Silicon Valley rideshare giant Uber is reducing its workforce by roughly 14 percent — about 3,700 people — as the coronavirus pandemic and stay-home mandates reduce the demand for rides, according to a Wednesday (May 6) regulatory filing.
Uber CEO Dara Khosrowshahi is giving up his $1 million base pay until the end of 2020, the filing with the Securities and Exchange Commission (SEC) also indicated.
“Due to lower trip volumes in its Rides segment and the Company’s current hiring freeze, the Company is reducing its customer support and recruiting teams by approximately 3,700 full-time employee roles,” according to the filing.
Uber anticipates the cuts will cost it about $20 million due to severance and other benefits associated with the layoffs.
“Days like this are brutal … We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” Khosrowshahi said in a memo to employees, as per a Wall Street Journal report on Wednesday.
“We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect,” he said.
The worldwide COVID-19 pandemic has triggered an economic crisis and has hit companies in the gig economy particularly hard as people continue to follow stay-home mandates and non-essential businesses remain temporarily closed.
During the week of April 20, rides with Uber were down 85 percent compared to the same week in 2019, according to research firm Edison Trends, as per the WSJ report.
“The impact on the sharing economy will be enormous, even devastating,” Stephanie Balaouras, a vice president at Forrester Research told WSJ.
Uber rival Lyft announced last month that it was reducing its workforce by 17 percent and cutting executives’ salaries May through August. The company said it was laying off 982 employees and furloughing 288 to trim operating costs.