Why the gig economy provides a revenue source that’s ‘lucrative’ for individuals

Uber and Lyft received an emergency stay that will allow the ridesharing companies to operate in California rather than shutdown. State Senator Shannon Grove joins Yahoo Finance's On The Move panel to weigh in.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance "On the Move." Lyft and Uber, they got a kind of reprieve, you might say, on Thursday when an appellate court extended the length of time that those two companies have until they need to comply with the order to reclassify their drivers as employees. There's much more going on here. And to help us understand what that is and what it means for everybody-- because California is the largest state in the union and what happens in California hit all of us-- we invite into the stream State Senator Shannon Grove. She represents Bakersfield, California. You're joining us from Sacramento. Thank you very much.

At the heart of this is who is a contractor? Who is a freelancer? Who's a full-time employee, right? What are the voters of California going to say about this? Because they get to address this issue, don't they?

SHANNON GROVE: They do get to address this issue. Uber, Lyft, and a lot of the gig economies have put the revenues into a ballot measure to allow the voters to have a voice. The problem that we have in California is that even if the voters choose to allow independent contractor work to continue-- because, you know, a million or more people get their additional income to feed their families because of these-- what we call side gigs or gig economy work-- even if they do say that they want to keep that work, the legislature has the votes to be able to overturn it.

When you look at rent control that happened last cycle, the voters said absolutely we do not want rent control. And then there was rent control bills that were introduced right when we came back. So there is a possibility that would happen.

But we do know that individuals in California, single moms, single dads-- I had a single dad post on my Facebook page the other day that he earned $300 working one evening and gave him additional dollars. And he's actually somebody who's impacted by the pandemic and can't go out and work at his original job. So this helps him keep food on the table for his family.

JULIE HYMAN: Hello, Senator. This is Julie. So at the same time, do these workers need increased protections? Because we have seen as a result of the pandemic, it sort of highlighted the need for increased protections, not just for gig economy workers, but for workers overall.

And a lot of companies have stepped up. They've offered more pay. They've offered more benefits. They've offered more flexibility in terms of sick time because of what's been going on. Shouldn't gig economy workers also have access to those same kinds of benefits?

SHANNON GROVE: So the gig economy did come together and offer additional benefits, offer worker's comp and different benefits that would be on a traditional worker to be able to make sure that individual workers that were classified as independent contractors would be covered in case of a worker's comp or unemployment situation. So they did step up and do that. The issue is really freedom of choice, when you look at it.

Individuals who, like I said, are single moms or single dads or class students that can drive or do gig work in between classes, single moms that can drive while their kids are at school if their kids are allowed to go back to school, just-- it's an a revenue source that is very lucrative in some places. I just gave you a perfect example of somebody driving for four hours and making $300 in one night. So it is beneficial. And it does give people the opportunity for freedom of choice.

They don't make anybody do that job. If you don't want to do that job, don't do that job. But you have the opportunity to get onto an app and choose to pick up a ride or not choose to pick up a ride.

I mean, you make the decision. You log on when you want to work. When you don't want to work, you don't have to log on. So there's no employer-employee relationship in the fact that you're told when to be there, what hours to work, and who to pick up and who to not pick up. They make that decision themselves as an independent contractor.

JESSICA SMITH: If this measure, the Proposition 22 does pass this fall, do you think that this is the end of the controversy, the end of this issue? Or are people going to keep fighting this? I mean, we've heard from people-- from lawmakers on a federal level wanting to make these gig workers employees. I guess, what does this mean for the future if this issue gets maybe resolved in California here?

SHANNON GROVE: So I don't know, like the example I gave of the rent control ballot measure and the dialysis ballot measure that took place on the last cycle. Because the uneven numbers in California, where a super, super majority of the legislators are Democrats-- for instance, in the Senate, there's 40 state senators and there are 29 Democrats and 11 Republicans. They only need 21 or 27 to-- 21 to get a regular bill passed and then 21 to-- 27 to overturn the people's voice on a ballot measure.

So even if the people support independent contractor work-- which it polls very, very well in California, because people do like the freedom of work choice and they do like the freedom to set their own hours. It polls well. Even if it does pass and the people vote for it, there are then legislative numbers in the House, both houses, the Senate and the Assembly, to overturn the will of the voters.

JULIE HYMAN: Finally, I did have a few topics, if I couldn't ask you about the fires that are going on in California. I don't believe your district is directly affected by the fires currently burning, if I'm not mistaken. I was looking at the maps this morning. But in general, this is, obviously, a threat. It's an ongoing threat, especially given climate change and the increased risk of fires. Do you think that the state is doing enough in terms of fire prevention and keeping people safe?

SHANNON GROVE: So we do have a lot of fires. We had one of the most deadliest fires a few years ago in the state of California with the Paradise Fire. We have a new fire season starting. Cal Fire and our firefighters are on the front lines every day protecting homes and property.

We have-- I had a video from a friend that owns a vineyard and the fire was just south of his ranch. Another person got evacuated and lost everything on their ranch except for one of the houses. And when you look at preventative measures, I don't think that the state does a lot of preventative measures.

They don't do land management issues because of environmental protection laws. There's just underbrush that can be cut back. You could do 1,000 square feet around houses. You could look at areas and where you build in high-prone fire areas.

So we do have some issues that need to be addressed during this crisis. And it should have been addressed before. We just, like I said, have to have a balance in the numbers so that we can supersede a lot of the environmental policy that comes through that puts us in this type of a situation.

And I don't mean that we need to neglect the environment. We need to make sure that the environment is healthy, that we all have a healthy environment to live in. But there are things that can be done to thin out our forest, to just do maintenance on the land, which would help reduce this fire issue.

ADAM SHAPIRO: State Senator Shannon Grove, representing Bakersfield, California, we appreciate your joining us here "On the Move."