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Gig WorkersModern ShipperNewsRecent NewsTechnologyTop Stories

What if there are no gig drivers?

Like many companies, gig economy companies are struggling to find drivers as passengers, deliveries ramp up

“I’m so over hour long waits in the city for Uber eats, because they say they can’t find a delivery driver. Ummm if your whole business model is based on delivery and your demand is exceeding supply, maybe pay your drivers more? Just a hunch.”

That tweet from @thisari88 on Saturday perfectly sums up the frustration that has been percolating through social media accounts in recent weeks as Uber (NYSE: UBER), Lyft (NASDAQ: LYFT), DoorDash (NYSE: DASH) and the rest of the app-based gig companies struggle with a problem that is infecting many sectors of the U.S. economy in May 2021 — a lack of workers.

When the April unemployment numbers were released by the Department of Labor, it showed employers across the economy had added just 266,000 jobs in the month. There are an estimated 8.2 million jobs still to recover to reach pre-pandemic employment levels. 

As early as March, the gig economy companies started expressing concern about a lack of drivers as COVID-19 vaccination rates accelerated and economies opened back up. DoorDash CFO Prabir Adarkar said the company was seeing an increase in orders but not the drivers to deliver them.

In its Q1 2021 results, Lyft said that while active riders fell 36.4% year-over-year to 13.4 million, that was up from 12.5 million in Q3 and Q4 2020 and each month in Q1 active riders increased.  Uber said trips taken in Q1 were 1.45 billion, which was flat quarter over quarter. Active drivers increased 4% quarter-over-quarter to 3.5 million, but that was still down 22% year-over-year.

In January, payments firm daVinci Payments released a survey of the gig economy and found that during the pandemic, it actually exploded — growing 33% to $1.6 trillion in 2020.

Clearly, there is demand for the services provided by the nation’s gig workforce, but that workforce still seems reluctant to jump back into service.

Harry Campbell, who writes the popular RideShare Guy blog, recently wrote about what he saw as the three reasons drivers were not returning quickly — unemployment assistance programs and Paycheck Protection Program loans, lingering COVID and safety concerns, and more competition for drivers.

“Gas prices aren’t helping either since they’re spiking right now, but I don’t think it’s a big reason why drivers aren’t hitting the road. Earning potential is actually at an all-time high right now,” Campbell wrote.

A February report from rideshare and delivery assistance company Gridwise found that drivers were more likely to choose food delivery during the pandemic for safety reasons — it is generally little to no contact.

A survey from Branch, an employer payments platform, and card-issuing platform Marqeta found that 85% of gig workers picked up additional work during the pandemic, and meal and grocery delivery was preferred by 50% of app-based workers, far outpacing rideshare, which came in second at just 10%. The companies said many workers chose gig work to supplement income, or to replace lost income.

“But competition among platforms will only increase as the gig economy and independent contract work continue to grow and reopenings widen,” said Branch CEO Atif Siddiqi, adding that companies offering “faster, flexible payouts at no cost will gain a competitive edge.”

In their Q1 2021 earnings reports, Uber, Lyft and DoorDash all reported customer demand continues to grow. In addition, they reported drivers on their platforms were making more than they ever have.

“With demand currently outstripping supply, driver earnings are at historically elevated levels,” Uber CEO Dara Khosrowshahi said on his company’s Q1 earnings call. “Median earnings for all … before tips are around $37 an hour in New York City and Philadelphia, $36 an hour in Chicago, and $33 an hour in Austin, just to name a few cities.”

Like the rest of the economy, gig economy companies are struggling to find drivers, and that could have a negative impact on the growth opportunity for the industry moving forward. (Photo: Instacart)

LYFT CFO Brian Roberts said industrywide demand is driving up prices for rideshare.

“We’ve been increasing investments to grow driver supply,” he said. “This includes onboarding new drivers and welcoming back drivers who may have stopped driving during the pandemic.”

Getting those drivers back, though, has been problematic, and has led the companies to offer incentives.

In April, Uber announced a $250 million “driver stimulus” boost in an attempt to lure drivers back to the service as pandemic-related restrictions are lifted and riders return. Lyft announced an $800 driver referral bonus program.

“This will work to recruit new drivers to the platforms, but one concern many long-time drivers and couriers have is additional pay for themselves,” Campbell wrote in his blog. “In these cases, Uber in particular has offered long-time drivers incentives to hit the road (I even took the $100 for 3 rides incentive!), but so far it’s looking like this isn’t enough yet. And they don’t appear to have incentives for those who have stuck it out and continued driving throughout the pandemic.”


Read: COVID didn’t kill gig economy, the pandemic accelerated it

Read: Uber hopes to lure back drivers with $250M in incentives


As a result, concern remains about whether there will be enough drivers to meet that demand. And if there isn’t, what happens to the gig economy?

The rideshare companies remain confident driver supply will return. John Zimmer, president, co-founder and vice chair of Lyft, believes drivers handling food delivery will transition back to rideshare as the year goes on.

“While exact comparisons are difficult, historically, studies have shown that rideshare represents a higher earnings opportunity than food delivery,” he said on Lyft’s Q1 earnings call. “Rideshare also offers a fundamentally different experience with social interactions that are largely absent from food delivery. This is important. After a year of social distancing, drivers are telling us they crave these in-person conversations. They miss the camaraderie and meaningful interactions they have while using Lyft, and we believe this brand preference bolsters our competitive positioning.”

Logan Green, Lyft CEO and co-founder, said he believes as more drivers get vaccinated against COVID-19, they will become more comfortable returning to the workforce.

“I think that’s really going to change a lot of the kind of feelings of health and safety around driving,” he noted.

Green did bring up the added $300 per week federal unemployment benefits being offered. Those are set to sunset in Q3 — and in fact, many states have already announced rollbacks of the enhanced benefits.

In addition, Congress moved quickly to support unemployed workers during the COVID-19 pandemic, allowing gig workers and the self-employed to qualify for benefits for the first time. Sens. Ron Wyden, D-Oregon, and Michael Bennet, D-Colorado, introduced the Unemployment Insurance Modernization Act that would codify that exemption, but as of now, access to unemployment benefits for gig workers will disappear later this year.


What happened to gig workers in 2020? Gridwise report tells the story


Click to read

Most of the gig economy companies are predicting strong finishes to 2021, but if they continue to see driver shortages, that could impact their bottom line. Most seem to be banking on historically higher rideshare pay compared to food delivery as well as increased vaccination rates and incentives bringing drivers back into the fold.

“It’s a really great time to bring new drivers into the system,” said Lyft’s Roberts. “And again, I think we’ll get some organic supply help just in terms of drivers who come back, who maybe just didn’t feel super safe in the earlier parts of the pandemic before they got their vaccines to be giving rides on the platform.”

“We’re actually seeing our drivers drive less food and more people because the demand for people is higher [and] the earnings opportunities are higher now,” Khosrowshahi said. “And we are seeing encouraging signs as it relates to more drivers coming back on, whether they’re new drivers that we’re recruiting to the platform or drivers that we’re resurrecting and telling them to come back because their earnings opportunities are so high.”

If Uber and Lyft expect to reach their financial targets in 2021, the return of drivers is an imperative.

Click for more Modern Shipper articles by Brian Straight.

You may also like:

COVID didn’t kill gig economy, the pandemic accelerated it

What happened to gig workers in 2020? Gridwise report tells the story

Uber hopes to lure back drivers with $250M in incentives

Brian Straight, managing editor, Modern Shipper

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and fleetowner.com. Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at bstraight@freightwaves.com.

5 Comments

  1. Anyone have a clue on the cost to own a vehicle? I see the same in trucking, they pay great, until everyone gets a pound of your flesh! Buying fuel and having enough left over for a carton of smokes and food, is not a model that is going to go anywhere. I am leaving my current carrier for that very reason, their initials are LS, and at the end of the day, they take 50%, I still have to buy fuel, then throw in the ELD, that is 30% right off the top! And their agents, many of whom I cannot understand, and they are always yanwing like I just woke them up at noon… If I can get a hold of anyone! This is what happens when you get eggheads and greedy bastards running a business. They think short term, not long term. Idiots, let them go under. I’m done.

    1. I currently work for Door dash and I can tell you as a full time driver delivering food for over 12hours a day used to be good pay 7 days a week back in march. But now in almost end of May I cant afford a simple houses payment of $700 a month. Its not lack of drivers in my area its lack of orders. I am unable to work a traditional job due to medical reason this was helping pay bills. Now I dont know how too. I find it shameful that the people who own a business get millions while those who actually work cant afford normal life.

  2. Uber speaks of these hourly rates drivers are making. I drive in Little Rock Arkansas and have not seen these hourly rates at all. NEVER. Absolutely no incentives. In fact, at the height of the pandemic, Uber cut all incentives out. Surges are now $1-3.,if your luck to get them. Short rides, 5 minutes or less was $3. Now $2.98. I drove throughout most of the Pandemic and still driving and….have not seen any bunoses/stimulus/pay increase from Uber. In fact making less now. Riders are often 10 to 20 miles away, for a quick 2 to 5 minute trip. And most dont care to tip. This week, after driving 22 hours. I made $387. Deducted $150. For gas. I made $10.77 an hour. And so it’s been for months.

  3. In Ontario Canada too many delivery drivers Uber and others using homeless shelters as a home base. Too many truck drivers also got sick after pushing with E logs the best solution is a minimum wage for gig and taxi drivers of $15.00 U S or $18.00 cd plus mileage for gig drivers. All trucks over 66,000 lbs or 30 passengers in Canada should make at least $24.00 cd for local work. O T R should make $28.00 cd or $24.00 us plus a medical care plan. Costco is paying warehousing employees $22.00 us plus medical. My friends daughter got a job in a bank in Detroit at $23.00 us per hour plus medical. We need to increase pay for all drivers and get them medical care.

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