What happened and why Car-sharing moved through the gears yesterday after the Californian ballot (not the presidency) served up the sweet relief for ride-hailing apps (Uber +25.43%, Lyft +30.35%) and food-delivery companies (DoorDash, Postmate). Voters in CA found time in their busy voting schedule to exempt the app-riders from their AB5 law, which would have classified gig-economy drivers as 'employees' (radical, I know), and in the process, would have cost them billions of dollars in the years ahead. Ride of their lives.... After a protracted back and forth with the state regulator, the tech-transport giants came out on top and by Wednesday morning, with 99% of the vote counted, 58% were in favour of the proposition. Hardly surprising when you look at what the state was up against... In August... Uber and Lyft said they'd shut down in CA because it was forcing them to follow the AB5 law, before the regulator paused the law until after the vote.Dream team... with Lyft, Uber, Doordash and Postmate arm-in-arm, the gig-economy syndicate threw a reported $210 million at promoting their campaign - the most costly ballot measure in Californian history. 🚦 The AB5 law - if it had received the green light - would have forced the ride-hailers and food delivery giants to hire drivers formally (including health insurance, minimum wage & hours), and in the process. Instead, the companies are expected to save billions in a market where every player is already haemorrhaging cash. The ballot served up the usual tech paradox... Drivers deserve the right for basic employee protection with health insurance, minimum wage and hours, but the consequence of the of AB5 law would have seen ride-hailing prices jump 2.5/3x and fewer drivers on the road > destroying competition in the process. The solution: work with the regulator over a protracted period at which point it becomes affordable to provide the employees with the protection they deserve to their job security and lives. But this is the home of the valley after all... that means business trumps all... until you're rich enough, when conscience appears from nowhere. | The Takeaway The AB5 law had the potential to deliver a ripple affect across America that could have destroyed Uber, Lyft and added a weighty financial burden to the Gig economy. But this is just one ballot in one state and is a long way from a long-term solution. Major employers on flexible working contracts will have to provide gig-economy workers greater protection soon and Europe is one place, where a second case is brewing.
