Economics/Class Relations

The End of the Millennial Lifestyle Subsidy

By Derek Thompson The Atlantic

Something beyond rising energy and labor costs is leading to sticker shock on once-cheap urban amenities.

Several weeks ago, I needed a ride home after some late-night drinks about two miles from my place in Washington, D.C. I pulled up the Uber app and entered my address. When the price on the screen popped up, I assumed I’d entered the wrong street, and perhaps the wrong state. I carefully retyped. But the same price appeared on the screen: $50.

That’s outrageous, I thought; $50 for a 10-minute ride? Then I kept thinking. Aren’t gas prices and inflation near half-century highs? Isn’t the labor market so tight that low-paid workers are switching jobs at historic rates? Isn’t nominal wage growth rising fastest for the kind of workers most likely to drive for Uber? Yes, yes, and yes.

But something beyond rising energy and labor costs led to that startling price tag. With markets falling and interest rates rising, start-ups and money-losing tech companies are changing the way they do business. In a recent letter to employees, Uber’s CEO, Dara Khosrowshahi, said the firm needs to “make sure our unit economics work before we go big.” That’s chief-executive speak for: We gave Derek a nice discount for a while, but the party’s over and now it costs $50 for him to get home.

For the past decade, people like me—youngish, urbanish, professionalish—got a sweetheart deal from Uber, the Uber-for-X clones, and that whole mosaic of urban amenities in travel, delivery, food, and retail that vaguely pretended to be tech companies. Almost each time you or I ordered a pizza or hailed a taxi, the company behind that app lost money. In effect, these start-ups, backed by venture capital, were paying us, the consumers, to buy their products.

READ MORE

Leave a Reply