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The Uncertain Future of Uber and Lyft


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    I remember at one time I considered becoming an Uber or Lyft driver to make some extra money. I knew my city well, and I had a sizable vehicle to boot. Now, I'm seeing both Uber and Lyft drivers struggling just as much as other gig workers. It's not surprising, but the numbers are more drastic than I thought they would be.

    Due to the economic downturn following the quarantine, Uber has laid off 3,700 employees, which is nearly 25% of it's workforce. They also closed one of their major offices in San Francisco. Lyft, has laid off 1,000 employees. To break down exactly why this is happening, it's not only because there are less people looking for rides in the city in general, in some instances it's because there being a lack in tourism, and events such as concerts. Rideshare drivers make a lot of their money from driving people to and from concerts and events, and since that isn't really going on anymore, they've lost a big chunk of their income. Many rideshare drivers are unemployed and still struggling to get unemployment benefits.

    In California for instance, they were able to pass a new law that required companies to reclassify contract workers as employees. Uber, and Lyft, however, have not as of yet complied with the law. According to UC Berkeley Labor Center, both Uber and Lyft should owe the state of California $413 million in unemployment insurance taxes. Instead of contributing, both rideshare companies have given $60 million to a proposed ballot initiative that would exempt them from the gig worker law in California. This is just one state we are talking about here. New York State is being sued by Uber and Lyft drivers for not providing them with unemployment benefits in a timely fashion.

    It doesn't look like rideshare driving will be a lucrative way to make money anytime soon. The food delivery companies seem to be doing well enough though. I could see one of the two giants of the rideshare world going under, or at least filing for bankruptcy. It used to be a popular idea to drive for money, but has the bubble popped for good?

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    I wouldn't say for good. But definitely for the time being. I think in time things will get back to relative normalcy and the need for Uber and Lyft will still be there, just as much as ever. But I do think both companies have to successfully weather this storm in the meantime. And seems like Lyft will have a harder time than Uber, just because they are smaller and less well known.

    Concerts and events are a big loss. But my first thought was people coming and going from bars. Uber/Lyft has become basically the ultimate stand in for what we used to call the 'designated driver'. But with bars being shut down for months, it makes sense that these rideshare apps are struggling mightily.

    Also rides to and from airports.

    At least Uber has Uber Eats, their food delivery service. So they are better diversified over Lyft. Unless Lyft has that too? Also Uber does carrier services, like package deliveries. So given that, I think Uber will be OK (not great but OK) after things rebound.

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    It's truly shocking how quickly these "gig" jobs went from being a decent source of guaranteed income to vanishing basically overnight. I've read some about drivers turning to food delivery apps, but I doubt they are making as much as they were before the economic downturn because people tend to tip based off how much they spent and a trip to the airport (or some other longer distance) would undoubtedly get most drivers a larger tip than a McDonald's delivery.

    I have a feeling it's going to be quite some time before either of these companies return back to some form of "normal."

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    Old Sport Wrote:

    It's truly shocking how quickly these "gig" jobs went from being a decent source of guaranteed income to vanishing basically overnight. I've read some about drivers turning to food delivery apps, but I doubt they are making as much as they were pre-pandemic because people tend to tip based off how much they spent and a trip to the airport (or some other longer distance) would undoubtedly get most drivers a larger tip than a McDonald's delivery.

    I have a feeling it's going to be quite some time before either of these companies return back to some form of "normal."

    Agreed. Perhaps they will find another business model that is more flexible. Or, I'm thinking new companies will sprout up from this, having learned the mistakes of the two companies that started the rideshare industry.