Disrupting the disrupters: How the coronavirus will change the gig economy

Uber Lyft

(John Locher, AP Photo, File)

SALT LAKE CITY — Working in the American gig economy was already hard enough.

Just ask Jonathan Cousar. He began driving for Uber in New York City in 2014, which was "great at first," he said.

"When I first started driving, Uber had just come into this area," Cousar told KSL.com. "And it was really awesome, because they were charging maybe four to five times what they charge now and they had a lot fewer drivers, so each individual driver could actually get a decent amount of trip requests."

Over time, however, the number of drivers shot up and fares went down. Driver earnings "began to plummet," Cousar said.

"Back then (in 2014) you could have made $30 to $40 an hour during morning and afternoon rush hour," he said. That had come all the way down to about $15 an hour before expenses in a 2019 survey by Ridester, a website that covers on-demand transportation for which Cousar now writes.

And then the COVID-19 pandemic hit.

Seemingly overnight, demand for ride-hailing services fell off a cliff. For the first time, Congress made self-employed and contract workers eligible for a form of unemployment in the March coronavirus aid bill — but states then had to figure out how to implement the new program, delaying aid to gig workers by weeks or even months.

The virus fallout has been nothing short of "devastating" to the industry and its workers, Cousar said. "The main sources of business are the afternoon and morning commute to work, airport business and nightlife," he said. "All of that was shut down."

Here in Utah, gig workers got some relief in mid-April when the Department of Workforce Services unveiled the Pandemic Unemployment Assistance program, Utah's implementation of the congressional mandate to bring unemployment aid to the self-employed. Kevin Burt, director of the department's Unemployment Insurance Division, said the state had to create the program "from scratch."

"Pandemic Unemployment Assistance was certainly a brand-new program," Burt said. "It was different, and it does cover a group of individuals that historically are not eligible for unemployment insurance." The program has been federally funded through the end of the year and can be used for up to 39 weeks, he said.

Last week the state saw about 1,300 new claims for Pandemic Unemployment Assistance and 8,800 ongoing claims, down from peaks of about 7,500 new and 18,000 continued claims, Burt said.

Solutions and the future

Not every job in the gig economy has suffered like ride-booking services. Food delivery apps, for instance, helped restaurants reach customers even when dine-in service was prohibited.

And some are exploring new models. Eric Nalbone is the vice president of marketing for Drum, a new app that lets users earn commissions for word-of-mouth product and service referrals, "drumming" up business for companies.

"So the business wins," Nalbone said. "They're able to really leverage their customers, and people who know the business already, to spread the word about that business. And the individuals win because they actually get compensated for this valuable service that they're providing" — a service that people already provide for free all the time, he said.

Drum launched a pilot program last fall, Nalbone said, and didn't originally intend to launch nationally until this summer. But once the pandemic hit, Drum's leadership saw a need for its service and expanded in April instead. "This is certainly a time when more businesses need support and more individuals need support than ever before," he said.

Still, for Uber and Lyft drivers, the outlook remains challenging. Ridester released a report this week finding that, after expenses, many drivers are pocketing less than $5 an hour.

And the expiration of the extra $600 of weekly unemployment aid — another provision of the March coronavirus aid bill that ran out just last week — will make matters worse, Cousar said.

"Now that the $600 has run out, all of these drivers who've been sitting at home are going to get back out on the streets," he said. "And drivers who are making $5 to $10 an hour — because there's not a lot of business, but there weren't a lot of other drivers out there, either — now they're going to be competing with three to four times the number of drivers they've been up against these last few weeks."

Cousar's advice for workers in the gig economy?

"Get some new skills," he said. "Learn to do computer programming. Learn software coding. Learn coding for websites. Because even before this (pandemic) happened, it was really difficult to earn much more than minimum wage driving for Uber and Lyft."

That's not to say gig work is a bad solution for everyone, Cousar said. He was once struck by data indicating a large number of Uber and Lyft drivers are over age 50.

"A lot of these guys are retired," he said. "They have a little time on their hands and like to make a little extra spending money, and that's a great way for them to do it." But as for young drivers?

"The younger guys should get out of it so those guys can make some money at it. And the younger guys can go improve their skills, and up their game, and try to do something else."

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