Uber, Lyft, and Airbnb: The Coronavirus, The Law, and Their Future

We’re over seven months past the first Covid-19 business closures, and our ride and place sharing concerns are still going on just fine.  Or are they?

Per Greg Bensinger in the August 19^th New York Times, “Uber and Lyft Just Can’t Stop Flouting the Law.”  That may be the wrong verb, as true limits on them are weak, so the firms have been able to pretend they are offering only technology, “a legal strategy” which thus far “has allowed them to label their legions of drivers contract workers, depriving them of company-backed benefits like health care, paid leave and severance pay.”  That, though, took a hit the month before, as “Uber and Lyft Drivers Win Ruling on Unemployment Benefits” (Noam Scheiber, The New York Times, July 28^th), as “a federal judge in New York,” finding both employers had perpetrated “an avoidable and inexcusable delay in the payment of unemployment insurance,” pronounced “that the state must promptly begin.”  As well, one in Pennsylvania had three days earlier ruled an Uber driver company-employed, which could precipitate the same verdict there.

Yet on September 22^nd, per Scheiber’s “Uber and Lyft Could Gain From U.S. Rule Defining Employment” that day in the same publication, the federal Labor Department announced “a so-called interpretive rule, not a regulation that has the force of law,” considering mainly “the extent to which a company controls how a worker performs a job” and “the opportunity that a worker has to profit in the job based on initiative, rather than simply earning a steady wage.”  Neither seem like overwhelming points in favor of keeping such drivers, who must use vehicles meeting certain standards and whose extra pay from taking more rides can be seen as just bonuses, as contractors, and, for one thing, cannot willfully assure themselves of any wage.

Over to different-line but structurally identical Airbnb, the hotel chain with plenty of rules for providers but thus far exempt from government regulations.  As Elaine Glusac put it in September 24^th’s “The Future of Airbnb,” also in the Times, that company will soon go public, and admits to “challenges” associated with the pandemic’s effect on travel patterns.  They are more often renting larger houses in rural settings for more daily money and longer stays.  They are encountering some places restricting short-term rentals, and providers are drawing “complaints by Muslim, transgender (how would they know?) and other groups” for allegedly denying bookings.  More laws are coming, but they may adapt to those as well.

In another Times piece by Scheiber, we saw that “Seattle Passes Minimum Pay Rate for Uber and Lyft Drivers” (September 29^th).  That city’s board unanimously passed a January requirement that such workers get, on top of expenses, Seattle’s $16 minimum hourly wage.  When I drove cab it typically was about 10 miles each hour, which, at the current I.R.S. rate of 57.5 cents apiece, would mean a total of $174 for an eight-hour shift.  That means the driver’s share of fares would need to be $21.75 plus everything else they cost, hour out and hour in, for Uber and Lyft to break even.  That’s a lot. 

Further down the coast, these ridesharers didn’t fare any better, per “Appeals Court Says Uber and Lyft Must Treat California Drivers as Employees” (Kate Conger, The New York Times, October 22^nd).  Not yet though, as those firms “are sponsoring a state ballot initiative, Proposition 22, to exempt them from the law and allow them to continue classifying drivers as independent contractors, while providing them with limited benefits.”  The next day, a follow-on piece by Conger also appeared in the Times, with the possibly quite accurate title of “It’s a Ballot Fight for Survival for Gig Companies Like Uber.” 

Should these sharing-economy concerns be free of most industry regulations?  There is a good case for yes – people need a chance to make money consistent with modest wants and needs.  Yet, if so, there is no excuse for Hilton and Yellow Cab to be thus fettered.  Even exempt, Uber and Lyft have never been profitable.  I don’t know about the homesharer, which lost $322 million in the first nine months of 2019 though maintaining profitable geographic areas, but the other two, with the virus threatening a year or more to run, are in deeper trouble than ever.  Laws or not, don’t count on them surviving.