Your Uber Driver May Never Come Back. Here’s Why.

Following the pandemic-led lockdowns, Americans struggled to pay the bills. As the government stepped in to provide extended unemployment benefits, states began reopening. But as American businesses started opening their doors, many realized that it had become nearly impossible to compete with federal aid.

With even fast-food chains offering more than minimum wage and a series of new perks to anyone who can fill in the vacancies, it is no wonder that gig economy firms like Uber and Lyft are also taking a beating.

Without enough people signing up to drive, the limited number of rides available leads to an increase in the end cost to customers. But as Uber and Lyft users are forced to deal with the long wait times and higher prices, drivers complain they are not seeing any boost in their pay.

With only red states terminating the federal jobless benefits early and many women leaving the workforce altogether, rideshare firms may continue to struggle to fill in driver vacancies. Could this spell trouble for the future of the gig economy giants?

Wrong Incentives

With lockdowns in place in 2020, people stopped traveling. Lack of in-depth information regarding how dangerous the virus was also prompted drivers to fear leaving their homes. With fewer drivers willing to take on the risks, many chose to stay home or switch to food delivery. But once America reopened and people started moving again, many drivers preferred to stick with food delivery. Others were comfortable with what unemployment benefits offered.

According to Uber, which provided free rides to vaccine spots up until July 4, most drivers are planning on coming back to work once they are vaccinated. But according to Harry Campbell, who runs The Rideshare Guy blog, drivers who moved on to food delivery are not going to return to ridesharing for a series of reasons.

“In times of Covid, there’s a lot less customer interaction with food delivery vs transporting a passenger in your backseat,” he told CNBC. “You also put less miles on your car as a delivery driver since people order from nearby restaurants vs a full-time ride-hail driver that can easily do 1,000 miles per week or more. A lot of ride-hail drivers just get tired of dealing with people too.”

By September, he added, we will know if the drivers who chose not to come back did so because of the unemployment benefits alone. It will also become clear if rideshare firms will see their female drivers come back.

As pointed out by CBSNews, the number of women who signed up for food delivery apps such as UberEats doubled between April 2020 and January 2021. And prior to the pandemic, women made up 40% of Uber’s workforce. Following the pandemic, things changed dramatically as millions of American women decided to slash their working hours or stay home full time.

Fewer Women in the Workforce: Can it Impact Rideshare Firms?

Since the beginning of the pandemic, more than 2.3 million women have left the workforce in the United States. As women continue to leave the workforce in droves well into 2021, President Joe Biden and Vice President Kamala Harris framed the issue as a national emergency.

Despite their best efforts, a growing number of female workers are now considering slowing things down.

According to a Lean In and McKinsey & Co. survey, 1 in 4 women is thinking about leaving the workforce or downshifting their careers. While covid was mentioned as the main reason why, some of the biggest challenges faced by female employees were anxiety over layoffs or furloughs, burnout, mental health, and childcare and/or homeschooling responsibilities.

If this trend continues, the rideshare industry may suffer a major blow as a greater number of women could choose to forego working outside the home.

Focusing on Driver Satisfaction is Not Enough

In order to address the shortage, both Lyft and Uber have been prioritizing their driver base.

After launching a $250 million incentive program to boost driver earnings in an effort to encourage drivers to come back, Uber CEO Dara Khosrowshahi said this is the best time for someone to earn top dollar as a rideshare driver.

“With demand currently outstripping supply,” he said, “driver earnings are at historically elevated levels.”

Lyft’s CEO Logan Green also stated that the company is doing all it can to bose drivers and their earnings, adding they expect to see a boost in their driver numbers later in the year.

“We think that in [the third quarter] and beyond, we’ll start to see some ... trends that should give us real tailwinds on the driver side,” he explained in early May.

But if drivers choose to not work with passengers any longer, they can always stick with food delivery.

Since the beginning of the pandemic, Uber Eats became Uber’s bread and butter, making up about two-thirds of the company’s gross earnings by early 2021. In the first quarter of 2019, rides were the firm’s top earner, making up about 80% of the business.

As we see new reports of covid variants hitting major US cities, rideshare giants might soon be experiencing more driver shortages.

With or without extended unemployment benefits, one thing is for sure: many are beginning to realize that the current shortage of workers means they now have bargaining privileges. And with so many weary of getting out there due to the virus, many are now confident they do not have to rely on their vehicles to make ends meet.

Chloe Anagnos is the Director of Marketing, Outreach, and Sales at the Independent Institute.
Posts by Chloe Anagnos | Full Biography and Publications
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