Jim Chanos, Kynikos Associates founder, joins 'Fast Money Halftime Report' to discuss how the gig economy will not scrape by unharmed from the coronavirus pandemic.
The coronavirus pandemic may not be the boon for gig economy companies that some believe it will be, Kynikos Associates Founder Jim Chanos said on CNBC’s “Halftime Report” Thursday.
“I think the gig economy companies are going to come out of this harmed, not enhanced,” said the billionaire investor and famous short seller. “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.”
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, meaning 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 economy 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.
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