Connect with us

Business

Uber and Lyft Avoided Paying Into Unemployment While the Federal Government Provided Drivers With Millions in Loans

Published

on

  • Newly released data from the Small Business Administration shows that many Uber and Lyft drivers heavily relied on federal aid programs during the pandemic while the multi-billion dollar tech firms provided little to no unemployment assistance.
  • The data, accessed by the Washington Post, reportedly shows that tens of thousands of gig drivers took in $80 million under the Economic Injury Disaster Loans program for small businesses, in addition to other aid for out-of-work contractors.
  • Policy experts said it is unusual for such a vast number of workers operating under huge corporations to receive government aid of this nature.
  • Experts also claim that workers’ access to federal assistance helped the two companies financially and alleviated pressure to make drivers employees amid tense political battles over the issue.

New Data on Gig Workers and Federal Aid

Tens of thousands of Uber and Lyft drivers took in $80 million from a federal loan program during the pandemic while the multi-billion dollar companies refused to pay out unemployment, according to a new report from The Washington Post.

The report analyzed data from the Small Business Administration that was released after The Post and 10 other news organizations filed a federal lawsuit under the Freedom of Information Act. 

The Post’s analysis of the data showed that many gig drivers “were left without employer support” during a time when ride-share companies themselves reported that trips had dropped as much as 80% in big cities.

As a result, those drivers were forced to rely on a mishmash of different government aid programs. Specifically, the $80 million figure comes from a loan program for small businesses, similar to the Paycheck Protection Program (PPP), called the Economic Injury Disaster Loans program (EIDL).

According to The Post, both Uber and Lyft “were the two most common business names” in the EIDL. Nearly 20,000 grants and loans going to people with apparent ties to Uber and Uber Eats and more than 8,000 with ties to Lyft in their searches of the data.

Additionally, many drivers also received federal aid under the Pandemic Unemployment Assistance, which provided unemployment benefits for independent contractors who otherwise would not qualify, a well as loans from the PPP.

The Independent Contractor Debate Continues

Uber and Lyft, for their part, responded to The Post report by emphasizing what they did do for drivers.

Uber spokesperson Matthew Wing said that the company provided $29 million total in assistance to almost 100,000 drivers and couriers who tested positive for COVID-19 or who were told to isolate because of preexisting conditions.

Wing also noted that the company gave out free PPE, helped connect workers with other ways to earn money, and provided information on government assistance programs.

Lyft, by contrast, just provided information about what money its workers could get from the government without providing any financial support themselves. The company’s spokesperson, Julie Wood, even argued that drivers preferred to be independent contractors because it meant they could qualify for the government assistance.

But policy experts told The Post that it is highly unusual for such a big group of workers under the purview of such large corporations to receive that money. Beyond that, not only did the tech companies benefit financially from their workers tapping into programs they did not have to pay into, the aid also lifted the pressure for them to make drivers employees at a time when there was a political battle raging over the topic.

While these companies’ workers were relying on help from the government, rather than simply giving them benefits, the same gig economy employers were pouring hundreds of millions of dollars into efforts to ensure those workers stayed as contractors and did not have access to standard benefits under California’s Prop 22.

The measure, passed in November, provided the companies with a model they are now pushing in other states.

“More broadly, it reflects how a new economic class of workers was left to rely on the social safety net at the same time Big Tech added billions in value and fought regulation that would require gig firms to contribute more to social programs,” The Post wrote.

See what others are saying: (The Washington Post) (Business Insider Australia) (The Verge)

Business

Major Chinese Company on Verge of Collapse Could Create Economic Trouble in U.S. 

Published

on

The company, Evergrande, accumulated $305 billion in debt through a business model that some have deemed “the biggest pyramid scheme [in] the world.”


Evergrande Can’t Pay Back Loans

The Chinese real estate company Evergrande, the second-largest property developer in the country, will likely be unable to meet interest payments on $84 million in offshore bonds due this week.

That amount almost seems like chump change compared to the whopping $305 billion in debt it managed to accrue since its founding in 1996, but if Evergrande defaults on its payments and collapses, it could send shockwaves through Chinese markets and economies abroad.

At its height, Evergrande was a Fortune 500 company. In addition to real estate, it also owns a theme park, a line of electric cars, a mineral extraction group, and a soccer team; however, it has struggled to maintain its real estate business model over the last several years due to government crackdowns on how much companies can take out in loans.

Evergrande Struggling to Pay Its Debts

In the 2000s, Evergrande aggressively borrowed money from banks and other lenders to buy land from local governments that were eager to sell. As the value of land rose, it kept borrowing, ultimately driving up the price of land even more. Because of that, many discredited Evergrande’s business model as “the biggest pyramid scheme the world has yet seen.”

For years, the model did not stir up any major challenges from Chinese regulators, but in 2018, President Xi Jinping began emphasizing “financial risk” as a problem that the government needed to address. Two years later, regulators imposed a system known as “three red lines,” which was meant to curb unregulated borrowing.

Under the system, the more a company owes, the less it is allowed to borrow. Notably, Evergrande crossed all three of the “red lines,” so regulators barred it from borrowing any more money.

But Evergrande would need to generate some form of income if it wanted to stay afloat. Because of that, it pre-sold more than 1.4 million apartments it hadn’t yet finished building. In other words, Evergrande stopped borrowing from official lenders and essentially started borrowing from everyday homeowners, asking them to pay major deposits before their homes were completed. Perhaps unsurprisingly, some people have now waited years for their homes to be ready.

At one point, Evergrande even became so strapped for cash that it forced its own employees into a corner, telling them to provide the company with a short-term loan or lose their bonuses. That, in turn, led to some employees needing to take out loans through banks. 

Similar to its inability to pay back banks, earlier this month, it stopped paying back the loans from its employees. 

Amid Evergrande’s uncertainty, the company’s stock value has steadily fallen over the past year from around $4 last September to just 30 cents Tuesday. 

Will This Lead to a Global Market Crisis?

There is currently no market crisis or collapse, only concerns that one could come. 

While Evergrande’s inability to repay its lenders is unsettling enough for homeowners and the company’s employees, the effects of an Evergrande default could be much more far-reaching. 

For one, if Evergrande defaults, banks and other firms will potentially be forced to lend less given the fact that the company owes large sums of money to around 300 institutions. If that happens, it could lead to a credit crunch, meaning companies would struggle to be able to borrow money at affordable rates. Some might be forced to close up shop for good. 

On top of that, the property values of existing homes in China would likely diminish. Since homes are such a valuable asset, that would likely lead to a decrease in consumer spending.

With those two effects combined, other countries would almost undoubtedly feel the financial shock. On Monday, upon the continued news that Evergrande likely can’t pay lenders, the U.S.-based Dow Jones fell 900 points. While it has recovered somewhat, other major U.S. indices like the S&P 500 and the NASDAQ saw similar pullbacks.

Many have asked if China is about to face a “Lehman Brothers moment,” a reference to the events that caused the disastrous 2008 recession. For now, the answer is uncertain, but many analysts expect it won’t.

That’s because while a full-scale crisis isn’t off the table, many believe the Chinese government will step in to bail out Evergrande, which some have called “too big to fail.”

“Rather than risk disrupting supply chains and enraging homeowners, we think the government will probably find a way to ensure Evergrande’s core business survives,” Mattie Bekink, of the Economist Intelligence Unit, told the BBC.

Still, nothing is certain. It’s possible China could refuse to bail out Evergrande to avoid what could be seen as it setting a bad precedent as it tries to rein in corporate debt. 

Chinese markets were closed Tuesday, but they will reopen Wednesday. No doubt, analysts will closely study how investors in the country react and whether or not that reaction could give the public a better idea about how the government might respond. 

See what others are saying: (BBC) (The Washington Post) (Axios)

Continue Reading

Business

Philadelphia Will Pay $2M to Black Woman Beaten by Officers Whose Child Was Used in a Pro-Police Social Media Post

Published

on

The post from the National Fraternal Order of Police claimed officers found the toddler “lost” and “barefoot,” but the mother’s lawyers said police ripped the child from her vehicle during an unjust stop and caused him to lose his hearing aids. 


$2 Million Settlement

The city of Philadelphia has agreed to pay a $2 million settlement to 29-year-old Rickia Young, a Black woman who was pulled from her car and beaten by police officers last year while trying to navigate through protests spurred by the police killing of Walter Wallace Jr. 

Along with the settlement, both an officer and a sergeant have been fired in connection to their treatment of Young that night. Another 14 members of the Philadelphia Police Department are awaiting disciplinary hearings that stem from an internal investigation into the incident. 

The terminations and investigations have not satisfied Kevin Mincey, one of Young’s attorneys. He’s currently calling on District Attorney Lawrence Krasner to file criminal charges against those officers, saying, “If any citizen did something like this, there would be no question they will be charged with aggravated assault as a felony.”

As of Thursday morning, Kranser has not said whether he plans to pursue such charges. 

Police Beating of Rickia Young 

On Oct. 27, 2020, Young said she drove into West Philly to pick up her 16-year-old nephew because he lived near the epicenter of the protests that were happening that night.

On her way back home, she reportedly came across a group of protesters blocking the street while engaging in a standoff with police. The police allegedly ordered her to turn her car around, and according to her attorneys, she complied but paused at one point to avoid hitting protesters running past her car.

From there, Young’s attorneys claimed police surrounded her vehicle. They then allegedly broke her windows with batons before pulling her and her nephew out of the vehicle. According to multiple outlets, the officers began beating her, leaving her with swelling on her face and body, as well as a swollen trachea. A video of this incident later went viral online.

For hours, Young was separated from her toddler, who was removed from the car by police and lost his hearing aids at some point during the night, according to her attorneys. Even after getting her son back, for days, she was without her car. 

Ultimately, neither young nor her nephew were cited. 

Pro-Police Post Involving Young’s Son

Two days after the incident, the National Fraternal Order of Police, the country’s largest police labor union, posted an image to Facebook showing an officer holding a young, Black child.

“This child was lost during the violent riots in Philadelphia, wandering around barefoot in an area that was experiencing complete lawlessness,” The caption read. “The only thing this Philadelphia Police Officer cared about in that moment was protecting this child.”

“We are not your enemy. We are the Thin Blue Line. And WE ARE the only thing standing between Order and Anarchy.”

While claiming that she had been abused by police, Young would also go on to claim the “lost” child in the photo was that of her son.

“They’re attempting to erase what happened — police brutality — and turn it instead into police saviorism,” Riley Ross, one of Young’s attorneys said. “It’s another deep wound that they cut.”

After being informed of the background behind the photo, the National Fraternal Order of Police deleted the post with Young’s child.

Still, as Philly council member Isaiah Thomas asked in February, “Who knows how many people there are who’ve seen that original image, but never actually understood that parent was not involved in some type of looting situation as it was displayed unfortunately on social media?”

See what others are saying: (Philadelphia Inquirer) (USA Today) (ABC News)

Continue Reading

Business

TikTok Works To Block “Devious Lick” Trend That Has Kids Stealing School Equipment

Published

on

Some schools have even threatened to pursue charges against those stealing or destroying school property.


What Is a Devious Lick?

TikTok is taking action against a new trend on the platform that involves users showing off what they consider impressive thefts they’ve pulled off, often at their own schools.

Users on the app refer to these thefts as “devious licks,” and some standout examples include kids stealing school projectors, street signs, microscopes, fire alarms, and pretty much anything you can imagine.

A lot of students also seem to particularly enjoy targeting school bathrooms, stealing paper towels or soap dispensers and even entire toilets or sinks, sometimes leaving bathrooms totally unusable.

Schools Respond

School officials across the country are obviously unhappy with this trend since it’s leaving their schools destroyed and low on equipment that is expensive to repair or replace.

In fact, many have issued warnings calling for the behavior to stop. Along with threats of suspension, some schools have said they will make families pay for the cost of the damage their child creates. Others even said they would get law enforcement involved.

For instance, Aubrey Chancellor, executive director of communications at North East Independent School District in San Antonio Texas, told Fox News, “It’s important for students to understand what they see on social media is not always a good idea in reality.”

“The students involved face disciplinary action and are expected to pay restitution as well. If possible, charges may be filed as well.”

With the trend generating widespread concerns, TikTok issued a statement Wednesday saying, “We are removing this content and redirecting hashtags and search results to our Community Guidelines to discourage such behavior.”

See what others are saying: (NBC News)(Desert News)(Gizmodo)

Continue Reading