What if I don’t have a gig driver?

“I’ve been waiting for Uber to eat in the city for over an hour because I’m told I can’t find a delivery driver. If the entire business model is based on delivery and demand exceeds supply, then more to the driver I might pay. It’s just a premonition. “

That tweet from @ thisari88 On Saturday, Uber fully summarizes the frustration that has pervaded social media accounts over the last few weeks (NYSE: UBER), Lyft (NASDAQ: LYFT), DoorDash (NYSE: Dash) And other app-based gig companies are suffering from a problem (labor shortage) that infects many sectors of the US economy in May 2021.

When the number of unemployment in April was announced by the Ministry of Labor, it was The economy added only 266,000 jobs In that month. There are an estimated 8.2 million jobs that still have to be restored to reach pre-pandemic employment levels.

As early as March, as COVID-19 vaccination rates accelerated and the economy recovered, gig economy companies began expressing concern about the shortage of drivers. DoorDash CFO Prabir Adarkar said the company is seeing an increase in orders, but not the drivers that offer it.

In the results of the first quarter of 2021, Lyft Active riders decreased by 36.4% year-on-year The number of active riders in the first quarter increased every month, increasing from 12.5 million in the third and fourth quarters of 2020 to 13.4 million. According to Uber, there were 1.45 billion trips in the first quarter, flat quarterly. The number of active drivers was 3.5 million, up 4% quarter-on-quarter, but still down 22% year-on-year.

January, settlement company daVinci Payment Published a survey of the gig economy and discovered that it actually exploded during a pandemic โ€” growing 33% to $ 1.6 trillion in 2020.

Obviously, there is demand for services provided by the country’s gig workers, but the workforce still seems hesitant to return to services.

Writing the popular Harry Campbell RideShareGuy BlogRecently wrote about what he saw as three reasons why the driver didn’t come back soon. Loans for unemployment and paycheck programs, prolonged COVID and safety concerns, and intensifying driver competition.

“Neither is useful because gasoline prices are soaring right now, but I don’t think it’s a big reason why drivers aren’t on the road. The revenue potential is actually the highest ever.” Campbell writes.

February report from ride-sharing and delivery support companies Gridwise It turns out that there are more drivers Likely to choose food delivery During a pandemic for safety reasons โ€” generally there is little or no contact.

Survey from branch, Employer payment platform, and card issuing platform Marketa Eighty-five percent of gig workers took on additional work during the pandemic, with food and grocery delivery favored by 50% of app-based workers, well above rideshare, and second with just 10%. .. The two companies said many workers chose gigwork to supplement their income or replace their lost income.

“But competition between platforms will only increase as contract work independent of the gig economy continues to grow and resumptions expand,” said branch CEO Atif Siddiqi, “free, faster and more flexible payments. The provider will be competitive. “

In the first quarter 2021 revenue report, Uber, Lyft and DoorDash all continue to see customer demand. In addition, they reported that drivers on their platform are making more than ever.

“Driver revenues are historically high as demand is currently outpacing supply,” Uber CEO Dara Khosrowshahi said in the company’s first-quarter earnings call. “The median income of all … Before the hint, it’s about $ 37 an hour in New York City and Philadelphia, $ 36 an hour in Chicago, and $ 33 an hour in Austin.

Like other economies, gig economy companies struggle to find momentum, which can negatively impact future industry growth opportunities. (Photo: Instacart)

LYFT CFO Brian Roberts said industry-wide demand is pushing up rideshare prices.

“We have increased our investment to increase the supply of drivers,” he said. “This includes onboarding new drivers and welcoming drivers who may have stopped driving during the pandemic.”

However, regaining these drivers was problematic and companies began to offer incentives.

In April, Uber announced $ 250 million.Driver stimulationWhen the pandemic-related restrictions are lifted and the rider returns, he will boost the driver in an attempt to bring him back into service. Lyft has announced a $ 800 driver referral bonus program.

“This works to bring new drivers to the platform, but one of the concerns many long-time drivers and courier companies have is the extra charge,” Campbell wrote in his blog. “In these cases, Uber in particular has provided incentives for drivers for many years (I think. $ 100 for 3 ride incentives!! But so far, this doesn’t seem to be enough. And they seem to have no incentive for those who stick it out and continue to drive throughout the pandemic. “

read: COVID did not kill the gig economy, the pandemic accelerated it

read: Uber wants to bring drivers back with an incentive of $ 250 million

As a result, there remains concern about whether there are enough drivers to meet that demand. And if not, what happens to the gig economy?

Rideshare companies are confident that the driver supply will return. John Zimmer, president, co-founder and vice chairman of Lyft, believes that food delivery drivers will return to rideshare over the years.

“It’s difficult to make an exact comparison, but historically, studies have shown that ride sharing represents higher revenue opportunities than food delivery,” he said in a phone call about Lyft’s first-quarter revenue. .. โ€œRideshare also offers a radically different experience of social interactions that are rarely found in food delivery. This is important. A year after social distance, drivers have these face-to-face conversations. They say they are anxious to miss the friendships and meaningful interactions they have while using Lyft, and that the taste of this brand enhances our competitiveness. believe.”

Logan Green, CEO and co-founder of Lyft, said he believes that more drivers vaccinated with COVID-19 will make it more comfortable to return to work.

“I think it will really change many kinds of health and safety sensations about driving,” he said.

Green brought in an additional $ 300 a week federal unemployment allowance offered. These will be discontinued in the third quarter. In fact, many states have already announced rollbacks of enhanced perks.

In addition, Congress moved quickly Support the unemployed During the COVID-19 pandemic, gig workers and self-employed people will be eligible for benefits for the first time.Introduced by Senator Ron Weiden (D-Oregon) and Michael Bennett (D-Colorado) Unemployment insurance modernization law It will codify that exemption, but for now, access to gig worker unemployment benefits will be lost later this year.

What happened to gig workers in 2020?Gridwise Report Tells a Story

Click to read

Most gig economy companies forecast strong performance by 2021, but continued driver shortages can impact revenue. Most people seem to rely on higher vaccination rates and incentives to bring drivers back to fold, in addition to historically higher rideshare payments compared to food delivery.

โ€œIt’s a really great time to introduce new drivers into the system,โ€ said Roberts of Lyft. “Once again, in the early stages of the pandemic, I think we can get the help of an organic supply in that drivers who didn’t feel very safe before vaccination came back. .platform.”

“We are actually seeing drivers driving less food and more people because of the high demand for people. [and] Revenue opportunities are higher than they are now, “said Khosrowshahi. “And whether it’s a new driver on the platform or a driver telling us to come back because of a resurrection opportunity, there’s a promising connection to more drivers coming back. There are some signs. High. “

If Uber and Lyft are hoping to reach their financial goals in 2021, a driver return is essential.

Click to see more Modern Shipper articles by Brian Straight.

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