Prop 22: California Voters Save the Gig Economy

[Riaz Haq]

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:

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. 

Gig Economy:

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.

Global Impact:

App-based ride-hailing company Uber has gone global and inspired many other entrepreneurs to experiment with the gig economy model. The passage of Prop 22 in California will likely help the world's largest app-based service companies prosper not just in California but the also serve as an example for the rest of the world. Developing countries like Pakistan are seeing extraordinary growth in their digital economies. 

Digital Gigs in Pakistan:

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, reports  Payoneer, a global payments platform company based in Silicon Valley, in its latest report. Payoneer attributes it to government programs such as Punjab government's e Rozgaar program that has been offering free online courses in digital freelancing. The sudden rush to learn skills online boosted the demand for instructors. The Pakistan government filled this demand by hiring alumni of programs like e Rozgaar who were successfully participating in the gig economy.

Summary: 

Passage of Prop 22 is a strong repudiation of California politicians in a deep blue liberal state. California voters have shown they are willing to experiment with the new gig economy. They have told the politicians in no uncertain terms that they do not approve of excessive regulation and higher business taxes. App-based ride-hailing company Uber has gone global and inspired many other entrepreneurs to experiment with the gig economy model. The passage of Prop 22 in California will likely help the world's largest app-based service companies prosper not just in California but the also serve as an example for the rest of the world. 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

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[ZAHRA ZAFAR]

App-based ride-hailing company Uber has gone global and inspired many other entrepreneurs to experiment with the gig economy model. The passage of Prop 22 in California will likely help the world's largest app-based service companies prosper not just in California but the also serve as an example for the rest of the world. Developing countries like  are seeing extraordinary growth in their digital economies. 

[Riaz Haq]

#Instacart IPO, led by Goldman Sachs, Could Come Early 2021 With $30B Valuation. #unicorn #IPO #Delivery #grocery #COVID19 #Pandemic #Prop22 #SanFrancisco #Tech #California - https://www.pymnts.com/news/ipo/2020/instacart-ipo-could-come-early...


Instacart is reportedly preparing for an initial public offering (IPO) led by Goldman Sachs, according to Reuters, which cited people “familiar with the matter.”

The IPO could value the delivery app at about $30 billion and could be announced early in 2021, Reuters reported.

Instacart’s IPO could be one of the biggest of the year, according to news from October, when reports that the company could go public first surfaced. The reports followed the closing of a funding round that raised $200 million and brought the company’s valuation to $17.7 billion.

The funding, and the looming IPO, signal the accelerating growth of digital grocery shopping amid the pandemic. The proportion of consumers shopping online for groceries grew almost 400 percent from March to May of this year, PYMNTS previously reported. Likewise, Instacart has seen orders rise over 400 percent this year, as people hunkered down, stayed at home and prepared meals in their own kitchens.

A PYMNTS report found that the greatest change on consumer behavior over the pandemic can be found in grocery shopping, noting that, “Our research shows that 85.3 percent of consumers who have shifted to grocery shopping online plan to maintain at least some and possibly all of their new digital shopping habits.”

Instacart has moved into delivery of non-grocery items, teaming up with Sephora in September to offer same-day delivery of the personal care and beauty store’s products. The delivery firm also struck a deal with 7-Eleven in September, its first convenience store partner.

The news also comes a week after California voters approved Proposition 22, which keeps gig economy workers classified as contractors rather than employees. This benefits gig economy firms like Uber, Lyft and Instacart — keeping them from being required to drastically change their business models and provide employees health insurance and other benefits.

Approval of Proposition 22 effectively negates Assembly Bill 5, which passed last year in an effort to reclassify workers.

[Riaz Haq]

#California #liberals Envisioned a Multiracial Coalition. Voters of Color Had Other Ideas. #Prop16 to bring back affirmative action in the state failed by a wide margin, 57% to 43%, and #Latino and #Asian-American voters played a key role in defeating it. https://www.nytimes.com/2020/11/16/us/liberals-race.html?smid=tw-share

The proposition seemed tailor-made for one of the nation’s most diverse and liberal states. California officials asked voters to overturn a 24-year-old ban on affirmative action in education, employment and contracting.

The state political and cultural establishment worked as one to pass this ballot measure. The governor, a senator, members of Congress, university presidents and civil rights leaders called it a righting of old wrongs.

“Women and people of color are still at a sharp disadvantage by almost every measure,” The Los Angeles Times wrote in an editorial endorsement.

Yet on Election Day, the proposition failed by a wide margin, 57 percent to 43 percent, and Latino and Asian-American voters played a key role in defeating it. The outcome captured the gap between the vision laid out by the liberal establishment in California, which has long imagined the creation of a multiracial, multiethnic coalition that would embrace progressive causes, and the sentiments of many Black, Latino, Asian and Arab voters.

Variations of this puzzle could be found in surprising corners of the nation on Election Day, as slices of ethnic and racial constituencies peeled off and cut against Democratic expectations.

“We should not think of demography as destiny,” said Professor Omar Wasow, who studies politics and voting patterns at Princeton University. “These groups are far more heterogeneous than a monolith and campaigns often end up building their own idiosyncratic coalition.”

Asian-American Californians opposed the affirmative action measure in large numbers. A striking number of East and South Asian students have gained admission to elite state universities, and their families spoke to reporters of their fear that their children would suffer if merit in college selection was given less weight. That battle carried echoes of another that raged the past few years in New York City, where a white liberal mayor’s efforts to increase the number of Black and Latino students in selective high schools angered working- and middle-class South and East Asian families whose children have gained admission to the schools in large numbers.

“There’s more texture to California blue politics than you might think,” said Lanhee Chen, a fellow at the conservative Hoover Institution at Stanford University and policy director for Mitt Romney’s 2012 presidential run. “Identity politics only go so far. There is a sense on affirmative action that people resent being categorized by progressives.”