While the world is focusing on the US presidential race between President Donald Trump and former Vice President Joseph Biden, the app-based service companies have made big news in the Silicon Valley tech world: The gig economy has been saved by California voters who passed Proposition 22 with 60% majority. The entire gig economy was facing the threat of extinction from California Assembly Bill 5 that required all gig workers to be classified as employees with full benefits rather than contractors. The voters in heavily Democratic California state also defeated anti-business Propositions 16 and 21. Prop 16 would have significantly raised commercial property taxes while Prop 21 would have imposed stricter rent controls. Bob Shrum, a former Democratic strategist and the director of the Dornsife Center for the Political Future at the University of Southern California, told the New York Times that “(T)he results in California show the Democrats that you can go too far. California is a very liberal state that is now resistant to higher taxes and welcoming to the new gig economy, which is where the industry was created.” App-based ride-hailing company Uber has gone global and inspired many other entrepreneurs to experiment with the gig economy model. Developing countries like Pakistan are seeing extraordinary growth in their digital economies. Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets
|App-based Gig Economy
California propositions are an example of direct democracy. Propositions are put up for popular vote during elections to deal with issues by groups that feel strongly that the politicians are not serving their best interests. Passage of Prop 22 shows that the majority of Californians disagree with the Assembly Bill 5 passed their elected legislators.
It is ironic that Democratic politicians in California, the birthplace of app-based gig economy companies, are trying to kill the gig economy to please their labor union donors. They are ignoring many part-time workers who do gig work to supplement their incomes from regular jobs. On the other hand, the gig companies like Uber are showing flexibility to accommodate the concerns of gig economy workers by guaranteeing higher minimum wages and assistance with health insurance premiums.
California Proposition 22:
Prop 22 exempts app-based companies like Uber, Lyft, Instacart and DoorDash from California AB 5. The new minimum hourly wage under Prop 22 is around $16.80, which is higher than the minimum pay under fair labor standards, provisions and regulations. Gig workers will also get a stipend they could use to buy an insurance plan from Covered California, the state’s health insurance marketplace. These provisions helped sell Prop 22 as a reasonable compromise to voters of the deep blue state.
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