California Voters Pass Proposition 22 Sending Uber, Lyft Shares Soaring
Tuesday was not only a day for the most anticipated election in recent history, but also a very important day for gig economy companies such as Uber, Lyft, and DoorDash. According to the Associated Press, voters in California voted in favour of Proposition 22, which would exempt gig-economy companies from requiring them to classify their workers as employees. Although the ballot measure will allow the drivers to receive some form of minimal benefits, they will not be entitled to full employment protections that would be traditionally offered alongside normal jobs.
Indeed, gig companies including Uber and Lyft spent a fortune on efforts to to get the ballot measure passed, and even threatened to leave California if they did not get their way. In fact, the gig companies combined spent a whopping $200 million to further “Yes on 22,” which turned out to be the most expensive ballot measure in the state’s history.
As the Associated Press noted, Proposition 22 received over 10.8 million votes, which puts its approval at 58.1%. As a result of the ballot measure’s success, Uber and Lyft shares have skyrocketed nearly 17% and 12% respectively, since election day.
The strong reaction from investors not only reflect the overall sentiment in California, but also serves as a precursor of what will likely happen elsewhere in the country. Officials in Illinois, New York, as well as other states have also mulled introducing strengthened labour laws for the gig economy. Conversely, Proposition 22 also gained some opposition, most notably from Democratic presidential candidate Joe Biden, California Teachers Association, and the Service Employees International Union, among others. Nonetheless, the passing of the ballot will see that gig economy workers will now have to continue operating as independent contractors, whilst not being entirely entitled to standard employment protections.
Information for this briefing was found via the Associated Press. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
