The gig economy's coronavirus test
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.
- Lyft announced it’s offering on-demand delivery of medical supplies and meals to seniors to provide more work for drivers.
- Because the transactions will be contactless, they'll ostensibly be somewhat safer.
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.