Inflation helps big companies like Uber and hurts their workers


Debbie Welker quit her job as a delivery driver for Shipt and Instacart in Dallas earlier this year because gas prices were severely undercutting her earnings.

She would work 12 to 14 hours a day, seven days a week, to earn about $1,200, but then would have to use some of that to pay for gas and other expenses. People stopped tipping, or paid between $2 and $5 for an hour of shopping, something you think was affected by inflation. “After the deductions, I was making less than minimum wage for the hours I worked or sitting in a parking lot waiting for an order,” added Welker, who started during the pandemic.

Inflation is putting new pressures on a growing workforce of casual workers serving food and driving passengers and performing other tasks on technology platforms that have so far weathered the unstable economic climate relatively unscathed. This group of people, many of whom do part-time work or even to supplement income with a second job, has grown into a large part of the workforce over the past decade, building on promises of flexible work with high pay.

But workers now say that while fees and prices for consumers are rising, they themselves are struggling to make ends meet, according to dozens of temporary job workers who spoke with The Washington Post. Meanwhile, companies say more drivers are joining the apps as a side business to fight inflation, which temporary job workers say increases competition for jobs out there.

If a serious downturn occurs, as many economists expect, temporary job workers may be particularly at risk. The influx of new unemployed workers switching to temporary work platforms can compete with those already in place, eroding some opportunities to steadily earn money through applications.

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“With the big influx of workers, people are going to get fewer shifts and fewer gigs,” said Erin Hatton, a professor at State University of New York at Buffalo who studies labor and labor economics. “This will generally have significant negative consequences for the workers already present and the workers to come. There will be a limited amount of work.”

Executives at Uber, Lyft and DoorDash all said during recent earnings calls that economic pressures have had a positive side for their companies, bringing those seeking additional income to their platforms. Uber CEO Dara Khosrowshahi said more than 70 percent of new drivers who joined the app said inflation was one of their reasons. New driver registrations in the United States have increased by more than 75 percent in more than a year.

“Nobody wants a tough economic environment or high inflation that affects many of us, including Uber drivers, but at the same time, from a competitive point of view, there is no doubt that this operating environment is stronger for us,” Khosrowshahi said.

Lyft executives, in their latest earnings call, said Lyft also has a strong supply of drivers, with the total number of active drivers hitting the company’s highest figure in two years. Lyft CEO Logan Green said on the call that the recession could also lead to an influx of new drivers.

The “freelance economy” is a loose term for the ecosystem of technology platforms and informal networks that connect freelancers to segmented jobs.

Millions of Americans have found segmented work as independent contractors for decades, but the rise of companies like Uber, Lyft, and DoorDash has made it easier for people to find gig work easily. Many are using the platforms to earn extra cash between working full-time or part-time, while others have driven for Uber or connected their full-time work to DoorDash.

For companies, the dynamics results in a flexible, on-demand workforce made up of workers who are not normally subject to employee wage requirements, job protection, or benefits such as health insurance. This means that workers are cheaper and companies are not obligated to provide them with work. Even retail giants like Amazon and Target have their own workforce, with Flex and Shipt, respectively.

Workers and activists have fought for years for better protection for temporary job workers, who have to provide their cars and equipment to work, and do not receive health insurance or other benefits from work companies.

Uber spokeswoman Alex Anfang and Uber spokeswoman Katie Kim said the influx of drivers speaks to the companies’ attractiveness. They also both reported earnings rates that rose significantly year-over-year, with the percentage increasing from double digits, both to the same rate of $37 per hour of riding.

DoorDash said in a recent letter to shareholders that its flexibility in the current environment makes it an attractive option. Instacart Director, Shopper Engagement Manager, Natalia Montalvo, and Shipp spokeswoman Danielle Schumann said the two companies have worked to help shoppers balance gas prices. Instacart has also updated the app to encourage top tips.

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Some sectors, such as food delivery and the taxi industry, have been overturned by work platforms. Restaurants used to hire their own delivery drivers as part-time or full-time workers, but now apps like DoorDash, Seamless, and Uber Eats handle a lot of the food delivery business in major cities. The taxi industry in most cities across the country has also been hit by the rise of Uber and Lyft.

According to a 2021 survey from the Pew Research Center, 16 percent of Americans have used an online platform to make money through big business. Hispanics and low-income people, as well as people under the age of 30, were more likely to do gig work, according to the Pew Center. Furthermore, 7 percent of all low-income adult Americans said that temporary work was their main job during the previous year.

It is unclear whether a recession is coming or not. The unemployment rate is low, but the government incentives that helped many cope with the pandemic have dried up. Rising prices have prompted many Americans, especially those on lower incomes, to focus their spending on gas, food, and other necessities. That has caused some major companies, including Walmart and Best Buy, to warn investors that sales are starting to falter.

Tech companies are still cutting billions of dollars in revenue but are beginning to freeze hiring and warn of a recession, telling their employees they will need to work harder and be more productive. Cracks are forming in an otherwise strong economy.

On Friday, the Bureau of Labor Statistics said the economy added 528,000 new jobs in July, slowing expectations of a much smaller number. The unemployment rate is now 3.5 percent, the same as it was before the pandemic began in February 2020. The strong job numbers contrast with slowing consumer spending in some areas and the fact that the economy has generally contracted slightly so far this year.

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While companies say they are increasing wages, some workers say otherwise. “It doesn’t take a calculator to figure out that the expense increase exceeds the alleged wage increase,” said Jerome Gage, a Lyft driver in California, who is now able to drive just five hours a week and has found a separate, full-time job. .

He said higher wages on Lyft, which executives indicated on the conference call, may be at least a partial reflection of incentives to bring drivers who have been parked out due to higher gas prices back into action. “It’s all temporary,” he said. “They will pull the rug out from under us once we get enough drivers back on the road.”

Experts said the current economic conditions are working in favor of gig companies. said Lindsey Cameron, a professor at the University of Pennsylvania’s Wharton School who has studied the impact of the pandemic on working workers. Cameron said the price of flights may have increased, but not at the same rate as workers’ expenses. “It’s not as good jobs as it was in 2014 and 2015, but it’s still better than many other options,” she added.

Raya Denny, 23, of Springfield, Massachusetts, said her earnings on Lyft have remained stable and enough to make ends meet. However, there are factors beyond her control. A few weeks ago, she said in an interview arranged by Lyft, she ended up having a screw in her frame, which is expensive. hiccups “I’ve made more profits with Lyft, but the problem is that the epidemic is getting more expensive,” she said, adding that her earnings have been good.

Gig companies rely on trip number rewards and sudden on-demand price increases to quickly reward newly acquired drivers after they are drawn to their digital platforms. This environment, full of incentives, can give drivers and couriers the impression of easily earned profits where the reward is always in the corner.

But drivers describe a dynamic where all of a sudden, once they’ve spent enough time on a podium, those rewards quickly erode. Long-distance carriers are left dependent on applications that force them to work harder, and for longer, to earn the same amount as before. They find themselves exhausted by the time they have grown up to appreciate the reality of the gig economy.

LaDonna Hamilton has driven Uber in the Los Angeles area for five years. She made it out of the pandemic when her flights went down to almost nothing. But recent inflation has dealt the final blow, as rising gas prices, maintenance costs and the high cost of insurance slash her paychecks. “It takes twice as long to earn the same amount of money,” she said, than when she started driving, adding that she plans to quit smoking soon.

In the face of rising living costs and rising fuel prices, drivers have to work even harder than before just to make diminishing returns. They say more drivers means fewer opportunities because they struggle to find profitable rides because a lot of their peers struggle to get the best fares.

Ben Valdez, a Los Angeles-based Uber driver who also organizes the working group Rideshare Drivers United, said job workers who turn to apps for extra income may find themselves trapped in a “vicious cycle”. “You get used to the money and when they lower prices and tell you you have flexibility, it just means you have to work more to make the same amount of money,” he said.

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If the United States enters a severe recession, temporary job workers may suffer more, said Enrique Lopezlera, director of the UC Berkeley Labor Center’s Low-Wage Work Program. “Consumer spending is going to come down pretty drastically as well, so I’m not sure how many real opportunities for this type of temporary work are, or whether people will be able to live in these kinds of jobs,” he said.

Urgent work takes many formats beyond driving and delivery work. Freelance work platforms like Fiverr and Upwork have created spaces for graphic designers, software developers, and digital marketers to find clients without having to land a full-time job.

Lindsey Chastain, a former English teacher and journalist who lives in Skiatuck, Oklahoma, began working as a freelancer full-time in March, after the small newspaper she was working for closed down, increasing its reliance on Fiverr and Upwork. It has succeeded so far, but inflation has affected its earnings. It needs to pay a subscription fee for a range of programs to be compatible with its diverse set of clients, and costs are rising. “All of these programs are getting more expensive. If the business goes down, my operating costs won’t go down, they actually go up,” Chastain said.

“People are using it as a way to bring in extra income, while still rising costs,” said Abby Furman, director of communications at Fiverr, and that data shows they can generally raise rates without consequences. The flexibility of gig work remains attractive to many. But many fear an economic recession. “I have a fear of stagnation, and I have a fear of work drying out,” Chastain added. Will I have to get a job at Walmart?

Caroline O’Donovan contributed to this report.

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