Uber and Lyft Gain Popularity as Job Market Slows

The gig economy has been on the rise in recent years, with more and more Americans turning to companies like Uber and Lyft for flexible work opportunities. This trend has been particularly pronounced in the wake of the COVID-19 pandemic, as many individuals have found themselves with fewer options for landing high-paying jobs. According to a recent report from the Bank of America Institute, the share of Bank of America customers receiving income from ride-hailing nearly tripled from less than 0.4% in March 2020 to about 1.2% as of March 2024, exceeding pre-pandemic levels.

One of the key findings of the report was that ride-hailing had become the most common source of gig income among BofA customers, surpassing deliveries, vacation rentals, and social commerce. Additionally, the report highlighted a growing trend of Americans going “all in” on gig work, with the share of gig workers who received gig income every month of the year increasing from about 3% in the 12 months preceding February 2023 to 4% in the 12 months preceding February 2024.

The shift towards gig work like ride-hailing can be attributed to a variety of factors. With job growth slowing and job openings decreasing, many Americans have found it increasingly difficult to secure higher-wage employment. In April, sectors that added the most job growth were lower-paying, while higher-paying sectors saw slower growth. This disparity has led some individuals to turn to gig work as a means of supplementing their income.

Furthermore, a recent Vanguard report found that the hiring rate has held steady for workers earning less than $55,000 a year, but has fallen for higher earners. This has created a situation where gig work may be a more viable option for those seeking additional income. Kate Bahn, the chief economist and SVP of research at the Institute for Women’s Policy Research, noted that job growth has not been accompanied by high wage growth in many sectors, prompting more individuals to explore alternative sources of income.

The rise in gig employment like ride-hailing slowed in 2022 as rising wages led more workers to pursue traditional jobs. However, as wage growth slowed in 2023, the number of gig workers began to increase again. This trend underscores the importance of economic conditions in shaping individuals’ decisions regarding employment.

The popularity of ride-hailing can also be attributed to shifting consumer spending patterns as pandemic conditions have eased. BofA hypothesized that the growth of ride-hailing relative to other gig opportunities may be driven by a pivot towards out-of-home services. Additionally, ride-hailing has proven to be a more lucrative option for many individuals compared to other gig opportunities like food delivery.

Despite the appeal of gig work, some Uber and Lyft drivers have expressed concerns about the profitability of ride-hailing. Increased competition among drivers, high vehicle expenses, and changes to driver pay structures have led to frustrations within the industry. This has resulted in driver protests and calls for higher guaranteed pay.

In conclusion, the rise of gig work like ride-hailing reflects broader trends in the labor market, with many Americans turning to alternative sources of income in the face of challenging economic conditions. As the gig economy continues to evolve, it will be important to monitor how these trends impact both workers and the broader economy.