When the COVID pandemic first hit, the federal government jumped in to help drivers and other workers whose jobs were severely affected by lockdowns make ends meet. Now, after about 18 months, the subsidies have been discontinued. Whether you’re driving again or unable to return to work, what does this mean for you?
In this post, we answer these questions:
- Why did the subsidy end?
- What will the end of unemployment payments mean for gig driving?
- What happens now if drivers get COVID and can’t work?
- Will it be easier or harder to make money driving now without the subsidy?
Why did the subsidy end?
The original subsidy that was signed into law in 2020 was extended once (in August of that year) through March 2021. After that, the American Rescue Plan Act extended benefits again through September 6, 2021. The supplemental unemployment payment was put into place to assist drivers and other workers who couldn’t work due to COVID, and to some extent, to keep them from spreading COVID should they be infected.
The original subsidy, which totaled $600 per week in federal benefits over and above state unemployment compensation, helped many drivers sustain themselves through the worst days of the pandemic. It also gave other independent contractors/freelancers access to unemployment compensation for the first time.
Later, the subsidy was reduced to $300 per week, which was still helpful if not as generous as the first round. You can read more about the original law that made these subsidies possible in this Gridwise post, and what happened the first time it was renewed here.
Now that the provisions within the American Rescue Plan Act have expired, the subsidies will end. On top of that, according to this post on the U.S. government’s official website, many states are changing their laws back to how they were pre-pandemic when unemployment benefits were first extended to freelance workers. You can check whether this is the case in your state by visiting the U.S. Department of Labor’s CareerOneStop website.
While supplemental payments and unemployment benefits for freelance workers helped during the height of the pandemic, many believe that the benefits are now hurting the economy. This article in USA Today describes the situation from the angle of national and global economics.
Companies and small businesses complain that it’s been hard to get people back to work because they collected so much during the pandemic. Also, detractors argue, paying benefits to freelancers and subsidizing unemployment compensation with so much cash places a strain on government budgets.
All or some of this may be true. And the effects of people reluctant to return to work can be seen to a great degree in the gig driving business.
What will the end of unemployment payments mean for gig driving?
Ever since COVID hit, it’s been hard for companies to get drivers to go to work. While this is especially true for rideshare, some delivery drivers (for health reasons) have also been unable to be in places where they’d be exposed to the virus.
As a result, the companies have been spending millions in driver bonuses to get them back on the road. Uber alone plunked down $230 million for this specific purpose. Read more about this and the many other incentives that have been offered in this Gridwise post.
Yet, even with all the surges, bonuses, and premiums, drivers haven’t rushed to get back behind the wheel. There is still a driver shortage, and customers are complaining of long waits and sky-high fares. Drivers are miffed because demand is so high, and they often get pressed into taking rides that are far away or inconvenient because there are not enough rideshare drivers to take care of all the passengers.
On top of all that, passengers in big cities are looking to rideshare to help them avoid being exposed to the vast number of possibly infected people they might meet on a bus, train, tram, or subway. Right now, with prices through the roof, drivers are making out better than usual, but the companies are capitalizing on the higher fares, too.
On the other hand, passengers are being asked to shell out more cash and tap on their reserves of tolerance and patience while waiting for those overpriced rides. This NPR article goes into more detail about these issues and how they’re complicating the gig driving business. Jenny Park, a frustrated passenger (that was interviewed for this article), said: “I’m really thinking more seriously about getting into yellow cabs.”
Now that the subsidies are ending, will drivers come back to their vehicles and serve passengers again? The answer will depend on many factors. Some drivers are still skittish about being exposed to the virus while driving. Others may have to care for a loved one who has a high risk of infection. Even with the vaccine being widely deployed, there is still the risk of infection.
Obviously, there are still reasons for gig drivers to believe that theirs is a risky business. They might have found other ways to make a living, gone back to school, or even downsized their lives so they no longer need the extra cash.
Still, it seems reasonable to expect that the end of unemployment subsidies will add to the driver population. In addition to drivers who are ready, at last, to get back to work, new drivers will likely be added to the driver pool.
Fresh-faced rideshare and delivery drivers could come from the ranks of those whose unemployment compensation has expired, yet they might not have other options for making a living. The companies have been actively recruiting new drivers while trying to get more seasoned ones back on board.
If more people come to work in rideshare and delivery, the company incentives are likely to go away, and there will be more competition. That means you’ll have to be on your game as a driver and take advantage of the tools you have available to you. You’ll also have to make sure you know what you’d do if the worst-case scenario happened; i.e., you could no longer work at driving because you’ve been infected with or exposed to the virus.
What happens now if drivers get COVID and can’t work?
With access to unemployment compensation, it was easier to know what would happen if you weren’t able to work because of the pandemic. Not only did you have the government safety net, but companies offered compensation too. While some companies like DoorDash and Grubhub still do, it’s difficult to find information about direct compensation from Uber or Lyft. They do, however, still offer access to testing, health insurance, and safety precautions.
It could definitely pay to get protection against lost income due to sickness or being quarantined. Gridwise offers a program that does exactly that, called Gridwise Protection. For a small monthly charge, you can recover the income you might lose from being sick, hospitalized, or sidelined due to a collision repair or an unfair deactivation.
You’d be well served by this program, and remember, you can use Gridwise to get a leg up on all those new drivers who are likely to be entering the market. In case you are one of those new drivers, you’ll want to use this handy and helpful app to improve your driving life, too. Here are some of the great features Gridwise offers:
- Automatic earnings tracking from all your driving apps
- The ability to log your expenses as they come in
- Mileage records
- Shift time optimizing feature that tells you When to Drive
- Fresh feeds of airport, event, weather, and traffic information.
- Cool deals and discounts for drivers.
- Awesome graphs that provide a tidy summary of your gig driving business:
Gridwise has all the useful features drivers need to help them earn up to 39% more. All this can be yours when you take a few simple steps and download the app.
Will it be easier or harder to make money driving now without the subsidy?
If only we had a crystal ball, we could tell you for sure what the future of gig driving will be. Since we don’t, we’ll have to go on what we know about the gig driving business and what we’re hearing from our drivers. That gives us some ideas about what it might look like once the dust from the expiration of unemployment benefits settles.
How it might be harder:
- There will no longer be a safety net from the government if you don’t feel safe driving, or if you can’t, due to COVID.
- There could be more drivers on the road, meaning more competition. Prices for rides, and your earnings, might be reduced.
- People may not be compliant with rules such as masking and social distancing, putting you at increased risk.
- The driving platforms won’t be lenient with drivers because drivers can be easily replaced with others. This could mean more unfair deactivations, which is the focus of this Gridwise article.
How it might be easier:
- Life may go back to “normal,” and there will be more business. With people feeling less vulnerable to the virus, big events, bar hopping, and even in-office work conditions will likely reappear.
- If more drivers come on board, there will be less driving out to remote areas to pick up people in underserved areas.
- Customers will be more pleasant and less resentful if they’re not paying outrageous prices for rides.
- You already know you’ve survived the worst part of the pandemic, and ways of shielding you from loss, like Gridwise Protection, are in place to protect you from lost income.
The pros and cons balance out to some extent. While there will be more drivers, there will also be more business. Rideshare and delivery companies will continue to thrive, and you will still make good money with your driving gig. As long as you continue to follow safety guidelines and ensure that your passengers do the same, there’s every chance of a very bright future for gig driving – and you.