This past year has brought monumental change to the gig economy landscape. Lyft got a new CEO, Uber reached profitability, DoorDash proved to be a consumer staple, and Instacart finally went public. All the while, a flurry of bills popped up from states and cities seeking to ensure minimum wage and provide workers with new protections.
Investors went into this year with concerns that U.S. consumer spending would dip dramatically, putting stress on pandemic darlings that had several quarters of growth thanks to stay-at-home orders and stimulus checks.
But consumers instead continued to take rides and order groceries on platforms, despite any macroeconomic challenges. Some turned to these platforms for part-time work to help offset rising inflation.
As 2023 comes to a close, we asked analysts, industry experts, and startup founders to predict how the gig economy will change for workers and consumers alike in the coming year. Their answers have been edited for length and clarity.
Harry Campbell, founder, the Rideshare Guy
“After a few tumultuous years during the pandemic, Uber’s driver supply is at an all-time high. That excess supply means that lower earnings could be in store for drivers over the next year as more and more of them compete for the same number of rides. Couple that with Uber’s recent profitability push, and it would not be a shocker if Uber looked to pay drivers less and continue to charge passengers more in order to increase profitability.
“On the regulatory side, there are a number of state ballot initiatives and propositions on the docket that will be costly and time consuming. But I expect that gig companies like Uber, Lyft, and DoorDash will ultimately come out on top and enshrine independent contractor status in state law while giving up some additional benefits like the ‘guaranteed hourly earnings’ we saw in California as part of Prop 22.
“Demand from consumers for food delivery has continued to increase, but I would not be surprised if growth came to a halt in 2024. There are a number of mixed economic signals, and if consumers are going to cut back on spending, I think cuts in spending on food delivery will come way before cutting back on rideshare. There are just so many good alternatives to the former: cooking at home, picking up your food, going out to dinner, eating leftovers, etc. Consumer demand in the food delivery space is a good leading indicator that I will be watching carefully in 2024 and could have larger implications for spending and demand in the rest of the gig economy.”
Dan Ives, senior equity research analyst, Wedbush
“We believe the gig economy is now thriving, being led by Uber as the economics and business model is scaling markedly. We believe more e-commerce will be merged with the gig economy as we foresee buying retail items that can be picked up in an Uber or Lyft and delivered within hours to a customer. We see more monetization in the gig economy and also believe more driverless Ubers and Lyfts in certain cities will be pilot projects kicked off by late 2024 following the Vegas test case, which has been very successful. We see this as a golden age for the gig economy in 2024 with food delivery reaching stabilization post-pandemic and travel booming while many return to the office full time over the coming year.”
Greg Star, cofounder, Carvertise
“The days of rideshare companies being funded by VC are over. There is a rush to both profitability and revenue growth. As a result, you’ll see higher pricing, especially during surge times. Wages will remain the same. There’s so much competition for rideshare workers that [if there’s] any reduction in wages, workers can just go to another rideshare company. Lastly, [we’ll see] more and more advertising from the gig economy companies—including OOH, toppers, car wraps, in-car etc. Any way to generate more revenue will be tried.”
Pedro Santiago, YouTuber and rideshare driver
“As more states and cities begin to try and put legislation in place for gig workers, cost for consumers will continue to rise. In 2024 the majority of drivers wont be impacted immediately but the trend of automation, legislation, and saturation of more workforce coming into the gig economy will make it a challenge long term.”
Jamie Siminoff, “chief doorman,” Door.com
“At this point, I find the term gig workers insulting. It is too broad of a term and does not respect the workers who wake up every day focused on doing the best job. We call them ‘Honest Day’s Workers,’ and believe that over the next few years there will be technology built to support them and not just use them. We hope to be a catalyst to this change and look forward to a world where the people doing the work are keeping the economics and being recognized for their work.”
Michael Morton, senior research analyst, MoffettNathanson
“Profitability and viable unit economics are now the focus. Consequentially, we expect a slowdown in growth—or in some cases a decline—in employees, advertising expense, consumer promos, and driver incentives as companies focus on rational growth.
“In North America rideshare, we expect rapidly rising variable insurance costs to pressure unit economics, forcing companies to push through the cost increase through a) continued higher consumer prices, or b) higher take rates. As a result, expect a continued push from Uber and Lyft toward higher-priced products (e.g., Reserve/Scheduled Ride and Extra Comfort) to offset this cost increase, although we ultimately believe base fares will continue to rise for the industry.”
Driver Eddie, YouTuber and rideshare driver
“On the consumer end, I consistently hear riders complaining about the prices going up, but they still order it because there is no other option, and at this point it is a part of their life now. Many people say they forego tipping as a result of the prices, feeling bad they can’t tip their driver but not wanting to spend more money.
“Since inflation hits lower and middle classes the hardest (aka the people who drive for Uber) there is a tremendous influx of drivers, which means the corporations can pay their drivers less. Sure, the quality of car/driver is decreasing, but at the end of the day, people don’t care about that. They just want a ride.
“Long story short, drivers’ wages will continue to go down until drivers realize that accepting every ride that is offered to them will hurt their bottom line. That said, on busy days like New Year’s or July 4, the influx of riders will still mean there are great days to drive and make some money.”
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