Is Uber Killing in Entrepreneurship?

Dollars & Details:

Startups and other small businesses have long been the key to a nation’s overall job growth.  Put another way: entrepreneurs and their activities are vital to the economic health of any country.  (Even communist countries like Vietnam and China have figured this out, encouraging business startups and privately-owned businesses in a big way—with great success.) 

On the other hand, many of the largest employers are streamlining, downsizing or offshoring in an effort to become more cost-efficient and achieve higher profits, thus, the large layoffs that hit the news from time-to-time.  Startups and growth companies, in contrast, must hire in order to grow.

The bad news: entrepreneurship (startup activity) in America dropped drastically during the 2008-09 recession, and it continued to fall through 2013, per official government numbers.  Today, according to the Kauffman Foundation, only about 6.0% of U.S. adults own a business, compared to 7.8% in 1997.  According to the Financial Times, since the late 1970s startups as a percentage of all firms have fallen by more than one-half and the number of workers at these firms has fallen by three-fourths.

The good news: Startup activity has finally rebounded in America, and is on a healthy track.  Meanwhile, the number of “contingent” workers (such as Uber drivers) in the sharing/gig economy is growing even faster than traditional entrepreneurship, and Plunkett Research considers this to be a very key trend.  Contingent workers have become such a vital part of the economy that the U.S Bureau of Labor Statistics will start officially gathering data on this segment in May, 2017.

Trends and Theories:

The Plunkett Theory:  Our CEO Jack Plunkett has been watching the drop in startups and the rise in the gig economy (the activities of companies that rely on part-time contractors instead of employees) at firms like Uber and Instacart.  He believes that the two are closely linked.  “Ask an Uber driver why he/she pursues this line of work, and you’re likely to be told that that they enjoy being entrepreneurs, and like being independent,” Plunkett said.

“Uber alone has nearly 500,000 drivers in America.   Gig economy/sharing economy workers state that they have chosen their careers because they want greater control of their working lives and more flexibility in their schedules.  In other words, they are seeking some of the top rewards of being entrepreneurs.” 

At the same time, the sharing/gig economy takes a lot of the pain out of being an entrepreneur, in that there is no need to understand and implement a marketing strategy, there is no need to make an investment (other than an automobile), and there are very few barriers to entering the market. 

Uber, Lyft, Instacart and TaskRabbit find customers for their contract workers, and take a cut of total revenues in exchange.  Even Amazon has entered the sector, with its Amazon Flex system that lets independents sign on as Amazon delivery people.  Jack Plunkett concluded, “When you consider these aspects of the gig economy, Uber and its peers are spurring lots of people to become entrepreneurs.”

Ranks and Results

Traditional entrepreneurship has started to rise again, but growth in contingent workers is much faster than growth in startups.  Meanwhile, there is no end to investors’ appetite for gig economy companies.  Venture capital investments in this field soared worldwide from about $1.5 billion in 2011 to more than $10 billion last year.

A recent study found Uber drivers in the U.S. receiving $19.04 hourly on average (part of which much be applied to their automobile operating costs, pay self-employment taxes, and buy insurance).  Many report a reasonable flow of tips as well.  This income compares favorably with some types of truck, taxi and bus drivers.  Meanwhile, Uber drivers enjoy complete control of their own schedules.


All the information you need about the global transportation industry can be found at Plunkett Research, including our Transportation, Logistics and Supply Chain Industry center online, and our just-published, completely-updated Plunkett’s Transportation, Logistics & Supply Chain Industry Almanac, 2017 edition.  See