COVID-19 & The Gig Economy

I spent the last week in South Africa with a group of girlfriends from my MBA program. When we left, the US — for the most part — had yet to implement any sweeping or drastic responses to combat coronavirus’ spread. This changed during the last couple of days of our trip — we received notice that the remainder of our school year would be administered online (including exams) in addition to a slew of global travel bans.

The repercussions of the virus, for us, are clear. However, many members of our economy are more silently affected, such as hourly and “gig” workers. Take Uber and Lyft drivers, for example.

Coronavirus’ ultimate effect on rideshare demand is still unclear. On one hand, concerns around utilizing public transportation may cause spikes in rideshare demand. On the other hand, it’s highly likely that as large-scale events continue to be canceled, airport travel decreases, and companies implement “work from home” restrictions, rideshare demand will follow suit, and decline as well. Some sources are already reporting that “rides are down about 50 percent compared to a normal week.”

Many drivers, concerned about potential demand declines, are compensating by increasing their daily driving hours. (When we returned to the U.S, our Uber driver from the airport essentially fell asleep at the wheel. He apologized, letting us know he drove straight through the night for fear of potential upcoming demand shortages.) This fear, and recognition, of rider shortages is echoed by many drivers in online driver communities. Reddit’s subchannel for Uber drivers’ is riddled with comments about rider declines, and concerns around the ability to make ends meet while the outbreak persists. One driver from LA reported that “the virus has absolutely obliterated demand.”

Rideshare drivers are also grappling with the fear of contracting coronavirus from passengers. The virus is more likely to be fatal for elderly individuals, and a quarter of Uber’s drivers are over the age of 50. Additionally, the average Uber driver transports 20+ passengers daily, directly contradicting all public suggestions to practice social distancing. Furthermore, while many drivers would like to avoid helping with passengers’ bags, opening doors, or performing other gestures that increase contact, they’re fearful of the effects of doing so on their ratings.

Uber has not historically provided drivers with benefits or healthcare, given that drivers are classified as independent contractors, not full-time employees. However, Uber has agreed to pay drivers that contract the virus for two weeks of work while self-quarantined. While seemingly a step in the right direction, drivers can only be compensated if they obtain written proof from a medical professional that they’ve tested positive, which may be a challenge given the shortage of medical tests thus far.

Ultimately, coronavirus presents drivers — and other gig workers — that have been denied benefits, such as paid sick leave, with a potential moment to band together and leverage their collective power. The fear and spread of coronavirus illuminate that denying gig workers paid sick leave only puts gig workers and their communities at risk.

MBA Candidate @ Wharton | Investing @ Flybridge, X-Factor Ventures, and The MBA Fund | Previously @ Underscore VC, WeWork, and Plum Alley Investments

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