Mar 20, 2020 - Economy & Business

The gig economy's coronavirus test

Illustration: Aïda Amer/Axios

Gig economy companies have largely dodged the costs of worker benefits and protections — but now, amid the coronavirus crisis, find themselves struggling to keep both customers and workers on board.

What’s happening: They're juggling mismatched supply and demand, and asked to alleviate everyone's financial strains.

Driving the news: Yesterday, Uber CEO Dara Khosrowshahi told investors that his firm's ride-hailing business has dropped 60-70% in Seattle so far this year compared with the same period of 2019.

  • Earlier this month, Uber said it will compensate drivers for up to 14 days if they are diagnosed with COVID-19 or asked to self-isolate or quarantine — since they don’t have paid time off as independent contractors.
  • Lyft, Instacart, and others are providing similar compensation.

This still leaves a lot of drivers worried and frustrated. They have to keep working to generate income — and fulfill consumer demand — despite the risk of getting infected by passengers.

Other firms are attempting similar balancing acts. Food delivery companies are seeing a surge in demand as people stay home and restaurants are forced to serve takeout only.

  • Drivers face the same health and financial risks.
  • Some companies are waiving certain restaurant fees, though they’re mostly focused on new eatery signups.

The clearest tension between the two sides of the marketplace is playing out at Airbnb: Travelers want refunds for their canceled reservations, but hosts want to keep the money, especially if it’s a significant source of their income.

The bottom line: These companies have spent years claiming that they are simply neutral marketplaces and that their workers and hosts are “entrepreneurs” — but leaving those people with all financial responsibility is backfiring now.

  • The firms are asking the federal government to relieve drivers, restaurants, and hosts’ economic strain.
  • Even if Uncle Sam does step in, the companies are already facing public pressure to help now.
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