Transportation Network Companies
What We’re Seeing Now:
TNC ridership decreased dramatically as a result of COVID-19, although numbers have been ticking up as cities loosen restrictions. At the height of the shutdown, Uber reported an 80% decline in ride bookings in April compared to 2019. Lyft’s ride volumes decreased by 70% the first week of May and 75% in mid-April, compared to the previous year.
- NPR: How Uber And Its Riders Are Adapting To The New 'Social' (06.10.20)
- The Wall Street Journal: Uber Cuts 3,000 More Jobs, Shuts 45 Offices in Coronavirus Crunch (05.19.20)
- New York Times: Uber and Lyft Are Searching for Lifelines (04.17.20)
Both Uber and Lyft have offered free or reduced cost rides during the COVID-19 pandemic. Uber announced they would provide 10 million free rides and delivery trips to healthcare workers, seniors, first responders, and other people in need. Similarly, Lyft donated thousands of rides through their LyftUp initiative which provides meal and grocery deliveries to families with children, low-income individuals, seniors, and other at-risk groups and transportation to work for doctors and nurses. Lyft also announced they would provide most US and Canadian customers an option for a reduced fare in exchange for a longer wait time, known as the “Wait & Save” option.
- The Verge: Lyft's 'Wait and Save' rides offer a cheaper fare for essential trips (05.05.20)
- Lyft: Supporting Our Community (03.20.20)
- Uber: Committed to helping
TNCs Uber and Lyft laid off significant portions of their workforce. By mid-May, Uber had cut roughly 27% of their workforce, roughly 7,700 employees. Lyft announced they would lay off approximately 900 employees, 17% of staff, in late April 2020. (Drivers are considered independent contractors by the companies and are therefore not included in these figures.)
- The Information: Uber Cuts 3,000 More Jobs, Bringing Total Workforce Reduction to 27% (05.18.20)
- The Washington Post: Lyft to lay off 17 percent of staff as coronavirus takes toll (04.29.20)
The increased demand for deliveries combined with public health guidance for limiting contact with people has led to more and more drivers transitioning to meal and grocery delivery services. With dine-in options still limited in many parts of the country, more and more people are ordering meals and groceries delivered to their homes. UberEats, Uber’s meal delivery service, experienced a 30% increase in customer sign-ups in March 2020. Uber announced that almost 40% of its rideshare drivers in the United States and Canada signed up to drive for its Uber Eats service in April 2020.
- New York Times: See Which States and Cities Have Told Residents to Stay at Home (04.20.20)
- Forbes: Uber Eats Demand Soars Due To COVID-19 Crisis (03.25.20)
Uber and Lyft’s financial assistance programs have raised equity concerns. Both Uber and Lyft announced they would provide paid sick leave for drivers who contacted COVID-19 or were ordered to quarantine by a medical professional. However, their specific policies for compensation eligibility drew criticisms. For example, drivers who have high insurance deductibles face financial barriers in seeing a doctor and getting the required note. Further, an Uber driver reported to Business Insider that Uber refused to provide him with sick pay because he had a pre-existing health condition.
- CityLab: The Human Cost of Calling an Uber Right Now (03.24.20)
- The Verge: Uber expands sick pay for drivers during coronavirus pandemic (03.16.20)
- Business Insider: More than 1,000 Uber and Lyft drivers told us they're putting their lives at risk to make just $2.50 an hour with meager support from the companies themselves (03.07.20)
TNC drivers face considerable risk of exposure to COVID-19. TNC drivers have been exposed to COVID-19 while providing rides, and it is likely that some drivers unintentionally exposed passengers to the virus. In one case, a school in Connecticut used an Uber to send a student home who tested positive for COVID-19. A number of Uber, Lyft, and other TNC drivers have died from the virus, and some of their families believing they contracted the virus while working. To mitigate the spread of the virus, Uber and Lyft now require both passengers and drivers wear face coverings to comply with CDC guidance.
- New York Post: Uber driver who stopped working to avoid coronavirus dies from disease (03.25.20)
- New York Times: Party Zero: How a Soirée in Connecticut Became a ‘Super Spreader’ (03.23.20)
- Forbes: ‘He Was Coughing Up Blood:’ Uber And Lyft Drivers Face Illness And Confusion Amid COVID-19 Outbreak (03.17.20)
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted by Congress in March 2020, provided much-needed relief to TNC drivers by extending eligibility for federal unemployment benefits through the Pandemic Unemployment Assistance fund. In most states, TNC drivers and other “gig workers” are left without a safety net because they are considered independent contractors and are not entitled to workers’ compensation, health care benefits, sick pay, and do not typically qualify for unemployment benefits.
The State of California sued TNCs Uber and Lyft for violating Assembly Bill 5, claiming that Uber and Lyft did not correctly classify their workers and wrongfully denied the drivers minimum wages, overtime pay, sick pay, and did not contribute to the state’s unemployment insurance pool. Researchers at UC Berkeley found that Uber and Lyft could owe the State of California as much as $413 million in state unemployment insurance taxes from 2014 to 2019. The California Public Utilities Commission, which regulates Uber and Lyft, released an order in June upholding the state law and said that drivers will be classified as employees.
- UC Berkeley Labor Center: What would Uber and Lyft owe to the State Unemployment Insurance Fund? (05.07.20)
- The New York Times: California Sues Uber and Lyft, Claiming Workers Are Misclassified (05.05.20)
Potential Long-term Issues and Questions:
Will we continue to see increases in ridership as stay-at-home orders are lifted? Will people who can afford to shift their travel behavior from transit to TNCs in order to minimize the exposure to others they face when commuting? What will happen to shared rides? One of the first steps Uber and Lyft took to protect drivers and customers from spreading COVID-19 was to discontinue shared rides in the United States and Canada, which were more affordable than the standard ride option. It is unclear when TNCs will restart shared ride programs on their platform.
Will TNCs be able to stay in business if the stay-at-home orders persist? Both Uber and Lyft withdrew their financial guidance for 2020, which includes profit and revenue forecasts for the year. According to The Information, Uber’s global gross bookings fell by 80% year-over-year and Lyft’s business fell by 75%. Uber and Lyft struggled with profitability before the pandemic and it is unclear how they will adapt to make up for lost revenues. Will TNCs increase pricing? Offer new services?
- TechCruch: Uber withdraws 2020 guidance (04.16.20)
- The Information: Uber’s Bookings Now Down 80% (04.21.20)
- Bloomberg: Lyft Pulls 2020 Forecast, Following a Similar Move by Uber (04.21.20)
Will drivers continue to drive for TNCs under the existing employment model knowing the risk and uncertainty they faced during the COVID-19 pandemic? Conversely, if people struggle to find jobs after stay-at-home orders are lifted will more people sign up to drive?
Will people be able to afford TNCs moving forward? There are concerns that TNCs will need to increase fares in the future. If they do this, who will be able to afford to take TNC trips? Will individuals with more health concerns switch to TNCs instead of taking public transit? Lyft found that 40% of rides in the United State begin or end in a low-income area. How will low-income individuals be affected by potential increases in fare and decreases in ride availability?
Will more states pass laws extending employee status to drivers, providing them with a safety net? The lack of traditional unemployment benefits, sick pay, worker’s compensation, and minimum wage leave TNC drivers particularly vulnerable to the impacts of economic downturns. Will other states follow California’s lead in classifying TNC drivers as employees?