7 ms·

Why would “gig economy jobs” get worse? If anything, during a recession, more people will want(need?) to become gig workers. Uber/Lyft are generally supply con

Why would “gig economy jobs” get worse? If anything, during a recession, more people will want(need?) to become gig workers. Uber/Lyft are generally supply constrained today. If there’s a surge of supply because people need money they won’t have to pay new driver incentives, which is one the areas that cause them to bleed cash today. Demand side will fall a little, but people will still need cheap ways to get to/from places, maybe especially if their car gets repossessed.

tomnipotent 8y ago
This isn't about supply & demand, it's about profitability and if these companies are viable long-term. There can be no gig economy jobs if there are no gig economy businesses.
- dawhizkid 8y ago
  Uber and Lyft can be profitable today. They are in their most mature markets like SF and NYC. If they need to get to profitability they scale back and cut certain cities. That’s it.
  - tomnipotent 8y ago
    Which would mean eliminating upwards of 90% of their workforce. Thus not sustainable, and the jobs disappear.
    - dawhizkid 8y ago
      You’re conflating profitability, growth, sustainability etc. you’re also conflating what is bad for Uber vs what is bad for drivers It is sustainable to do that if by sustainable you mean have a profitable long term business that is cash flow positive It would likely massively hurt share prices because you’re trading growth for profitability
      - tomnipotent 8y ago
        I'm not conflating anything, you're just mixing subjects. You said that gig jobs would get better or there would be more, and I countered that was not the case since a business cannot sustain that number of people if it's not profitable.
        dawhizkid 8y ago
        I don’t think you understand how Uber/Lyft think about their drivers. They aren’t employees. In fact, drivers are their customers. There’s no “sustaining” drivers because they aren’t paying their drivers anything...they are just making a commission off of the driver’s own earnings. Uber and Lyft can’t and won’t “fire” drivers since, again, they aren’t employees. The best way to think of drivers is that they are customers who are licensing Uber/Lyft software for lead generation for their own business. In a recession a seller of lead generation software (Uber/Lyft) is not going to turn customers (drivers) away. It just might not be profitable for you as a customer of lead generation software to buy it if there aren’t leads, but I don’t think anyone knows what will really happen to rideshare demand if the economy tanks. I think it will go down, but it might not go down as much as one might think.
        deleted 8y ago
        [deleted]
    - treis 8y ago
      It's not sustainable for the employees but it probably would be good for the business. Looking at Lyft's careers page, I see 7 UX, 11 product, 14 data science, and 40 engineering positions open. That just seems like an absurd amount.
  - 12298765 8y ago
    The whole point was that the jobs would disappear -- if Uber and Lyft back out of smaller cities to be profitable, all of those jobs are gone, which is exactly the point of the person you replied to. Most of those gig jobs would start disappearing
    - dawhizkid 8y ago
      There's no "backing out" if we're talking about individual cities in a country they already operate in (save a few edge cases). That isn't really how Uber/Lyft enter/exit markets. They will just not pay driver incentives for new markets, which is usually the lighter fire for incentivizing new supply (i.e. drivers) to start driving. There's no job to be "lost." They aren't going to turn you away for a "job" or "fire" you because you literally aren't employed by the company. Think of it as if you are licensing Uber/Lyft software to generate leads for your own business. That is literally how they think about it and what the driver ToS says.
      - b_tterc_p 8y ago
        That’s true, there’s no real reason to “leave” a city. But if they need to stop bleeding cash in an expensive city, they’ll need to raise prices during a hurting economy. Doing this at scale is going to severely dent their ability to cover fixed costs long term.
  - moorhosj 8y ago
    Now we see those cities starting to price in the negative externalities of these businesses. The congestion pricing in NYC is directly tied to the rise in ride sharing. This could change the economics even (especially?) in the profitable cities.
    - Jommi 8y ago
      It's ridehailing, ride-sharing is completely different. Ride-sharing REDUCES congestion. Ridehailing increases congestion if the city's public transport system is terrible. This is not a fault of ridehailing, it's a symptom of bad infra.
  - Marazan 8y ago
    I see this repeated as an article of faith but how profitable? Uber is billions in the hole. If they make a billion in profit every year for 15 years then they will have repaid their investors money at nominal rates. In real terms they will still be down. How much profit can Uber make if it cuts 'certain' cities?
- treis 8y ago
  I don't think Lyft/Uber should be grouped in with the other gig economy players. Taxis have been a thing for a century and Lyft/Uber represent a real improvement over the traditional model. It's effectively a certainty that we will have app summoned taxis 10 years from now. I don't see a good reason to think that it won't be Lyft/Uber providing them.
gjs278 8y ago
lyft is not supply constrained. I can get picked up right now in two minutes. they will pay the new drivers less.
onion2k 8y ago
Uber and Lyft may well survive, but Uber Eats, Postmates, Deliveroo, Handy etc probably won't fare so well. People won't pay to do menial tasks they can do for themselves if they're at all worried about money.
dragonwriter 8y ago
> Why would “gig economy jobs” get worse? Because... > If anything, during a recession, more people will want(need?) to become gig workers. At the same time, the demand for gig services will drop. So, to the extent possible, things will get worse for the less-scarce workers, but they’ll also get worse for the firms, because they are already often squeezing gig workers as much (or, in some cases, more) than they can legally get away with, so they don't have a cushion to pass on the demand drop to gig workers and see no net harm.
- Jommi 8y ago
  And them the prices will adjust. It's not going to change for the platform, it might actually raise the amount of orders/trips.
b_tterc_p 8y ago
Maybe, but I think not. If there’s a recession, it becomes harder to get cash. If it is hard to get cash, you probably can’t afford to keep burning it in hope of building your competitive moat, especially if people are more conservative to the idea that the moat will never happen. So what does Meituan do about its annual $18B deficit? It can try to raise prices and lower wages (maybe you’re right and supply of labor increases), but that’s a fundamental change to its entire business and a huge gap to fill; plus the wages are already near the bottom. If it doesn’t click with consumers quickly... the business just dies- and for a lot of these services the enticement is just the low price right now. A lot of gig economy jobs are premised on bad businesses that only work now because there is a lot of capital to go around. It might be true that at a certain scale it would work, but that doesn’t mean they’re able to get there. Can Uber and Lyft do better? Maybe. They can’t drop wages much lower either because these people need not only to eat but to pay off vehicle leases. And the more people driving for Uber, the less each person makes due to limited demand for rides (also likely reduced in a recession), so I think there will be a limited surge of new drivers. It could be that Uber could just drop all of its scale except where profitable, but that throws billions of sunk cost down the drain too and throws a horrible signal to the market about its prospects for the future. Tl;dr: I believe that companies with deeply red income statements will suffer the most when a recession hits, and it follows that disposable contract workers for these companies will be the most vulnerable.
- dawhizkid 8y ago
  Drivers are customers of lead generation software licensed by Uber and Lyft. When you think that way, you’ll realize why it doesn’t make sense to think that Uber or Lyft would have any reason or incentive to “fire” drivers during a recession. You wouldn’t “dispose” of your customers in a recession.

tomnipotent 8y ago

This isn't about supply & demand, it's about profitability and if these companies are viable long-term. There can be no gig economy jobs if there are no gig economy businesses.

dawhizkid 8y ago
Uber and Lyft can be profitable today. They are in their most mature markets like SF and NYC. If they need to get to profitability they scale back and cut certain cities. That’s it.
- tomnipotent 8y ago
  Which would mean eliminating upwards of 90% of their workforce. Thus not sustainable, and the jobs disappear.
  - dawhizkid 8y ago
    You’re conflating profitability, growth, sustainability etc. you’re also conflating what is bad for Uber vs what is bad for drivers It is sustainable to do that if by sustainable you mean have a profitable long term business that is cash flow positive It would likely massively hurt share prices because you’re trading growth for profitability
    - tomnipotent 8y ago
      I'm not conflating anything, you're just mixing subjects. You said that gig jobs would get better or there would be more, and I countered that was not the case since a business cannot sustain that number of people if it's not profitable.
      - dawhizkid 8y ago
        I don’t think you understand how Uber/Lyft think about their drivers. They aren’t employees. In fact, drivers are their customers. There’s no “sustaining” drivers because they aren’t paying their drivers anything...they are just making a commission off of the driver’s own earnings. Uber and Lyft can’t and won’t “fire” drivers since, again, they aren’t employees. The best way to think of drivers is that they are customers who are licensing Uber/Lyft software for lead generation for their own business. In a recession a seller of lead generation software (Uber/Lyft) is not going to turn customers (drivers) away. It just might not be profitable for you as a customer of lead generation software to buy it if there aren’t leads, but I don’t think anyone knows what will really happen to rideshare demand if the economy tanks. I think it will go down, but it might not go down as much as one might think.
        deleted 8y ago
        [deleted]
  - treis 8y ago
    It's not sustainable for the employees but it probably would be good for the business. Looking at Lyft's careers page, I see 7 UX, 11 product, 14 data science, and 40 engineering positions open. That just seems like an absurd amount.
- 12298765 8y ago
  The whole point was that the jobs would disappear -- if Uber and Lyft back out of smaller cities to be profitable, all of those jobs are gone, which is exactly the point of the person you replied to. Most of those gig jobs would start disappearing
  - dawhizkid 8y ago
    There's no "backing out" if we're talking about individual cities in a country they already operate in (save a few edge cases). That isn't really how Uber/Lyft enter/exit markets. They will just not pay driver incentives for new markets, which is usually the lighter fire for incentivizing new supply (i.e. drivers) to start driving. There's no job to be "lost." They aren't going to turn you away for a "job" or "fire" you because you literally aren't employed by the company. Think of it as if you are licensing Uber/Lyft software to generate leads for your own business. That is literally how they think about it and what the driver ToS says.
    - b_tterc_p 8y ago
      That’s true, there’s no real reason to “leave” a city. But if they need to stop bleeding cash in an expensive city, they’ll need to raise prices during a hurting economy. Doing this at scale is going to severely dent their ability to cover fixed costs long term.
- moorhosj 8y ago
  Now we see those cities starting to price in the negative externalities of these businesses. The congestion pricing in NYC is directly tied to the rise in ride sharing. This could change the economics even (especially?) in the profitable cities.
  - Jommi 8y ago
    It's ridehailing, ride-sharing is completely different. Ride-sharing REDUCES congestion. Ridehailing increases congestion if the city's public transport system is terrible. This is not a fault of ridehailing, it's a symptom of bad infra.
- Marazan 8y ago
  I see this repeated as an article of faith but how profitable? Uber is billions in the hole. If they make a billion in profit every year for 15 years then they will have repaid their investors money at nominal rates. In real terms they will still be down. How much profit can Uber make if it cuts 'certain' cities?
treis 8y ago
I don't think Lyft/Uber should be grouped in with the other gig economy players. Taxis have been a thing for a century and Lyft/Uber represent a real improvement over the traditional model. It's effectively a certainty that we will have app summoned taxis 10 years from now. I don't see a good reason to think that it won't be Lyft/Uber providing them.

gjs278 8y ago

lyft is not supply constrained. I can get picked up right now in two minutes. they will pay the new drivers less.

onion2k 8y ago

Uber and Lyft may well survive, but Uber Eats, Postmates, Deliveroo, Handy etc probably won't fare so well. People won't pay to do menial tasks they can do for themselves if they're at all worried about money.

dragonwriter 8y ago

> Why would “gig economy jobs” get worse? Because... > If anything, during a recession, more people will want(need?) to become gig workers. At the same time, the demand for gig services will drop. So, to the extent possible, things will get worse for the less-scarce workers, but they’ll also get worse for the firms, because they are already often squeezing gig workers as much (or, in some cases, more) than they can legally get away with, so they don't have a cushion to pass on the demand drop to gig workers and see no net harm.

Jommi 8y ago
And them the prices will adjust. It's not going to change for the platform, it might actually raise the amount of orders/trips.

b_tterc_p 8y ago

Maybe, but I think not. If there’s a recession, it becomes harder to get cash. If it is hard to get cash, you probably can’t afford to keep burning it in hope of building your competitive moat, especially if people are more conservative to the idea that the moat will never happen. So what does Meituan do about its annual $18B deficit? It can try to raise prices and lower wages (maybe you’re right and supply of labor increases), but that’s a fundamental change to its entire business and a huge gap to fill; plus the wages are already near the bottom. If it doesn’t click with consumers quickly... the business just dies- and for a lot of these services the enticement is just the low price right now. A lot of gig economy jobs are premised on bad businesses that only work now because there is a lot of capital to go around. It might be true that at a certain scale it would work, but that doesn’t mean they’re able to get there. Can Uber and Lyft do better? Maybe. They can’t drop wages much lower either because these people need not only to eat but to pay off vehicle leases. And the more people driving for Uber, the less each person makes due to limited demand for rides (also likely reduced in a recession), so I think there will be a limited surge of new drivers. It could be that Uber could just drop all of its scale except where profitable, but that throws billions of sunk cost down the drain too and throws a horrible signal to the market about its prospects for the future. Tl;dr: I believe that companies with deeply red income statements will suffer the most when a recession hits, and it follows that disposable contract workers for these companies will be the most vulnerable.

dawhizkid 8y ago
Drivers are customers of lead generation software licensed by Uber and Lyft. When you think that way, you’ll realize why it doesn’t make sense to think that Uber or Lyft would have any reason or incentive to “fire” drivers during a recession. You wouldn’t “dispose” of your customers in a recession.