Uber CEO Dara Khosrowshahi is asking President Trump to provide aid to drivers who have seen their earnings fall off a cliff in recent weeks.
In a letter, Khosrowshahi urged the president to consider "protections and benefits for independent workers" in upcoming stimulus legislation aimed at stemming the economic damage caused by the coronavirus. Senate lawmakers are negotiating the details of a coronavirus stimulus package worth more than $1 trillion.
"My goal in writing to you is not to ask for a bailout for Uber, but rather for support for the independent workers on our platform and, once we move past the immediate crisis, the opportunity to legally provide them with a real safety net going forward," Khosrowshahi wrote in the letter.
Uber (UBER) - Get Report and Lyft (LYFT) - Get Report, among other gig economy firms, consider their drivers independent contractors and not employees, but the status of that classification is tenuous. As independent contractors, gig workers are generally not entitled to unemployment, health and other benefits. California passed a bill last year that extends employee classification to gig workers, but Uber and other firms have claimed the bill is illegal and proposed their own state ballot measure in response.
But widespread closures of restaurants, bars and places of work across the U.S., as well as a steep drop in airline travel, have also meant an immediate shock to driver earnings. A survey by The Rideshare Guy conducted between March 13 and March 16 found that 80% of drivers reported that their earnings were way down, a figure that escalated with each passing day.
"As more restaurants, bars and similar venues close, we expect this trend to continue," said Harry Campbell, founder of The Rideshare Guy.
Uber shares rose more than 4% on Monday to $22.66, continuing an upward swing after hitting an all-time low of $13.71 per share last Wednesday.
In his letter, Khosrowshahi stopped short of offering a specific policy proposal to assist drivers who have seen earnings disappear as of late, but called on the administration to consider employment legislation going forward that would establish a third classification category for independent gig workers. He also argued that in a coming economic downturn, more workers will need to turn to gig platforms.
"We are already working with lawmakers and Governors in various jurisdictions across the U.S. on similar legislation that would require companies like ours to provide protections and benefits to our independent contractors," Khosrowshahi wrote.
If Uber were compelled to classify its driver base as employees, it could mean 30% higher overhead costs, analysts have estimated.
In a note on Monday, Wedbush analyst Dan Ives wrote that Uber likely has enough cash to weather the immediate crisis, even if demand fell by 80% in 2020. But its goal of getting profitable by the end of this year is likely "off the table" for now, and the full impact of the coronavirus on its overall business remains to be seen. Investors should act conservatively and assume the worst case scenarios, he added.
"Furthermore, we believe that given the pressure on Uber’s model, the company will see an even greater challenge with the segment-unprofitable Uber Eats, (despite a lighter drop-off in demand than Rides), given delivery fee subsidization and risk of an independent restaurant industry emerging as a shell of what it was before this crisis began," Ives wrote.