One major player in the rideshare space – Lyft – has recently announced that they will be doing another significant round of layoffs.
This change will affect the company, drivers, riders, and the rideshare industry as a whole. To help you learn more about the Lyft layoff and what they mean, we’ve rounded up everything to know below.
What’s Happening
Lyft, like many tech companies, has announced a new round of layoffs. This is the second wave of layoffs in 2022, with the latest batch bringing an expected decrease of nearly 700 to Lyft’s corporate workforce.
The company explained in a press release,
“There are several challenges playing out across the economy. We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up. 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. The layoffs impact every organization in the company, and were based on deprioritized initiatives, an effort to reduce management layers, broader savings goals, and, in some cases, performance trajectory.”
What’s Behind the Layoffs
There are a few potential reasons for Lyft’s layoffs, but explanations (according to the press release) largely point to inflation and a slowing economy. The reality is that many companies are struggling to stay afloat in these tough times, and Lyft is no exception.
Cuts have to be made somewhere, and unfortunately, employees are often the ones who bear the brunt of them. This announcement comes after Lyft’s diligent efforts to lower operating costs earlier this year. Though with results that missed the mark, it ultimately resulted in more action needed.
Consequences of the Lyft Layoffs
Restructuring & Costs
Lyft leaders have cited that the layoff costs will be roughly 30 million for the company. Those costs will go toward restructuring the business in the absence of the laid-off employees.
Plus, there will be associated charges for benefits and severance package issues for employees on the way out.
Benefits for departing team members include ten weeks’ pay, healthcare coverage through April 2023, and more – all extended expenses. These costs are planned to be incurred during the 4th quarter.
Potential Raised Fees for Drivers & Passengers
While slimming down the staff count for Lyft is ultimately being done to help the company save, the costs to make the change are exponential.
While it has not been announced that fees on behalf of passengers or drivers are expected to go up, the company may look for ways to offset the change in the coming months via higher prices or commissions.
Employee Divestiture
Divestitures are a common action taken by companies when layoffs happen – even Lyft. The process is described as the offloading of subsidiary investments and interests. This can be done via sells, trades, exchanges, or other forms. In the case of Lyft, the company is using these divestitures as a way to help bridge the gap for some employees.
According to Lyft, the layoffs will not leave employees completely helpless. The company goes on to say, “…we are pursuing a divestiture (sale) of our first-party vehicle service business, and in that case we do expect most of those team members will be offered roles from the acquiring company.
Less Help From “Higher Up”
While only time can tell exactly how these layoffs will affect Lyft drivers, it’s likely that the restructuring of the company will have some adverse effects. With resources stretched thinner, the way you do your job may look a little different than before.
One potential consequence of the layoffs is that there is not as much of a presence from corporate Lyft to help drivers navigate their job. If there is a problem, delays can be expected. Plus, layoffs are always felt in waves, even after the initial action.
How Lyft Layoffs May Impact the Rideshare Industry
The recent Lyft layoffs may have a significant impact on the rideshare industry as a whole. As one of the largest companies in the space, Lyft’s actions will likely set a precedent for other companies to follow suit.
This could mean more competition for drivers, as there are fewer people working to connect riders with drivers.
In addition, driver pay rates could be further cut in order to keep companies afloat. These changes could have a major impact on the livelihoods of rideshare drivers, and it remains to be seen how the industry will adapt.
The Future of Lyft
Because of the drastic changes in Lyft’s workforce, many question the longevity of the company. While there is no way to predict what will happen down the road, the company is doubling down on the future.
They go on to say,
“We are confident in the overall trajectory of the business. It was important to take these proactive actions to ensure we can accelerate execution, stay focused on the best opportunities to drive profitable growth, and deliver strong business results in 2023 and beyond… 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. 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 Takeaway
Lyft’s recent layoffs will have a significant impact on the rideshare industry as a whole. As one of the largest companies in the space, Lyft’s actions will likely set a precedent for other companies to follow suit.
This could mean more competition for drivers, as there are fewer people working to connect riders with drivers. In addition, driver pay rates could be further cut in order to keep companies afloat.
These changes could have a major impact on the livelihoods of rideshare drivers, and it remains to be seen how the industry will adapt.
What do you think? Are you worried about how these Lyft layoffs will impact your experience as a driver? Let us know!