As high-paying jobs become harder to get, more Americans are looking to Uber and Lyft for extra income

• Gig work, in particular ride-hailing for companies like Uber and Lyft, is getting more popular.
• Some Americans are turning to it as cost-of-living pressures persist and the job market slows.
• It might not be the solution for everyone in need of extra income.

More and more Americans are taking up gig work for companies like Uber and Lyft — in part because some have fewer options to land high-paying jobs.

The share of Bank of America customers receiving income from ride-hailing nearly tripled from less than 0.4% in March 2020 to about 1.2% as of March, exceeding pre-pandemic levels, according to a Bank of America Institute report that analyzed internal company data and was published in late April. Among BofA customers, ride-hailing became the most common source of gig income over the last year, passing deliveries, vacation rentals, and social commerce.

BofA also found that many more Americans are going "all in" on gig work. The share of gig workers who received gig income every month of the year increased from about 3% in the 12 months preceding February 2023 to 4% in the 12 months preceding February 2024 — much of this growth came from ride-hailing. Since 2022, it's become increasingly common for gig workers not to have a traditional job, compared to those who do it as a side hustle, BofA found.

Some Americans may be turning to gig work like ride-hailing because they've struggled to boost their income. Job growth is slowing, job openings have fallen from record levels, and April data from the Bureau of Labor Statistics released Friday suggests it's getting more difficult to find higher-wage employment.

In April, the sectors that added the most job growth were lower-paying, including retail trade, wholesale trade, transportation and warehousing, and healthcare and social services. Higher-paying sectors, including manufacturing, construction, and professional services, saw slower job growth. What's more, the unemployment rate rose to 3.9%, up from 3.8% in March.

Additionally, a recent Vanguard report found that the hiring rate has held steady for workers who earn less than $55,000 a year, but has fallen for workers in the top third of earners, who make over $96,000, to its lowest level since 2014.

"Where there's been job growth has not been sectors where there has been high wage growth," Kate Bahn, the chief economist and SVP of research at the Institute for Women's Policy Research, previously told BI.

BofA noted that growth in gig employment like ride-hailing slowed in 2022 when rising wages led more workers to pursue traditional jobs. But as wage growth slowed in 2023, the number of gig workers began to tick up again, BofA found. In January 2023, wages rose 6.3% compared to the prior year, according to the Atlanta Fed. By November, this had fallen to 5.6% and was 5.2% as of March 2024.

Why ride-hailing is getting more popular

The BofA report gave several reasons Americans in need of cash might be flocking to ride-hailing in particular.

BofA hypothesized that ride-hailing's growth, relative to a gig like food delivery, may have been driven by a shift in Americans' spending patterns as pandemic conditions have eased.

"This mirrors the pivot in consumer spending towards out-of-home services and away from in-home services and goods, with more people eating out, for example, rather than ordering in," the report said.

Additionally, BofA found that people with ride-hailing income earned, on average, more a month than those who did delivery gig work. Vacation rental was the highest-earning gig BofA measured, but this is only accessible to people with a home to rent out.

Lastly, BofA said that some people who valued public transportation pre-pandemic have shifted to using ridesharing for some trips, given that demand for public transportation is well below pre-pandemic levels while traffic levels are about equivalent.

Younger generations account for much of the rise in ride-hailing numbers.

BofA found that ride-hailing was the most common gig for millennials and Gen X. More than 30% of all gig workers in these generations had ride-hailing income, compared to about 20% for Gen Z and 25% for boomers.

While some young people could value the supplementary income gig work can provide — particularly if they're struggling to pay the bills — others may end up disappointed.

Over the last year, several Uber and Lyft drivers have told BI that ride-hailing is less profitable than it used to be. They've accused ride-hailing giants of taking a bigger cut of rider fares and said increased driver competition and high vehicle expenses have hurt their earnings. These frustrations have led to driver protests and calls for higher guaranteed pay.

Have you recently become a gig driver for companies like Uber and Lyft? What were your motivations? Reach out to these reporters at [email protected] and [email protected].