Good morning, and welcome to the
Essential California newsletter. It’s
Tuesday, May 21, and I’m writing from Los Angeles.
Los Angeles Times business reporter Johana Bhuiyan has
oftenwritten about the human costs of the cheaply priced gig economy. Yesterday, she published
a major investigation on Lyft’s Express Drive program, which rents cars to drivers.
Both Lyft and Uber offer short-term car rental agreements to people, including those who might have poor credit or are desperately in need of a flexible stream of income. But drivers who rent through Lyft
pay a premium and
earn less than other ride-share drivers. Strapped to make ends meet, some even
sleep in their cars.
I talked to Johana about the burdens shouldered by individual drivers, and what it says about the gig economy.
Why do Uber and Lyft need programs like Express Drive to recruit new drivers?A little more than 60% of drivers stop driving for either Uber or Lyft within six months. It could be because they no longer need to do it anymore, or because the rates are too low, or any number of reasons. So, the pool of new drivers that Uber and Lyft can tap into is very limited in the U.S.
Both companies focused a lot on just getting new drivers and spent less time on keeping them around. Offering car rental programs allows them to be creative about opening up that really limited pool of drivers in the U.S.
Why is that pool so limited?A lot of people who either qualify to drive for Uber or need to drive for Uber — those demographics — have already started to drive for Uber and Lyft and then decided not to do it anymore. There aren’t a ton of new drivers for Uber and Lyft to recruit anymore, so they have to focus on retaining them.
Who gets targeted for these programs? Is it people who might not have otherwise qualified to drive for Uber or Lyft?It's people who don’t have a car at all or people who have a car but don’t meet all of the company’s requirements, which include how old the car is, things like that.
Your story delves into the higher costs of these programs that might not be obvious. What do those look like?In some markets, the rent per week starts at $219. But what a lot of drivers end up paying is about $240, including taxes and fees. So it’s just under $1,000 a month, if you're paying $240 a week.
The company says that insurance is included in that cost, but drivers who rent with Lyft are also being paid less per mile than drivers who use their own cars.
The other thing with ride-sharing apps is that a lot of drivers do multiple apps to come up with a pretty steady income. But if you rent a car through Lyft or Uber, you are not allowed to work for more than one service. So you can only drive for Lyft or you can only drive for Uber. Even if the pay was on par with what they were making before, they’re limited in how they can make their money.
Some of the drivers you wrote about are actually living in their cars. How does that shake out?Due to extenuating circumstances, some of these drivers have resorted to sleeping in their cars. At least one of them got a second job and is now able to afford a room in a boardinghouse in Hollywood, but before that he was sleeping in his car.
So, this vehicle that he’s paying $240 a week for and is being paid less [than a driver who wasn’t renting from the company] to drive is not just his income, it’s also his home. The difficult thing is that they’re just not making enough to save.
Lyft puts a hold on your account for the cost of your [car] rent. So, until you make enough rides to cover that rent, you don’t have any income. Typically drivers spend the first two days of the week driving to cover that rent. It’s not until Tuesday or Wednesday that they actually have money that they can withdraw from their account. For drivers who are struggling and don’t have a ton of income or anything in their bank, that’s two days where they have to overdraw their bank accounts for gas money. That’s two days where they have to figure out what meals they can and cannot eat.
Lyft also imposes a few conditions and requirements that makes it feel like there’s this looming threat of losing the vehicle. And obviously for someone who’s living in the car, that's pretty daunting.
[Read “Lower pay and higher costs: The downside of Lyft’s car rental program” by Johana Bhuiyan]What do these stories say about the gig economy and gaps in the social safety net?It says a lot of things. It’s interesting because Lyft and Uber both pitch themselves as this, you know, part-time solution for people who just need cash on the side or supplementary income. They constantly say that more and more of their drivers are part-time …. And that’s kind of this protection for them, because earnings are decreasing in a lot of markets as they cut the prices for all drivers. So they go, ‘Well, this is not something that drivers are completely relying on for all of their income.’ But then these programs essentially incentivize you to work full-time.
There are a lot of upsides to driving for Lyft and Uber. But there’s a lot more downside when you are driving it full-time and are paying the premiums to drive for the company.
You cover the tech beat really differently than most, with a focus on how regular people are affected by these changing technologies. What’s your reporting philosophy?My entire focus at the L.A. Times is accountability. My north star has always been keeping the powers that be accountable to the public. That's always how I’ve covered the companies that I write about.
What
really matters is how this tech and innovation is affecting real people. There are forms of innovation that might be good for a certain demographic, but are also continuing to marginalize communities that are already really disenfranchised. I think it’s important to focus on how these corporations are affecting actual human beings.
And now,
here’s what’s happening across California:
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