers in states with laxer rules to limit their offerings to minimal plans that would be largely useless to people with extensive health problems.
5) The Senate bill would kill funding for Planned Parenthood but wouldn't bar the government from subsidizing private insurance that pays for abortions, which will infuriate religious conservatives.
So, to review: The Senate bill keeps Obamacare’s subsidy structure in place while paring back eligibility, guts Medicaid more slowly but more severely than the House bill, and still lets states drop essential consumer protections, although not as many as the House. But fear not. “Aides stress that the GOP plan is likely to undergo more changes in order to garner the 50 votes Republicans need to pass it,” the Post reports. Surely it will only improve as McConnell frantically tries to whip his caucus next week, right?
Travis Kalanick, Who Personified Uber and Its Demons, Has Resigned
When the pugnacious Uber CEO and founder Travis Kalanick announced he was taking an indefinite leave of absence last week, it was, at least in part, an effort to mollify his critics inside and outside the company—the ones who said that Uber’s sexist, brutish workplace culture had become too toxic not to require a wholesale overhaul, the ones repulsed by the startup’s mercenary business tactics, the ones who kept piling on after months of self-inflicted scandals, and, of course, the investors who worried all of this chaos at a firm worth $69 billion could suddenly cost them fortunes. Uber had to change, so Kalanick, who built the company in his image, vowed to work on “Travis 2.0, to become the leader this company needs and that you deserve.”
It wasn’t good enough—and now, Kalanick is out.
The New York Times was first to report that Kalanick stepped down Tuesday after five of Uber’s large investors called for his exit:
In the letter, titled “Moving Uber Forward” and obtained by The New York Times, the investors wrote to Mr. Kalanick that he must immediately leave and that the company needed a change in leadership. Mr. Kalanick, 40, consulted with at least one Uber board member, and after long discussions with some of the investors, he agreed to step down. He will remain on Uber’s board of directors.
In a statement, Kalanick said, “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight.”
Fighting and building used to be synonymous goals for Uber, whether it was tussling with city and state regulators, rivals like Lyft (for ride-hailing) and Apple (for self-driving cars), or Uber’s own drivers, like the one whom Kalanick was caught on video berating for complaining about shrinking pay. That stance, laid out in a series of company principles such as making bold bets and “always be hustlin’,” unquestionably helps account for the massive scale and valuation Uber has achieved since its founding in 2009.
But the consequences of that attitude, filtered down from an executive who once added the hashtag #FML to a memo advising employees not to have sex with co-workers in their same chain of command on a company retreat, became too much in aggregate, especially after former Uber engineer Susan Fowler wrote a horrifying post about the sexual harassment she’d faced working at the startup. That eventually led the company to commission former Attorney General Eric Holder to investigate Uber’s culture; the company’s board adopted all of the suggestions of a resulting report last week.
The board wasn’t finished. While Kalanick controls the board through his own shares and the seats of his allies, the group of investors who demanded he step down has about 40 percent of the voting power, the Times reports. They’ll now seek a new chief executive—in addition to filling many other senior roles left vacant by a recent employee exodus. Those investors insisted that Kalanick support the talent search, which he undoubtedly will—even if, in the back of his head, he’s also muttering “#FML.”
Uber Is Adding a Tipping Function. We Have Questions.
In the wake of scandal, a corporate shake-up, and a federal investigation, is Uber’s decision to finally add a tipping function this July an olive branch to the company’s drivers?
Why else would the New York–based independent drivers guild have called it an "important win”? Doesn’t the policy come with other worker perks, like charges for wait time? Plus, couldn’t this newfound posture of corporate remorse pay off for Uber? Haven’t many customers bailed on Uber for Lyft in part because of the “friendly ride-share company” image that this type of small concession to employees, which Lyft has offered for years, helped create? And in that sense, is this a textbook case of corporate social responsibility—a policy that benefits workers, customers, and the bottom line?
Then again, will riders even feel good about their newfound ability to contribute to driver welfare? Isn’t tipping, as Michael Lewis famously wrote, a bit of an aristocratic conceit—“Get yourself a haircut, why don’t you?”—that we should have abandoned long ago? Weren’t we all trying to eliminate tipping from restaurants just a few years ago in the interest of paying workers a proper wage instead? Wasn’t it unfortunate that Uber, in so many ways so loathsome, was also the poster child for a company that eliminated this rotten system? And didn’t the lack of tipping help eliminate cab deserts by making every geographic area equally lucrative?
What is the social convention around tipping a cabbie these days? Is it like a restaurant, where you give 20 percent in all cases unless there was a bug in your food? What’s next, tipping the dentist?
Don’t we all agree that tips kind of suck as a way to make a living? Do tips forestall the arrival of substantive benefits for drivers like health insurance? Doesn’t the addition of tips to ride share introduce Uber to the effects of conscious and unconscious racial bias that have already been demonstrated in its rating system?
But also: Isn’t it better to be tipped than not to be tipped?
Why change now? Because this is the company’s first full week without founder Travis Kalanick, who is on a leave of absence, and was the subject of a viral video in which he argued with a driver about pay? Was Kalanick an obstinate opponent of a policy that was seen as a good PR move for both customers and drivers?
Could there be some internal corporate logic for installing a tipping button? Does it provide labor-conscious riders with an opportunity to express their frustration with bad drivers without bestowing a three-star review that could lose someone their job? What if this is a way of testing to see how much customers are willing to pay, and charging more to more generous tippers?
Speaking of bad tippers, why is the company putting a surcharge on teens, anyway? Did someone egg Arianna Huffington’s house last week?
And should we even be discussing this cosmetic change in the driver-customer-company relationship, when the business model is dependent on cheap labor made possible by treating the drivers as contractors? Aren’t we, as riders, complicit in this relationship? Does tipping assuage our guilt? Or merely transfer the responsibility for a living wage from the front office to the back seat?
UPS Will Charge More to Ship Your Holiday Packages This Year. That’s Great News for America.
The Wall Street Journal reported Tuesday morning that delivery giant UPS will add a small shipping surcharge for packages this holiday season. Between Nov. 19 and Dec. 2—the period including Black Friday and Cyber Monday—and again between Dec. 17 and Dec. 23, shippers will pay an additional 27 cents for ground shipments (and an additional 81 cents for next-day air delivery). This is, in a word, awesome.
Yes, higher prices for widely used services aren’t usually a cause for celebration. But there are several reasons why this is good news.
First, the unilateral imposition of across-the-board charges on something resembling a utility—everyone uses UPS and its competitors—is inflationary. And we badly need some inflation in this country. For nearly a decade, the Federal Reserve, which is charged with maintaining inflation at a 2 percent annual rate, has been failing to meet this goal. There are a host of immense deflationary forces afoot in the economy—the margin-killing efficiency of Amazon, cheap oil, automation, the decline of organized labor. These powerful forces can’t be overcome by the Federal Reserve’s highly permissive monetary policies. We desperately need some big players in the market to insist on higher prices and on the higher wages that should follow.
Second, these higher prices are highly likely to lead to higher wages. UPS and other logistics companies are very well-oiled machines. They handle an astonishing number of packages with comparatively little error every day. Their interconnected systems of airplanes, trucks, and distribution centers can handle an immense amount of throughput. But in America, we insist on cramming a disproportionate share of consumer spending (and hence of package delivery) into a six-week period at the end of the year.
For that reason, all the players in the holiday shopping ecosystem—retailers, department stores, e-commerce companies, and delivery services—hire hundreds of thousands of temporary employees in November and December. Last year, UPS alone hired 95,000 seasonal workers.
But hiring large numbers of seasonal workers is becoming progressively more difficult. We’ve had a record 80 straight months of payroll job growth, the unemployment rate is 4.3 percent, and there are 6 million open positions in the U.S. One of UPS’s biggest facilities is in Louisville, Kentucky, a city that already has 30,000 unfilled job openings. All of which means that if you have an urgent need to fill lots of positions this year, you’re going to have to use the blunt instrument of sharply higher wages. UPS is adding the surcharge precisely because it believes it will have to spend significantly more on labor this year. We’ve been waiting for our long recovery to meaningfully raise wages. Here is one example of how that is actually happening.
Third, the move will be a small source of succor for suffering brick-and-mortar chains. Forcing people to pay 27 cents more for a parcel for a few weeks out of the year won’t stem the e-commerce tide that is slowly swamping America’s malls. But at the margins, it may help. Some e-tailers will respond by passing through higher costs to their customers. (Others, like Amazon, may simply eat the costs for the sake of maintaining and growing market share.) And some consumers will respond to the higher shipping costs by deciding to go to the mall or store on their own.
Finally, the planned surcharges represent a small step toward making consumers burden the actual costs of the benefits the economy is delivering to them. One of the great things about the internet age is the immense consumer surplus it has created. Because our systems today enable the delivery of goods and services for much cheaper (and sometimes for nothing), and because a lot of companies are willing to run on very small or negative margins (hello, Uber), the consumer is getting an immense surplus. We have all the content and music we can consume for cheap or (thanks to advertising) free, goods are delivered to our home for very low prices, cars that appear out of nowhere to whisk us to our desired destination for a few dollars. But there is a price to be paid for all this cheapness. My surplus is often somebody else’s deficit: the companies and artists who can’t get paid (or paid decently) for the content they produce, the exploited port truck drivers who work at very low wages (go read this searing USA Today investigation), warehouse workers who labor to the point of exhaustion, and so on.
The problem is that many of the companies that possess the size and market presence to influence pricing, and hence wages, have been unwilling to pass on higher costs to their consumers. In fact, in many instances, their business models have been explicitly built around denying adequate compensation to suppliers and workers.
Eight years into the expansion, UPS’s decision may represent a small hole in the dam that has been holding the tide back from lifting all boats.
Amazon’s Dominance Isn’t Assured. It’s Facing a Messy e-Commerce War in India.
Thanks to Amazon’s surprise acquisition of Whole Foods, the e-commerce giant’s odds of world domination feel more inevitable than usual these days. But in India last week, the biggest rival to Amazon’s business there showed just how precarious the company’s ascendance might be.
Last Thursday, Indian antitrust regulators announced they would allow Bangalore-based Flipkart to purchase eBay’s Indian business—a move that could seriously shake up India’s online retail market, which Morgan Stanley estimates will be worth $119 billion by 2020. As part of its acquisition of eBay’s Indian arm, Flipkart will strike a deal to make more of the American auction company’s global inventory accessible to Indian consumers, while eBay’s buyers globally will have greater access to Indian inventory provided by Flipkart. (Disclosure: Slate is an Amazon affiliate; when you click on an Amazon link from Slate, the magazine gets a cut of the proceeds from whatever you buy.)
Right now, Amazon controls 44.6 percent of that market, according to data from an Indian research firm that looked at transactions in 60 Indian cities, while Flipkart controls 35.7 percent. Last year Amazon boosted its investment in India to the tune of $3 billion, bringing its overall investment in the country to $5 billion.
Amazon’s global e-commerce business has grown over the years. In 2014, 37 percent of Amazon’s sale came from international markets, and this year the Seattle-based company ranked as the world’s third largest retailer after Walmart and CVS, according to Forbes. Chinese online retailer Alibaba is also growing—the company made a huge investment in the Indian mobile wallet firm Paytm, and the Indian startup’s e-commerce business is now valued at more than $7 billion.
And then there’s another development in India, involving yet another global tech firm. Snapdeal, another Indian online retailer, could be acquired by Flipkart in a deal that could be worth $1 billion deal this year. The deal is currently being brokered by Snapdeal’s owner, Japan’s Softbank.
According to India’s Economic Times, Amazon, Flipkart and Snapdeal controlled nearly 75 percent of the market in 2016. If Flipkart keeps this up, its name won’t just represent Amazon’s biggest headache in South Asia, but the angry gesture of choice for sleepless Jeff Bezos lieutenants.
The Senate Has a New Idea to Cut Medicaid That’s Even Crueler Than the House Plan
With health care negotiations hitting a critical stretch this week, Senate Republicans are reportedly considering a new plan that would cut per-patient Medicaid spending even deeper than the bill passed last month by the House.
According to the Hill, lawmakers are considering a tweak to the program's funding formula that would, for all intents and purposes, put its budget in a vise. The House legislation, you may recall, caps Medicaid's per-patient spending for the first time ever and adjusts it upward each year based on the consumer price index for medical care, with an extra percentage point tacked on each year for the elderly and disabled. This would likely curtail Medicaid's spending growth over time, since the CPI-M—which only actually measures the cost of out-of-pocket medical purchases—is expected to grow more slowly than the program's expenses otherwise would. The Office of the Chief Actuary at the Centers for Medicare and Medicaid Services recently estimated that the change would shave $64 billion from its funding over a decade.
Senate Republicans reportedly want to use the same system—initially. But beginning in 2025, they would start adjusting Medicaid's per-enrollee spending using the plain old consumer price index—or CPI-U, the one that includes stuff like the price of televisions and socks—which would grow even more gradually. To give you a sense of how dramatic a change this is, just look at this chart. Since 2000, the medical cost index has grown by about 41 percentage points more than the CPI-U.
The Hill reports that the “plan has been described as a ‘consensus option’” and has been sent to the Congressional Budget Office for analysis, though other ideas are still being considered. Presumably, Senate Republicans are thinking about these deeper cuts because they need to offset spending elsewhere in the bill, at least on paper. The fact that the changes aren't set to kick in until 2025 suggests that maybe, just maybe, the thinking is that future Congresses would prevent the change from ever taking effect. But if they failed to do so, the long-term result would be a large blow to Medicaid that could force states to trim the program's coverage dramatically in order to manage costs, making sure that American health insurance for the sick, poor, and disabled would become truly inadequate.
No wonder the Senate leadership doesn't want the public to see what it's working on.