Gasoline prices harm auto drivers in America’s gig economy

The recent spike in fuel prices across the United States has impacted the country’s contract economy dynamics, forcing many to reform the way they work or quit their jobs.

Drivers for ride-hailing and delivery apps as well as industry analysts say that in addition to changes in payment algorithms, a 59% increase in gas costs over the past 12 months has hit the industry. chill business.

Uber and Lyft, the two biggest ride-hailing apps, are trying to ease the burden by encouraging the switch to electric cars, but many drivers have been frustrated.

“Drivers are less likely to drive,” says Melissa Berry, editor of The Rideshare Guy, an industry blog. This change in the way they work in response to fuel prices has “no doubt aggravated it.” lack of driver Uber and Lyft have periodically found themselves.”

Gasoline prices, listed at corner stations, are one of the most visible indicators of rising inflation in the US. The drop in the oil market over the past week may have dampened retail gasoline prices, but so far drivers have seen no relief.

And the reason for the oil market reversal – fears that the Omicron coronavirus variant could stifle mobility – will be hard to incentivize drivers to use ride-hailing apps.

To cover the extra fuel costs, many gig drivers have adapted to the changes that include turning away many distant customers. Other things are quit smoking.

“Some drivers have reduced their working hours. Some drivers have gone looking for other work,” said Beth Griffith, a former Uber and Lyft driver and head of the Boston Independent Drivers Association.

An online poll conducted by The Rideshare Guy this week found that 91% of car-sharing drivers are worried about gas prices, and about half of drivers drive less. 12% said they stopped driving altogether due to high prices.

It is difficult to estimate the population of contract drivers. Many people sign up for multiple apps or work for food delivery services. About 1.6 million Americans were engaged in app-based work in 2017, the most recent year for which the Bureau of Labor Statistics collects data. Some estimate bringing the number of Uber and Lyft drivers operating in the US to 1.

Last month, Uber cooperate with the GasBuddy and GetUpside apps to reduce fuel prices in an effort to help drivers. Lyft says it has similar partnerships in the works.

“We know that gas is a top spend for many drivers, especially when prices are going up,” Uber said.

Willy Solis says he drives an extra hour a day to make up for the 50% increase in gas prices

But drivers doubt that the companies will provide enough relief.

“There is a real cost associated with gig work. Willy Solis, organizational lead for the Gig worker Collective, who also works for delivery teams Uber Eats and Shipt, said that cost continues to be allocated to contract workers.

Solis drives a 2018 Nissan Sentra in Denton, Texas, often booking 40 hours per week. He says he now spends 50% more on gas than he did five months ago and is driving an extra hour a day to make up.

While payment models vary between platforms, ridesharing and food delivery drivers are typically paid a base rate for the length of time they drive and can receive bonuses and tips.

But the vast majority of these workers are classified as independent contractors, not employees, so they have to cover their own costs, including fuel. Those who subtract these expenses from income tax report small savings.

“Contract work is based on changing economic risks to workers. As gas, car and other expenses add up, workers have to pay for themselves. Shelly Steward, director of the Future Jobs Initiative at the Aspen Institute, says at a time when wages need to rise, gig work is increasingly expensive.

Ultimately, high gasoline prices could accelerate the electrification of the contract economy’s fleets, according to analysts.

Line chart of Regular Gasoline, dollars per gallon showing rising US gas prices

Last month, Uber announced plans to offer 50,000 Tesla electric cars for hire by drivers. Lyft has a similar rental program, and both car-sharing companies plan to go all-electric by 2030.

Rents for Uber’s Teslas start at $344 a week, almost dual the average cost of the American Automobile Association to own a new car.

Luke Thompson, a full-time Uber and Lyft driver in Seattle, said he planned to buy an electric car – but then the price went up beyond his budget.

“I would actually be economically better off flying around the country, buying a car there, and then getting back on the road,” says Thompson.

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