As the likelihood of a recession increases, the ridesharing company Lyft revealed that it intends to fire hundreds of employees. The Washington Examiner reports that co-founders John Zimmer and Logan Green informed all employees in a company-wide email that Lyft will be axing over 700 positions to strengthen its operations going into 2023. The company is now dealing with rising inflation and a weakening economy.
The email stated, in part, “There are several challenges playing out across the economy. We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up,” adding that the “tough news” would affect every department in the company. However, the company maintained its sales projection for the third quarter and stated that it was optimistic about the business’s overall trajectory.
The company noted the layoffs are more of a preventative step that is a part of its preparations for next year. The action follows the company’s recent decision to lay off a small number of employees over the summer from its non-driver workforce of more than 4,000. About 2% of its workers were affected by that wave of terminations.
The layoffs occur as a recession grows more probable. The Federal Reserve has been raising interest rates at a historical rate to counteract soaring inflation. The central bank carried out its fourth consecutive large-scale increase on Wednesday, this time by 75 basis points. While the measure is intended to lower inflation by reducing demand, it has the unintended consequence of slowing the economy and possibly leading to layoffs. The labor market is still robust, but most analysts anticipate that unemployment will rise and the economy will enter a recession sometime next year.
