Chanos says gig economy companies like Uber will emerge ‘harmed’ from coronavirus crisis

Jim Chanos

Scott Mlyn | CNBC

The coronavirus pandemic may not be the boon for gig economy companies that some believe it will be,
billionaire short seller Jim Chanos told CNBC on Thursday.

“I think the gig economy companies are going to come out of this harmed, not enhanced,” said Chanos, founder of Kynikos Associates.

“I know there’s a body of thought that oh, well everybody will just do food delivery and we’ll all take Ubers and no one is going to buy a car again, and I think the flip side of it is that the labor pool issue for the gig economy companies is going to loom very very large coming out of this crisis.”

In an interview on CNBC’s “Halftime Report,” Chanos said the unemployment benefits being paid to gig economy workers, as outlined in the $2 trillion relief bill, could highlight certain issues with the models of companies like Uber, Lyft and GrubHub. Because these companies classify drivers as independent contractors rather than employees, the companies have avoided paying into unemployment programs the way a traditional employer would. That means the payments fall on taxpayers.

Uber CEO Dara Khosrowshahi appealed directly to lawmakers and President Donald Trump to secure unemployment benefits for gig economy workers like his. Uber, along with other gig companies, has fiercely opposed measures to reclassify its workers as employees, arguing it would strip them of flexibility and supplemental income they enjoy. Uber is challenging a new California law that aims to reclassify its workers along with delivery service Postmates.

While these companies have been integral in transporting food and essential workers during social distancing measures, Chanos said their models could leave them open to government scrutiny and regulation down the road.

“I think both political parties are going to be looking at that pretty hard coming out of the crisis to enhance corporate responsibility in lots of different ways whether it’s keeping employees as independent contractors, whether its restricting buybacks,” Chanos said.

Representatives from Uber, Lyft and GrubHub did not immediately respond to requests for comment.

Subscribe to CNBC on YouTube.

WATCH: Billionaire investor Jim Chanos: Coronavirus pandemic is going to hurt the gig economy

Leave a Reply

Back to top