Uber lays off 3,700 as coronavirus upends sharing economy
NEW YORK — In a world where the coronavirus pandemic has turned social distancing into a new way of life, companies whose business models bank on people’s willingness to share their personal space are now struggling.
Uber said Wednesday it’s cutting 3,700 full-time workers, or about 14% of its workforce, as people fearful of infection either stay indoors or try to limit contact with others to minimize risk when they do venture out. Rival Lyft and home-sharing service Airbnb have also announced cuts because of falling usage.
The layoffs and related costs like severance will cost about $20 million for Uber, which had already imposed a hiring freeze. The San Francisco-based company has offered up to 14 days of financial assistance to drivers and delivery workers who were diagnosed with the COVID-19 disease, or placed in quarantine.
Those ride-hailing drivers still on the road are trying to avoid infection and patch together enough fares to put dinner on the table even as ridership plummets.
“A lot of us are living on the razor’s edge of homelessness,” said Jerome Gage, 28, who drives for Uber’s rival Lyft in Los Angeles. “We have to work or we don’t eat.”
Gage, who as a contract worker does not have paid sick leave or health insurance, has seen his income plummet as the number of rides he provided fell about 75%. He got one disposable mask and a few small bottles of sanitizer from Lyft, but said it’s not enough to keep him safe.
“Any trip, you could contract the virus,” Gage said. “So every single day we’re on the road we’re in harm’s way.”
Lyft announced last month it would lay off 982 people, or 17% of its workforce in the face of sinking ridership. The San Francisco company expects to spend $28 million to $36 million on expenses related to employee severance and benefit costs.
Lyft’s revenue grew 23% to $955.7 million in the first quarter, which doesn’t capture the full extent of the outbreak. The number of active riders grew just 3%, the company said Wednesday. Lyft lost $398.1 million, which was better than the year-ago loss of $1.1 billion when the company had higher expenses related to its IPO.