An undercompensated worker may decide it’s in her interest to stop putting herself at risk – and stop delivering food and groceries, says an observer.
A positive externality is created when someone’s private behavior leads to broader social benefits. Common examples include when someone buys a hybrid car, gets vaccinated or stops smoking.A negative externality, on the other hand, is when private behavior leads to a public harm, such as pollution from a factory.
But in general they perform jobs that pay relatively little, and the workers say they lack basic protective gear such as hand sanitiser and masks that would keep them safe.Unfortunately, the free market isn’t very good at dealing with positive externalities like this – or compensating those who bear the cost. As a result, there’s a risk the people creating the public benefit will not provide enough of it.
And that means the undercompensated worker may decide it’s in her interest to stop putting herself at risk – and stop delivering food.FILE PHOTO: An Amazon delivery person walks in Times Square following the outbreak of Coronavirus disease , in the Manhattan borough of New York City, New York, U.S., March 17, 2020. REUTERS/Carlo Allegri/File Photo
Instacart and other companies, of course, are the ones paying these workers, along with fees or tips paid by consumers. The surging demand for these companies’ services suggests they should be able to afford to offer higher wages and provide the kinds of protective gear like masks and hand sanitiser that the workers need.
Essentially, the government could compensate these workers for the benefits to the public through something like a hazard subsidy and a supply of protective gear, thereby ensuring an ample supply of these workers and the services they provide during this time of crisis.A Grab delivery rider wears a face mask as he cycles on a street in Singapore, Mar 31, 2020.
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