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6 min read

    6 min read

    The stimulus bill, designed to help the economy in the midst of this global pandemic, was recently signed into law. How will it affect drivers and other gig economy workers? Senior RSG contributor John Ince breaks down what drivers are experiencing during this time, plus how Uber and other companies are handling the coronavirus news, and more below.

    Uber wants more protection for drivers, but it still doesn’t want them as employees  [Quartz]

    Sum and Substance:  Uber CEO Dara Khosrowshahi sent a letter to US president Donald Trump today, asking him to ensure that Uber’s drivers are included in the economic stimulus plans in response to coronavirus.

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    “My goal in writing to you is not to ask for a bailout for Uber,” wrote Khosrowshahi, “but rather for support for the independent workers on our platform and, once we move past the immediate crisis, the opportunity to legally provide them with a real safety net going forward.”

    The plea included a promise that the ride-hailing giant “know[s] we need to do more.” But it hardly concedes the point that Uber has been making to judges, regulators, and legislators around the world for years: that Uber drivers are not Uber employees.

    My Take:  The final legislation had protections for gig workers in it.  That’s a major shift, and it changes the entire landscape of being a driver.  The details have to be worked out, but now we’ve got a basis on which to proceed.

    NYC is offering to hire out-of-work Uber and Lyft drivers  [The Verge]

    Sum and Substance:  New York City is offering to hire out-of-work Uber and Lyft drivers, and it’s even promising to reimburse them for their driving expenses. The appeal comes at a time when many drivers are seeing their earnings dry up amid the novel coronavirus pandemic.

    In an email, the city’s Taxi and Limousine Commission said it is seeking drivers “to help the City of New York with important work related to COVID-19,” the disease caused by the novel coronavirus. The work would include delivering food to homebound senior citizens.

    My Take:  This makes perfect sense.  Kudos to TLC for taking this action. It’s probably not that many drivers, but for those who do it, it will certainly help.

    Drivers Say Uber and Lyft Are Blocking Unemployment Pay  [NYTimes]

    Sum and Substance:  States like New York and California have made gig workers eligible for jobless benefits and sick days. But the companies have resisted complying. … In a typical week, Jerome Gage, a Lyft driver in Los Angeles, makes $900 to $1,000 before expenses during roughly 50 hours on the road. This week, with most of the state holed up and demand for rides evaporating, he expects to work even longer to make far less than half that amount.

    Given the option, Mr. Gage said, he would stop wasting his time and risking his health and file for unemployment benefits. But unlike workers employed by restaurants, hotels and retail establishments, gig workers like Uber and Lyft drivers typically have not been able to collect unemployment benefits or take paid sick leave…

    The stalemate has set up a showdown with increasingly desperate drivers. On March 11, Shannon Liss-Riordan, a Boston-based plaintiff’s lawyer who has won rulings against Uber and Lyft over the employment status of drivers, filed complaints seeking to force the companies to follow the state’s new law immediately, giving drivers access to unemployment benefits and sick days. … Her complaints are pending in federal court. …

    My Take:  This seems pretty clear to me: the companies aren’t complying with the law. Right now, they’re so big they can get away with it.  But sooner or later they will have to pay the piper – unless they get the law overturned. We’ll find that out later this year – virus willing.

    Can Uber Become Profitable This Year? Deep-Dive Analysis  [Forbes]

    Sum and Substance:  Uber burns over $4 billion annually yet the company is stating it will be profitable by the end of 2020. Further analysis is required to look deeper into whether Uber is able to accomplish what it has promised or if the company is buying time and appealing for a more promising valuation before it has to raise more cash. The latter is something Uber is incredibly skilled at as the company now trades well below its last private valuation of $76 billion with a current market cap of $35 billion.

    Despite the coronavirus causing the company to cut back operations nation-wide with declines of up to 80% in ride-sharing volume, Uber is receiving analyst upgrades based on the company’s variable cost structure. These analyst upgrades come despite slowing growth and $7 billion in debt on the balance sheet while being deeply unprofitable with record-setting adjusted net losses of $4 billion in 2019…

    In 2017, Reuters published that Uber passengers pay only 41% of the actual cost of their trips, citing research from transportation consultant Hubert Horan. At the time, Reuters warned that this creates an “artificial signal about the size of the market” after Uber had released limited financial data as a private company that showed losses of $708 million per quarter. …

    My Take:  This article isn’t quite fair since Uber’s statement about profitability was made before the whole virus thing hit. Nevertheless, the analysis seems spot on.

    Uber isn’t going to become profitable any time soon.  Part of that will be the virus and part will be the underlying economics.

    Uber drivers are being forced to choose between risking Covid-19 or starvation  [TheGuardian]

    Sum and Substance:  By defying the law to refuse their workers’ basic benefits, the giants of the gig economy are creating a heartbreaking crisis …

    For the last week, Ahmed, a driver for Uber and Lyft, has faced a heartbreaking choice: starvation or sickness.  Ahmed has four kids, ages 11, eight, five and three. He lives with them, his wife and his elderly parents in San Francisco. He provides his family’s sole source of income, but even though he works 60 or more hours a week, he has only 56 cents in his bank account. …

    The choice he faces is cruel and unfair. It’s also supposed to be illegal  …

    My Take:  This is a great article that hits the whole situation right in the middle.  How can drivers make a living in the midst of this virus? They have a choice to make – drive or stay home and do nothing.  If they drive, they risk catching the virus with all that entails.

    For the first time, Uber drivers and other gig workers would qualify for unemployment insurance as part of the Senate’s $2 trillion coronavirus stimulus bill  [BusinessInsider]

    Sum and Substance:  The Senate’s $2 trillion coronavirus economic bailout bill includes help for gig-economy workers, like Uber and Lyft drivers, who have seen their livelihood dissolve during the coronavirus crisis. For the first time, these workers would qualify for unemployment insurance…

    A provision in the Senate’s coronavirus stimulus bill, under a section called Pandemic Unemployment Assistance, makes contractors, freelancers, and other self-employed workers finally eligible for unemployment insurance….

    It isn’t wholly clear yet how much money a week gig workers would qualify for, but the bill, which passed the Senate late Wednesday, says the amount should be equivalent to what they would have gotten from their state unemployment programs if they were a full-time employee who qualified for regular unemployment insurance. …

    My Take:  This is a major victory if it becomes law.  For drivers to get unemployment – that will totally change the game.  How much they get is yet to be determined, but with this provision, it’s a whole new ball game.

    Readers, what do you think of this week’s roundup?

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    -John @ RSG

    John Ince

    John Ince

    John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Uber and Lyft.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all - For a sneak peak visit the link above.