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.

Go deeper

Virus spread emphasizes precariousness of gig economy work

Illustration: Sarah Grillo/Axios

While a growing number of white collar companies are asking employees to work from home, gig economy companies seem to be doing little to protect workers in the face of coronavirus — though pressure is mounting for them to do more.

Why it matters: While engineers and business managers at companies like Uber and Lyft can bring their laptops home and access corporate health resources, the independent contractors who ferry passengers, hot meals and groceries, cannot. This highlights painful differences between corporate "haves" and "have-nots."

How Uber will compensate drivers affected by COVID-19

Photo: Justin Sullivan/Getty Images

Uber released more details about how it will compensate drivers affected by COVID-19, which will be based on their average daily earnings over the last six months.

Why it matters: Ride-hailing and delivery drivers are among the most vulnerable as the virus spreads, both because of the very social nature of their jobs and because they don't qualify for sick leave as independent contractors.

What's in the coronavirus bill for Silicon Valley

Illustration: Aïda Amer/Axios

There are a few provisions for Silicon Valley in the massive $2 trillion package to cushion the coronavirus' economic impact that Congress is on the brink of passing.

Why it matters: Some startups are facing layoffs and shutdowns, and millions of gig economy workers and Airbnb hosts are being strained by the sudden shift in consumer behavior.