The gig economy is on the ballot in California on election day. Akiko Fujita joins Yahoo Finance Live to break down Prop 22 and what it means for the gig economy and gig economy workers in California if it is passed.
SEANA SMITH: Two stocks that are in the green today, Uber and Lyft. Uber shares up just around 4%. Lyft up just around 7 and 1/2%. Now these gains come one day ahead of California voting on the future of gig workers. Obviously this could have a massive impact on these two companies.
Akiko Fujita joins us now with more on this for us. And, Akiko, we've been talking about this now for quite some time. It comes down to a piece of legislation known as Prop 22, and should Prop 22 pass, these ride-sharing companies, as well as some of the other companies out there that do employ gig workers, would be able to continue classifying employees as contractors. Just talk to us just about how much is exactly riding on this vote.
AKIKO FUJITA: Yes, Seana, I mean, this is really a last-ditch effort by these app-based companies to be able to continue to classify their workers as independent contractors. To your point, we have the appellate court already affirming a lower-court ruling saying that these companies need to adhere to Assembly Bill 5, which is a law that was passed in California requiring these companies to classify their drivers as full-time employees.
And Prop 22 is essentially asking for an exemption for these companies. On the one hand, it would compel companies to provide additional benefits to employees that are similar to those offered by California's labor laws. It would also require companies to cover insurance for on-the-job injuries. But critics, notably the labor unions, say it simply doesn't go far enough.
Now, Seana, you asked how much is riding on this. Well, if the money that has been raised for this initiative is any indication, there is a lot riding on it. We're talking about more than $200 million raised with contributions from Uber, Lyft, DoorDash, and Postmates, just to name a few of the backers of this proposition. That would make this the most expensive ballot measure in California history.
Now, Uber has consistently said that their drivers are largely part time and they prefer the flexibility that comes with an independent contract. We've heard Uber and Lyft both talk about reducing their footprint if, in fact, they are required to classify their drivers as full time.
Now, I did get a chance to speak to a number of drivers on both sides of the aisle, and I can tell you the arguments really cut both ways. One woman we spoke to from Sacramento says she is a full-time driver, but she uses the money from her Uber rides to help support vacations and extracurricular activities. She doesn't want to be qualified as a full-time employee. But another rider who rides for both Uber and Lyft said, look, this is my livelihood. I take home about $1,000 a week. But in the end, I only get $600 because of insurance costs, because of the money from gas, because of the payments to cars.
And so there is a real divide here on this issue, and it's really going to come down to the wire in terms of how the results play out. But regardless of who wins, there's no question other states are going to be watching this very closely to see how they move forward on their regulation.
ADAM SHAPIRO: Akiko, I think we all look forward to a day when we don't have to say polls, but I have to ask you, have they done any polling? Do we know where the California electorate may be falling on this?
AKIKO FUJITA: There have been a number of polls, and that's in contention as well in terms of who the polling was done by, whether it was by the yes side or the no side. I think you can safely say that this is very clearly divided. There is no clear-cut winner right now going into Election Day, which is why you have seen so much money being poured into this initiative that right now, by the way, is only going to be result-- only going to be for California. But there's so much money into this because there is a feeling here on both sides that this is going to set the course for other states to follow California's lead.