Inflation helping gig companies like Uber — and hurting their workers

Dallas-based Debbie Welker quit working as a delivery driver for Shipt and Instacart earlier this year because gas prices were cutting too deeply into her earnings.

She would work 12- to 14-hour days, seven days a week to make around $1,200, but then would have to use some of that to pay for gas and other expenses. People stopped tipping, or tipped between $2 and $5 for an hour of shopping, something she thinks was affected by inflation.

“After deductions, I was making less than minimum wage for the hours I was working or sitting in a store parking lot waiting for an order,” added Welker, who started during the pandemic.

Inflation is putting new pressure on the burgeoning workforce of gig workers who deliver food, drive passengers and perform other tasks on the giant tech platforms that so far are surviving the current unsteady economic climate relatively unscathed. That group of people — many of whom do the work part time or even to supplement income with a second job — has grown to a major portion of the workforce over the past decade built on promises of flexible work with high pay.

But now, workers say that, while fees and prices are soaring for consumers, they themselves are struggling to make ends meet, according to a dozen gig workers who spoke with the Washington Post. Meanwhile, the companies say more drivers are joining the apps as a side gig to combat inflation, which gig workers say is increasing competition for the jobs that are out there.

If a serious downturn does happen, as many economists predict, gig workers could be especially vulnerable. An influx of newly-unemployed workers turning to gig work platforms could compete with those who are already there, eroding certain opportunities to steadily earn through the apps.

“With a significant influx of workers, people are going to be getting fewer shifts, fewer gigs,” said Erin Hatton, a professor at the University of Buffalo who studies labor and the gig economy. “That would in general have pretty significant negative consequences for workers who are already there and the workers that are coming in. There’s going to be a finite amount of work.”

Executives at DoorDash, Uber and Lyft all said during earnings calls last week that economic pressures had an upside for their companies, driving those who are seeking extra income to their platforms.

Uber chief executive officer Dara Khosrowshahi said more than 70 percent of new drivers joining the app say inflation was one of their reasons. New driver sign-ups in the U.S. are up more than 75 percent over a year ago.

“No one wishes for a tough economic environment or elevated inflation that’s affecting so many of us including Uber drivers, but at the same time, from a competitive standpoint, there’s no question that this operating environment is stronger for us,” Khosrowshahi said.

Lyft, too, has a strong supply of drivers, executives said on their earnings call last week, as the number of total active drivers stood at its highest figure in two years. And a recession could bring an influx of new drivers, CEO Logan Green said on the call.

The “gig economy” is a loose term for the ecosystem of tech platforms and informal networks that connect independent workers with piecemeal jobs. Millions of Americans have found piecemeal work as independent contractors for decades, but the rise of companies like Uber, Lyft and DoorDash has made it even easier for people to find gig work easily. Many use the platforms to make extra cash in between fulltime or part-time work, while others have made driving for Uber or delivering for DoorDash their full-time job.

For the companies, the dynamics result in a flexible, on-demand workforce consisting of workers who are not typically subject to employee wage requirements, job protections or benefits such as health insurance. That means the workers are cheaper and the companies aren’t bound to provide them with work.