I admit it. I’ve never been a fan of Ponzi or pyramid schemes.  And, I’m not talking about Mr. Ponzi himself- or even Bernie Madoff.   No, I’m talking about Herbalife (Bill Ackman’s averral the Herbalife is a pyramid scheme, 22 July 2014) and those other ‘get rich’ schemes that make folks money by skimming the profits off other unsuspecting souls.   You know, sell a product and your “upstream” team takes a portion, leaving you a smaller portion of the “profits”.  The only way you make real money is to con a slew of folks to work for you- and to find others to work for them- as you skim the profits from their labors.

And, there are other companies and ideas like this.  Right now, there are a slew of companies that are “hiring employees” for their ventures and paying them nothing.  Not just those that claim they are training folks for better jobs (and who don’t pay them a dime until they are “trained”).   No, folks like Uber and Homejoy who treat their “staff” as independent contractors.

Which means that these “staff members” are offered no benefits, no guarantee of minimum wage, no guaranteed hours, no nothing.  Just the potential chance to make a dollar or two.  Oh, and being responsible for their own payroll taxes.

I know many of you have been told that this is the “1099 economy”.  (It’s called that because these “employees” don’t get W-2 statements at the end of the year, but 1099 forms instead.)

But, it really means that so many folks are desperate for a job, they’ll take anything.  Even if it means letting the “sophisticated” rich rip off the unsuspecting poor (and former middle class) folks, promising them a chance for success.

In case you didn’t know it, folks working for Uber et. al. make a “commission” for their efforts.  And, from that commission, they deduct expenses for their efforts.  And, then these folks are responsible for the 15.3% social security and Medicare taxes [the employee and employer share] on what’s left.  Which typically exceeds the income taxes due- if any- on their meager earnings.

Not a pretty sight.  And, certainly not the savior of our economy, either.

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