Uber and Lyft IPOs, Strikes, and What It means for the Gig Economy

With Memorial Day upon us, we see the sudden influx of people going out of town, heading to airports, and relying on ride hailing gig workers to get them there.

On the heels of many high-visibility events like Lyft’s IPO and Uber IPO, driver strikes and now a California Supreme Court ruling that created a strict standard for determining who is an “employee”, the gig economy has been under major scrutiny.

The gig economy - 9 things employers need to know

The public has been asking questions like “how will Uber's upcoming IPO affect the gig labor market?”, “how has Lyft's performance been after going public?” and “how will Lyft/Uber's strike in the U.S. affect the gig economy/labor market? What results do you expect to come from this, if any?”

Fountain’s COO, Micah Rowland, has weighed in on this topic with a number of reporters and news outlets such as The Wall Street Journal, CNBC, and Barron’s. On the heels of the Uber IPO news and driver strike, Micah was invited to talk with Bloomberg TV on May 8th. While the implications of all these recent events is still too early to tell, it’s clear that we are looking at uncharted territory.

Here are some of Micah’s predictions:

How will Uber's upcoming IPO affect the gig labor market?

I don't think it will have much affect at all - workers in this market, like workers elsewhere, are working to provide for their families and make a life for themselves. To the extent they can do that at Uber or other gig economy companies, they'll continue to do so. To the extent they can't, I expect they'll begin seeking other types of opportunities. I think the interesting thing to watch will be if gig economy companies start to struggle to attract the labor they need, at the prices they can afford to pay, to run their businesses. Many of these companies run on very thin operating margins. A rise in labor costs to keep workers engaged, if it becomes necessary, might prove fatal to some of them.

Did you see anything surprising in Lyft's earnings?

The increased losses were a little bit of a surprise to me because one would hope that at their scale, Lyft would be turning a corner and at least moving in the direction of profitability, but I haven't read the earnings report in enough detail yet to say more than that.

How has Lyft's performance been after going public?

I think the stock price roughly reflects the prospects of the company, primarily in its volatility. There's a lot of uncertainty about whether Lyft can do what it needs to do to be a profitable company, and the current price suggests the market is not yet convinced.

How will Lyft/Uber's strike in the U.S. today affect the gig economy/labor market? What results do you expect to come from this, if any?

I don't expect much. The #deleteuber campaign a few years ago was a much more potent combination of unsettling company behavior and social activist response, and it did allow Lyft to gain share and hasten Kalanick's departure, but doesn't seem to have affected Uber as a company very much. The service Uber provides is valuable to people at the prices they ask, and as long as that remains true I think Uber will grow. Whether they can figure out how to grow profitably is another question.

Why the gig economy isn’t going anywhere

  1. It’s a new, mobile workforce

An Intuit study found that 43% of American workers will have independent contractor jobs by 2020. It has always been widely accepted that people will switch jobs over their careers. The gig economy is perceived as a natural extension of this pattern. Advances in technology have enabled independent contractor jobs because it facilitates a mobile workforce, who can work from anywhere. Gig workers, who are sometimes referred to as freelancers, contingent workers or independent contractors opt to do this type of work to supplement their income, or for a better work-life balance.

This shift in the way work is carried out has resulted in a change in how companies hire the labor they require. Full-time jobs are likely to remain a fixture of most companies for the foreseeable future. However, businesses need to embrace providing gig economy jobs as a way to remain competitive. A report by McKinsey found that 162 million people in the U.S and Europe (20 – 30% of working age people) have some type of independent contractor job.

2. Employees are using freelancers to cut costs

Freelancing is growing into a formidable majority. In 2014, one in every three Americans (53 million workers, or 33% of the total U.S. workforce) had done ​freelance work within the past year.​ By 2017, it was reported that this number grew to approximately 57 million Americans working as freelancers. This means the freelance workforce has grown by 4 million in just 3 years! If this trend continues, over half of Americans are expected to work as freelancers by 2027.

The main reason employers use freelancers and contract workers for goods or services is cost. Freelancers cost businesses less to retain than hiring a full-time employee, and, in most cases, freelancers do not get benefits such as insurance and paid leave.

Freelancers also help small businesses grow before they are fully ready to scale up, and can be let go if a company experiences budget problems without concern for severance pay or benefits payouts.

Freelancing in today’s gig economy

3. These jobs hire quickly

Other industries are still using outdated methods of hiring which means job seekers have to wait weeks or even months to find out if they get hired. Gig companies, on the other hand, have invested in hiring quickly and painlessly. As a result, the growing popularity (36% of workers have gig jobs) of the gig economy has revolutionized the hiring process.

One of the main changes being the speed at which candidates are hired. The jobs that typically hire quickly are on-demand jobs who require a high number or workers and generally experience a high turnover rate. Time to hire rates have been steadily decreasing as candidates (especially millennials) have adopted a 24/7 – ‘insta’ culture to all aspects of their lives, including recruitment.  

A look under the hood of applying to be a driver

Ride hailing driver jobs

Uber is the ride hailing service we all know of that allows people to request trips from one location to another. As an Uber driver, you will pick them up and drive them for a fee that is calculated per mile. They hire quickly and get you working fast as long as you pass their requirements.

To become an Uber driver, you have to:

  • Fill out an application online - This application will give Uber the necessary information for them to perform a background check. In this application, you will also need to provide pictures of the front, back, and inside of your vehicle. And lastly, you will need to upload a copy of your driver’s license, registration, and proof of insurance to show that you are properly qualified to drive.
  • Get your car inspected - Uber has its own facilities in some cities for you to get your car inspected for free. If there is no Uber facility in your area, you can use a third party inspector.
  • Pass a background check - This background check will go through the past seven years, looking for any criminal history, bad driving records (including fatal accidents or indications of reckless driving), or drug-related offenses.

If you pass these requirements, you should be driving within a week or two.

If you are accepted, Uber will send you an email saying that you are activated. You will also receive a starting pack that comes with an Uber sticker for your window, an aux cord, and a welcome manual. Then, you can start driving and earning. One driver says they make about $15-$25 per hour after paying for fuel, taxes, commission and other expenses.

Before applying, make sure that you meet these qualifications:

  • You are 21 years old or older.
  • Your car is year 2000 or newer.
  • You have a valid license, registration and car insurance.

Delivery driver jobs

Postmates is a delivery service that allows people to place orders from stores and restaurants and have it delivered. Customers pay $7.99 per month for deliveries. There are no other fees associated with orders, so delivery people keep 100% of the money that they make.

To get started, create a free account and fill out an application. You will need a photo of yourself as well as a form of identification. If you are accepted, you will receive a welcome pack that includes a delivery bag and a prepaid card that you will use to pay for customer orders at pickup.

Once you have received your welcome pack, download the Fleet app to activate your card and start accepting orders. There is no time commitment, so you can earn whenever you are available. The app will show you busy areas in your city so that you know when and where you can make the most money.

Earnings are deposited on a weekly basis automatically or can be cashed out any time of your choosing. Postmates is a viable option if you need to get hired quickly and start making money.

What type of jobs hire quickly and why?

Conclusion

There is no denying that the gig economy is transforming the world of work as we know it. The rise of the contingent workforce has had an impact on how companies source workers. It could be tempting to believe that the gig economy is just a passing trend among millennials and the generations after them. Research, however, has found that freelance workers are generally older.

The gig economy is fueled by people of different demographics who want to enjoy flexibility while earning extra money. Popular gig economy apps for every type of work provide opportunities for people to participate in the gig economy, no matter what their interests or skill level.

The gig economy continues to grow at a rapid pace. It is clear that traditional companies as well as companies on demand benefit from the contingent workforce. This new way of working demands a new outlook on hiring and onboarding workers.

The Gig Economy is Growing at a Rapid Pace – Here’s a Look at the Stats

Companies that are able to take full advantage of the rapid growth in the gig economy are the ones that are able to reduce time to hire rates without reducing the quality of the candidates.

Fountain’s hiring software provides the functionality for companies to hire gig workers at scale quickly and easily. We have already transformed the hiring process of companies like Lime andSafeway.


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