Gig Companies Fear a Worker Shortage, Despite a Recession

“One of the biggest challenges in ridesharing is creating marketplace balance, making sure you have enough drivers for every rider,” Lyft’s Green said last month. “And the two respond on very different timelines.”

Then there’s an unexpected factor: The nation’s hastily constructed pandemic safety net appears to be working, leaving people less desperate. Like most Americans, gig workers received stimulus checks—one last spring, and a smaller one in January. (Another one appears to be on the way.) For gig workers who used to have other full-time jobs, states have extended unemployment insurance payments. And for the first time, gig workers—and all other freelancers—became eligible for a form of federal unemployment insurance, $600 a week.

Gig companies say they’ve felt the impact. A spokesperson for Uber says the company’s data suggests that its number of drivers available fluctuated according to unemployment insurance policies. When the stimulus hit drivers’ bank accounts, for example, fewer signed in to work on the app. Adarkar, the DoorDash CFO, told investors last month that, “on the one hand, you would have expected a large influx of Dashers as a result of heightened unemployment. But that was offset to some degree by stimulus checks.”

Research from the JP Morgan Chase Institute published in 2018 suggests that families tend to turn to online gig work, especially driving, after someone in the household loses a job and needs to supplement their income. Basically, people sign on to gig when they need extra cash.

Newer research from the institute finds that the expansion of federal pandemic assistance and stimulus check programs have given families, especially low-income families, more cash on hand than they did before. By the end of the summer, average household bank accounts held 40 percent more money than they did the year before.

“I’m not surprised that people aren’t returning to platforms, because the government has done a really good job of meeting peoples’ needs,” says Fiona Greig, the co-president of the institute. Pandemic assistance was designed to discourage workers from looking for jobs in the middle of a public health emergency. Unlike other state unemployment programs, it doesn’t demand that workers actively look for jobs while accepting payments. So for now, workers might not need to gig.

According to executives’ comments, driver supply isn’t likely an existential issue, at least in the long term. It’s also pretty simple to solve. “As a labor economist—which I am—the market response for employers who have difficulty recruiting workers is to pay higher wages,” says the New School’s Parrott. There’s some anecdotal evidence that that’s happening: Drivers in some cities—including Indianapolis, Oklahoma City, Pittsburgh, and Sacramento, California—say they’ve received emails and notifications from gig companies offering one-time bonuses if they sign on and complete a few trips. Lyft said last month that it would spend between $10 and $20 million more this quarter on driver incentives, after cutting its recruitment costs by $15 million at the end of last year.

But the question of when to encourage workers to get behind the wheel is tricky. The companies want to have lots of people signed on and ready to go once more Americans get vaccinated and are ready to resume normal-ish lives, Uber rides included.

“Bringing more drivers onto the system takes time,” Green, the Lyft CEO, said last month. “It’s a little more like steering and turning the Titanic, whereas demand can move much faster.” Don’t tell him how that one ends.


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