Ride-sharing giant Uber has announced that it will be laying off 3,700 employees, or around 14 percent of its workforce, due to the drop in its business suffered during the Chinese virus pandemic.
CNBC reports that ride-sharing company Uber announced in a filing with the SEC that the firm will be laying off 3,700 employees from its customer support and recruiting teams.
The cuts represent approximately 14 percent of its 26,900 employees based on Uber’s most recent employee figures. CEO Dara Khosrowshahi will also reportedly forgo his base salary for the year. In 2019 Khosrowshahi made approximately $1 million in base salary and gained the vast majority of his compensation from bonuses and stock awards.
Uber has been hit hard by the Wuhan coronavirus pandemic, with the company’s stock price dropping 3 percent as of Wednesday morning. Due to the stalling of travel worldwide, Uber has seen its global gross bookings down by 80 percent according to a report last month from The Information.
Uber’s drivers have also lost income which has reignited the debate around whether or not Uber should classify its drivers as contractors. On Tuesday of this week, California Attorney General Xavier Becerra and three city attorneys announced a lawsuit against ride-sharing firms Uber and Lyft, alleging that the companies denied workers benefits by misclassifying their employment type.
At the beginning of April, Breitbart News reported that billionaire investor Jim Chanos predicted that Gig Economy companies such as Uber would suffer during and after the pandemic. As we reported:
“I think the gig economy companies are going to come out of this harmed, not enhanced,” said Chanos, founder of Kynikos Associates. “I know there’s a body of thought that oh, well everybody will just do food delivery and we’ll all take Ubers and no one is going to buy a car again, and I think the flip side of it is that the labor pool issue for the gig economy companies is going to loom very very large coming out of this crisis.”
Chanos said that unemployment benefits being paid to gig economy workers could highlight certain issues with the models of companies such as Uber, Lyft, and GrubHub as these companies classify drivers as independent contractors rather than employees meaning that the companies have avoided paying into unemployment programs as a traditional employer would. This means that the payments are made by taxpayers.
Even as Uber cuts its workforce down, its reportedly continuing to look for future investments. Uber had been in talks to lead a $170 million investment in the electric scooter company Lime, valuing it at $510 million, a 79 percent drop from its previous valuation. Read more about Uber’s possible investment in Lime at The Information here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address email@example.com