Lyft joins the long list of companies laying off employees in preparation for what it calls a “probable recession.”
According to Fast Company, Lyft CEO Logan Green and President John Zimmer called employees to an all-hands meeting.
“We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up,” the executives wrote in an email announcing the meeting. “We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives. Still, Lyft has to become leaner, which requires us to part with incredible team members.”
“We are not immune to the realities of inflation and a slowing economy. We need 2023 to be a period where we can better execute without having to change plans in response to external events — and the tough reality is that today’s actions set us up to do that,” Zimmer and Green added. “It’s our responsibility to take ownership of these decisions and, in the end, protect the future we’re building for the drivers and riders we serve.”
The company says it will give workers 10 weeks of pay, assistance finding other jobs, and healthcare through April 2024.
Lyft co-founderJohn Zimmer is extremely confident the court ruling that found California Proposition 22 unconstitutional will be overturned on appeal.
“If you look at California Constitution we feel very confident in the way the ballot initiative was written,” says Lyft co-founder and President, John Zimmer. “The Attorney General in California agrees with us and was on our side in this lawsuit. As this goes through higher courts, the appeals court in California, we are extremely confident that the proposition will be upheld.”
“There is no change coming (to Lyft) out of that ruling,” adds Zimmer. “It will go on appeal and we’ll continue to work within the system of law and we are confident of the final outcome.”
“It’s hard to predict the legal process fully but we’re optimistic that within that (6 months) timeframe we’ll get a more final resolution.”
“The impact of the pandemic to us in the broader market is rides being down about 50% now,” says Lyft co-founder and President John Zimmer. “They were down 75%. So we are halfway recovered across the board. That impacts individual drivers as well. If you look at how some drivers have shifted, we actually have higher driver earnings now per hour than even pre-pandemic.”
John Zimmer, co-founder and President of Lyft, discusses the impact of the pandemic on Lyft, noting that daily rides are still down by half since March 2020:
Lyft Rides Still Down 50%
Drivers 4 to 1 want to remain independent contractors and want to retain flexibility. Depending on the market, 80 to 90% drive less than 20 hours a week. We think there is a much better way forward than saying (in California) that everyone should become employees. That way forward is to say let’s retain the flexibility and let’s add more protections and benefits like we are pushing for in California.
The impact of the pandemic to us in the broader market is rides being down about 50% now. They were down 75%. So we are halfway recovered across the board. That impacts individual drivers as well. If you look at how some drivers have shifted, we actually have higher driver earnings now per hour than even pre-pandemic. There’s equilibrium between demand and supply, between riders and drivers.
Impact Of Lockdowns And The Virus Is Real
The impact to the broader economy and the impact with lockdowns and the virus is real for our business. Transportation is directly tied to people’s movement and the broader economy. That said, we’ve continually week over week seen incremental improvements going from negative 75% to now above 50%.
We see markets like Toronto back to 80% of where we were before. As countries get better and as states get better at living with the conditions we have because of the virus I see continued improvement. Driver earnings per hour are higher today than they were pre-pandemic. We are looking right now for more drivers.
Regulation Has Been Part Of Our History From Day One
Regulation has been a part of our history from day one. We are as much in the transportation business as we are in the technology business and transportation historically has been a regulated industry. Within our first year of operation, we worked with California regulators to create a new category for regulation.
It’s been part of our business and will always be part of our business. It’s part of how we think about the path to profitability but we are just moving forward on that path despite anything that is going to change around us in terms of regulation.
Largest Bike-Share Program In North America
We also have a diversified set of transportation that we offer. We have the largest bike-share program in North America with City Bikes in New York City and Bay Wheels in the Bay and Divvy in Chicago. Our bike systems are in many cases above where they were pre-COVID. They are a great way to get around and get some fresh air and not be next to someone else.
Lyft Co-Founder John Zimmer Says Rides Are Still Down 50%
Lyft is warning it may join Uber in shuttering operations in California following a preliminary injunction classifying its drivers as employees.
Uber, Lyft and the state of California have been locked in a battle over how to classify the two companies’ drivers. Under the Assembly Bill 5, gig workers are considered employees if they are critical to a company’s business. The law has profound implications for companies like Uber and Lyft, whose entire model is geared around independent contractors.
In his ruling, the judge granted a preliminary injunction preventing Uber and Lyft from classifying their drivers as independent contractors, effectively making them employees. While both companies plan to appeal the ruling, according to The Verge, Lyft President John Zimmer made it clear that losing the appeal would result in Lyft leaving the state. In a call with investors, he said: “If our efforts here are not successful it would force us to suspend operations in California.”
Uber and Lyft’s case will have far-reaching consequences for the gig economy in California and beyond.
