TORONTO, Nov 11 (Reuters Breakingviews) – Some members of the shared economy are seeing a resurgence in parallel unrest as inflation bites. People are increasingly interested in driving for Uber Technologies (UBER.N) and listing their homes on Airbnb (ABNB.O) to earn some extra money. This is a nice change for markets that rely on sharing workers or spaces. And at least for now, the demand for the services is holding up.
Uber chief executive Dara Khosrowshahi said last week that more than 70% of the ride-sharing company’s drivers noted inflation played a role in their decision to sign up for work. Lyft (LYFT.O) had more active drivers than it has had since the pandemic began. Vacation rental company Airbnb, meanwhile, also reported “strong growth” in the number of new guests in its quarterly revenue. Company CEO Brian Chesky said people are particularly interested in earning extra income through accommodation, reflecting a rise in second jobs during the Great Recession of 2008.
It’s part of a broader rise in freelancing: A McKinsey survey estimates that 36% of employed respondents, or 58 million Americans, identify as self-employed, up from 27% in 2016. And people have need means to supplement their income. Consumer prices in the United States rose 7.7% in the year to October, and prices have recently risen more than they have in four decades.
Having more workers in theory gives companies leverage. Last month, US President Joe Biden proposed a new gig worker rule that could fundamentally change how companies classify their workers. But for now, competition among shared-service providers could be a good thing. The drivers or hosts ultimately take a share of the bookings that arrive on the platforms. The more vendors people can choose from, the lower the discount those vendors might be willing to take to get the job.
Inflation also has another aspect: the fall in demand. But the shared economy seems to hold up well, even if the economy doesn’t. Uber stresses “absolutely no signs of slowing down”. Airbnb had its largest and most profitable quarter ever. DoorDash (DASH.N) saw its orders rise 27% year-on-year to 439 million in the third quarter. Each of the companies has warned of or is watching for signs of consumer weakening. For now, however, additional scammers could work in their favor.
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Uber Technologies, Lyft, DoorDash and Airbnb reported their third quarter results in November. Uber Technologies said on Nov. 1 that its revenue grew 72% year-on-year to $8.3 billion in the third quarter. On Nov. 7, Lyft said revenue grew 22% year-over-year to $1.1 billion. DoorDash on Nov. 3 announced that its revenue grew 33% year-over-year to $1.7 billion. On Nov. 1, Airbnb said revenue grew 29% year-over-year to $2.9 billion for the quarter, and adjusted EBITDA increased 32% year-over-year to $1.5 billion. of dollars.
The US Department of Labor proposed a rule on Oct. 11 that would make it harder for companies to treat some workers as independent contractors. The rule would require companies that rely on so-called gig workers to designate them as employees, potentially giving them more benefits and legal protections.
Editing by Lauren Silva Laughlin and Amanda Gomez
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