A number of major gig economy companies suffered significant losses on Thursday, after the US labour secretary suggested some contract workers should be reclassified as employees.
Over $15 billion was erased off the value of the American gig economy, as shares of ride-hailing companies Uber and Lyft, as well as food delivery service DoorDash, fell between 5 and 11% on Thursday. The latest decline comes after US labour secretary Marty Walsh exclusively told Reuters that gig workers should be treated as employees. “In some cases [workers] are treated respectfully and in some cases they are not,” adding that rules should be “consistent across the board.”
Given the labour secretary’s significant influence over the interpretation of the US labour law, investors took the comments as an eminent threat to companies that are reliant on workers identifying as independent contractors. Gig economy workers, such as the ones employed by Uber and Lyft, must pay for a number of key costs— including vehicle maintenance and fuel— out of their own pocket, while receiving less benefits and labour protections compared to traditional employees.
“These companies are making profits and revenue and I’m not [going to] begrudge anyone for that because that’s what we are about in America . . . but we also want to make sure that success trickles down to the worker,” Walsh said. The labour secretary has several upcoming meetings with a number of gig economy companies over the next several months, Reuters reported.
Information for this briefing was found via Reuters. 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.
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