This Week In Rideshare: Gigs, Promises, and Losses.
Gig work is up, Uber gets out, and losses pile on. LegalRideshare breaks it down.
GIG WORKERS ON THE RISE
As high-paying jobs are harder to find, workers are turning to rideshare. Business Insider reported:
The share of Bank of America customers receiving income from ride-hailing nearly tripled from less than 0.4% in March 2020 to about 1.2% as of March, exceeding pre-pandemic levels, according to a Bank of America Institute report that analyzed internal company data and was published in late April.
BofA also found that many more Americans are going “all in” on gig work. The share of gig workers who received gig income every month of the year increased from about 3% in the 12 months preceding February 2023 to 4% in the 12 months preceding February 2024 — much of this growth came from ride-hailing. Since 2022, it’s become increasingly common for gig workers not to have a traditional job, compared to those who do it as a side hustle, BofA found.
Some Americans may be turning to gig work like ride-hailing because they’ve struggled to boost their income. Job growth is slowing, job openings have fallen from record levels, and April data from the Bureau of Labor Statistics released Friday suggests it’s getting more difficult to find higher-wage employment.
UBER/LYFT LEAVE MINNESOTA ENTIRELY
Uber’s threats have turned into a promise. FOX9 reported:
After Minnesota state legislators and Minneapolis council members announced a compromise on wage legislation for Uber and Lyft drivers, the ride-hailing companies are now threatening to leave Minnesota entirely.
Previously, Lyft had only threatened to leave Minneapolis, once the pay raise ordinance went into effect, but had planned to continue service in the rest of the metro and state. Uber had said it would leave Minneapolis and potentially the entire metro because of the ordinance.
Rep. Jamie Long (DFL-Minneapolis) says the newly agreed-upon rates match rates in other states and are below rates in Washington state — where both Uber and Lyft still operate.
When asked, Rep. Long said he believes Lyft’s threats are a bluff by the company to negotiate a better deal.
UBER LOSES $646 MILLION
Uber starts 2024 with a crash. The Verge explains:
In 2023, Uber achieved an important milestone, earning more money than it spent for a full year for the first time. It was widely seen as a sign that the perennially cash-strapped business was finally on a more sustainable path.
Today, there are signs that the journey may be longer than we thought.
The ridehailing and delivery company reported a surprise net loss of $654 million for the first quarter of the year, as legal settlements and equity investments proved to be more of a drag on Uber’s business than many expected.
So why the loss? In short, legal settlements, stock holdings in other companies, and fewer rides in key markets like Latin America. All of these factors have the appearance of being unrelated to Uber’s business of delivering people and goods — but they are also extremely reflective of the company’s core business model.
It’s no secret that Uber classifies its drivers as independent contractors as a way to reduce labor costs and position itself as simply an app that connects customers to enterprising freelancers who work for multiple ridehailing and delivery companies. And yet, for years, the company has fought against attempts by local legislatures and courts to reclassify its drivers as employees and pay them better.
The company has spent tens of billions of dollars to oppose these efforts, and while it occasionally wins, it doesn’t seem to be any closer to putting the issue to rest.
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