Younger, smaller, and less recognizable, Lyft has always lived in the substantial shadow of its main competitor Uber. Now it’s dying in it too.
Social distancing has put the transportation sector against impossible odds: subway ridership in my home city of New York is down at least 74-percent; total flights may drop off up to 90-percent this summer. Being in a small, enclosed space with a stranger who likely does not have health insurance couldn’t be less appealing at this juncture in history—and consequently ridesharing has fallen off a cliff too.
Reported by CNBC, Lyft is laying off 982 of its current employees, and furloughing an additional 288—taken together, that trims the current workforce there by a considerable 22-percent. It’s not clear which departments were the focus of these cuts, though we’ve asked Lyft to supply that information if it’s available. Uber, it was reported just yesterday by The Information, is also staring down layoffs of up to 20-percent of its staff.
The downturn in demand has hurt Lyft and Uber, but the worst fallout has seemingly landed in the laps of these platforms’ drivers. Because of their classification as independent contractors, many aren’t eligible for unemployment—even with the CARES Act signed into law. Drivers have widely described their earnings drop from meager to unlivable.
In tandem with shedding over a fifth of its staff, Lyft wrote in a SEC filing today that it had also “implemented reductions in base salary for exempt employees for a twelve week period beginning in May 2020, consisting of a 30% reduction for executive leadership, 20% for vice presidents and 10% for all other exempt employees.” Whether these austerity measures are drastic enough to keep Lyft afloat seems largely to be a matter of how long the current phase of the pandemic will stretch on. “Our guiding principle for decision-making right now is to ensure we emerge from the crisis in the strongest possible position to achieve the company’s mission,” Lyft’s CEO Logan Green wrote in a statement.
The U.S. economy shrank by 4.8-percent in the first quarter of this year—a data point which does not account for coronavirus’s impact over this past month—which was described broadly as signaling the beginning of a recession. The tip of that recession has already cost an estimated 26 million Americans their jobs, a figure that unfortunately seems all but certain to continue rising.