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May 7, 2021

The pandemic has been a tough time to be in the business of shuttling people from Point A to Point B. For months, government rules and fears about catching Covid-19 meant everyone stayed put. Finally, though, there are signs of change — and Uber, for one, is thrilled.

"Uber has already begun to fire on all cylinders," CEO Dara Khosrowshahi told analysts after the company reported earnings Wednesday.

As the economic recovery picked up in key markets like the United States, the startup reported a net loss of $108 million for the first three months of the year. That's a dramatic improvement from the $968 million loss it posted during the final three months of 2020.

The company's core ride-hailing business still looks weak, with gross bookings for rides down 38% compared to a year earlier. But major growth in food delivery, which saw bookings jump 166% compared to the same period in 2020, is helping Uber weather the storm.

Even as customers return to the app, however, there's significant uncertainty over Uber's relationship with its drivers.

Driver supply has been a problem recently as the company tries to convince people it's safe to start ferrying riders around again. Khosrowshahi said the company is offering incentives to get old drivers back on the road and to find new recruits.

"There's a greater hesitation for some drivers to come on board to drive other people versus, again, [driving] food," Khosrowshahi said.

The longer-term problem is how Uber compensates its workers.

Earlier this year, the UK Supreme Court upheld a ruling that Uber drivers in the country should be classified as workers and not independent contractors. That means they're entitled to the minimum wage, vacation time, and a pension.

Uber said Wednesday that it had to set aside $600 million to deal with these changes.

It's not the only place where the tide could be turning against Uber on labor issues. Chief Legal Officer Tony West acknowledged that the company is actively engaging on such matters with officials across Europe, which he said is "really is at the forefront."

But the approach from the Biden administration is increasingly under the microscope, too. On Wednesday, the US Labor Department said it was withdrawing a Trump-era rule that would have made it easier for companies to classify gig economy workers as independent contractors.

"Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors," Labor Secretary Marty Walsh said in a statement.

West said the current administration doesn't have a uniform set of views, which "creates space for some meaningful dialogue." But investors may not be as sanguine. Shares are down 4% in premarket trading.


Source: Forbes
Image Source: Getty Images