"The key datapoint came in October, when Uber said in a blog post that when it lowered fares for its UberX product, its drivers’ income actually went up rather than down: in Boston, it rose by 22% per hour, which is a lot of money. The result has been that UberX is now priced near or below prevailing taxi rates in most cities: in Washington DC, for instance, UberX costs 18% less than a taxi. And the drivers of those cars are making significantly more money than they would make if they were driving a cab."
So, along comes Uber, Lyft or any of the other services. They do not have this cost. So, if those new services were to be the same price as a cab ride, or even if they’re cheaper than one, there’s still room for the drivers to make more money than the cab drivers. At which point our old friend, the rising demand for labour comes in. When the demand for labour does indeed rise then, as Karl Marx himself pointed out, in the absence of there being a reserve army of the unemployed then the wages of labour will rise. For the capitalists are now competing between themselves for the profits that can be made by employing that labour and they will thus bid up wages.
And there’s no doubt at all that this will happen. We’ve seen exactly this happening in Chinese manufacturing wages this past 15 years. As the world has turned to China to do the manufacturing for it then the demand for labour has soared. So much so that manufacturing wages have risen from some $1,000 a year to $6,500 a year in only a decade and a half. Simply and purely because there are now more capitalists wanting to exploit that labour, the competition to make the profits from that exploitation has raised wages.
And writ large this is the story of wages in general in the advanced countries over the past couple of centuries. A hairdresser is no more productive today than one was 100 years ago. But their wages have most definitely risen: because the employers of hairdressers have to compete with the much more productive jobs in other fields for the labour they require. Thus they must raise wages to the level paid in other industries.
I will admit to one little point of amusement here. I have above laid out something that Marx was quite clear about himself. In an era of rising productivity and competitive markets then wages will rise as a result of the competition among capitalists. On this he was indeed correct. But this very point that he was correct upon then invalidates almost everything else he said. For, if wages are going to keep rising then how can it be that the capitalists will be able to grind the faces of the poor into the dust?