The incomes of independent contractors who drive for ridesharing companies like Uber and Lyft are being hit hard by the coronavirus, according to Reuters. The business model leaves drivers with no financial safety net and often little cash in reserve.
- Roughly 1.3 million people in the United States are drivers and food delivery workers.
- Demand for ridesharing has declined as much as 70 percent in some U.S. cities as a result of the coroanvirus.
- Protecting these workers would require a change to existing laws.
Driver compensation and protections are not new challenges for ridesharing. There have long been complaints from drivers that the model is unfair. Uber drivers held a one-day strike in May 2019 — days ahead of the company’s IPO — to protest low wages, according to CNBC. A story from NPR in November of the same year highlighted a protest by drivers who showed up at the homes of the company’s biggest investors to again protest unfair wages.
Drivers who come down with or are exposed to the coronavirus are offered limited financial help from Uber and Lyft. (Photo: Getty Images)
Extra help during the coronavirus pandemic
The coronavirus brings the challenges of being an independent contractor to the fore as the number of people using ridesharing declines. Both Uber and Lyft initially focused on keeping everyone healthy by instituting more comprehensive sanitizing measures and temporarily banning those who were infected or exposed.
That helped protect everyone’s health but did nothing to protect their wallets. As independent contractors, drivers aren’t eligible for sick days, but both companies changed their policies in the wake of the virus. Uber is giving drivers who are diagnosed or quarantined 14 paid sick days. Lyft followed suit, offering financial help for its drivers as well.
Those measures ease the financial pressure for drivers directly affected by the virus for a short time but do nothing to help them over the long term. This downturn in business is likely to last for months. And then there are the drivers who are healthy. They aren’t eligible for the help currently offered by either company even though their incomes are also being severely cut by the coronavirus.
What will ridesharing look like when things return to normal? (Photo: Getty Images)
The impact on future mobility
While recently passed federal aid includes coverage for the independent contractors who drive for ridesharing companies, it’s only a temporary fix. A long-term solution needs to be found. Uber sees this as an opportunity to push for changes in existing employment laws.
Uber CEO Dara Khosrowshahi recently asked legislators to create what the company calls a third way between being a contractor and being an employee. Uber sees it as a middle ground that will make it easier for more people to take advantage of independent, flexible work opportunities. Labor unions see it as just another way for Uber to get around giving its drivers the benefits they deserve.
Most benefits open to workers are tied to employment status including health insurance, sick time, and unemployment benefits. If ridesharing drivers are to be protected, the law will need to change to keep those who participate in the gig economy from falling into the existing gap in benefits.
WHY THIS MATTERS
Ridesharing plays heavily in the future of mobility. It is still a relatively new business model and one that’s facing something of a test during the coronavirus. Drivers who were okay with the lack of financial protection are now experiencing the impact of that accepted risk.
The question is whether those drivers will continue to accept that risk as the economy eventually returns to normal. Not all may be willing to once again face the financial uncertainty they face today. Both legislators and businesses will have to consider how to protect drivers if ridesharing is to continue as a vital part of future mobility.