These are just some of the key findings from Stash’s October Gig Economy survey, which polled 1,240 customers who identified themselves as working in the gig economy.¹

While 90% of those surveyed said they lack access to traditional employer benefits such as health care, access to retirement accounts, and paid time off, only 12% said they were dissatisfied with their employers.

A resounding 57% of respondents said they were either very satisfied or somewhat satisfied with their employers. About one third were neutral.

Despite positive employer sentiment, the survey found that lack of access to employee benefits may leave gig workers uniquely vulnerable to financial instability. Since becoming gig workers, more than half report having to borrow or sell off assets to pay for emergency expenses. Similarly, 28% have had to tap into savings “too many times to count” to pay for such emergencies. Meanwhile, more than a quarter say they are not actively building an emergency fund, and nearly half say they are not actively saving for retirement.

Who are gig workers?

Gig workers are typically classified as contract workers who perform specific tasks for short periods of time, and they have usually lacked the protections and agreements that full time and salaried workers have with their employers. Many gig workers staff the new economy of app-based, on-demand service businesses, including Lyft and Uber, Postmates, Grubhub, TaskRabbit, and Instacart, while others freelance or work as contractors across different business sectors.

By the numbers, more than a third of respondents work in the transportation and delivery industry, which can include driving for companies such as Uber and Lyft. Six percent work in retail, while 4% work in technology, and 2% work in construction, among other categories.

Roughly 48% identified as male, and 51% female. The remainder identified as other.

Nearly half of those surveyed earn less than $50,000 annually.

A national debate about worker rights

The findings come as national protests of Uber and Lyft heat up, with drivers reportedly organizing into a labor movement, advocating for better working conditions, increased pay, and access to employee benefits. Concerns that a new California law aims to directly address.

The law, called Assembly Bill 5, says contract workers—including janitors, many construction workers, beauticians, and drivers—must now pass something called the ABC test, in which employers must prove their employees are not central to the way they do business. Companies must also prove that their contractors are independently established in a trade or occupation that’s the same as the work they do for the company that hires them for contract work.

Workers classified as contractors are typically not covered by a wide swath of employee laws, including minimum wage, unemployment, and disability insurance, sick leave and discrimination protections, according to sources. Assembly Bill 5 aims to change this.

The law is slated to go into effect on January 1, 2020, although Uber, Lyft, and other companies are exploring ways to fight the new law.

How to start saving for your future today

Whether you work in the gig economy or not, there are steps you can take today to help reach your goals and find financial freedom. If it’s an emergency fund you’re after, start by putting small amounts of money away each month—maybe $20 or $50, more if you can. If you can automate your savings, even better.

Once you’ve built up your emergency fund, you may be in a position to pursue other goals, like saving for retirement, your child’s education, a house, and more.

And most importantly, you’ll know that if things go wrong, you’re covered.

The post Stash Surveyed Gig Economy Workers: Here’s What We Found appeared first on Stash Learn.

This week, legislators in the country’s most populous state passed a law that stipulates many contractor workers in new economy jobs are actually employees of the companies they work for.

That means that all the Uber and Lyft drivers, Postmates and Grubhub delivery people, those who hustle you to and from the airport and bring groceries and dinners to your doorstep, eventually could be compensated like regular employees.

The ABCs of AB5

The law, called Assembly Bill 5, says contract workers must now pass something called the ABC test, in which employers must prove their employees are not central to the way they do business. Companies must also prove that their contractors are independently established in a trade or occupation that’s the same as the work they do for the company that hires them for contract work. The law is slated to go into effect on January 1, 2020.

What is a gig worker?

Gig workers staff the new economy of app-based, on-demand service businesses, including Lyft and Uber, Postmates, Grubhub, TaskRabbit, and Instacart, among others.  Gig workers are typically classified as contract workers who perform specific tasks for short periods of time, and they have usually lacked the protections and agreements that full time and salaried workers have with their employers. Many of the gig economy companies are based in California.

Generally, the legal argument of AB5 is that gig workers are not true freelance contractors, as their livelihood depends on the company that has hired them to do the contract work. Further, gig workers tend to be indirectly managed by the companies they work for, and much of the business model of a gig economy company depends on having access to a cheap and flexible contract workforce, among other things.

Drivers for rideshare companies in numerous cities, for example, have attempted to organize for higher wages and greater employee protections.

The U.S. Bureau of Labor Statistics estimates that as many as 6 million people may work in the gig economy. Uber, in its IPO filing, says it has nearly 1 million drivers on its platforms.

Why is this important?

Workers classified as contractors are not covered by a wide swath of employee laws, including minimum wage, unemployment, and disability insurance, sick leave and discrimination protections, according to sources.

Many new economy businesses, particularly those in the tech industry, depend on a steady stream of cheap contract workers to make their business run. Businesses say making contract workers employees could add as much as 30% to costs.

Both Lyft and Uber, for example, have said in their recent IPO filings with the SEC (here and here) that their business models would be threatened if its drivers were classified as employees, instead of contract workers. Both companies are likely to fight the new law in the coming months, according to reports.

Ripple effect

In addition to ride-share drivers and delivery workers, the law could apply to any contract worker in jobs as varied as construction, construction, healthcare, trucking, janitorial services, nail salons, adult entertainment, commercial fishing, and newspapers, according to the Los Angeles Times.

Will this affect me?

New regulations can be good for consumers and workers, ensuring safer products and fairer wages for workers, for example. If you’re a gig worker in California, for example, you’re likely to have new protections and rights under the law.

But they can also affect the growth prospects of some businesses, making it more expensive for them to operate. Lower growth might also affect the stock prices of public companies subject to the new law.

The post How CA’s New Labor Law Could Hit Uber and Lyft appeared first on Stash Learn.

The company, which along with rival Uber, has upended the taxi and limousine industry, is seeking as much as $2 billion dollars from its upcoming sale of stock to the public, according to its stock prospectus.

Here are some key details:

• Lyft expects its stock to debut at a range between $70 and $72, according to its prospectus.
• The company has set a target valuation of up to $23 billion. That means the company hopes to be worth that much when it sells its shares to the public in April. How do companies set a valuation? They take into account a combination of things in the business, such as assets, or the things it owns, as well as stock price, earnings and cash flow.
• Lyft had revenue of $2.2 billion in 2018, double its sales in  2017.
• The company lost nearly $1 billion in 2018, according to its SEC filing, an increase of 32% compared to its losses for 2017. When companies lose money rather than make money, it’s often not a good sign for investors. However, many successful companies—Amazon for example—regularly report losses as they launch new products and services and grow.

A competitive ride-share market

Lyft’s biggest rival Uber also plans to go public this year, and is likely to surpass Lyft with a valuation of $120 billion, according to reports. As Lyft ventures into scooter and bike sharing, as well as new technology such as self-driving cars, it faces a raft of other competitors such as Apple, BMW, and Google, as well as Baidu, Waymo, and Lime.

Lyft says in its regulatory filing, the ride-share market in the U.S. is potentially as big as $1.2 trillion.

Two types of shares

Lyft will list two types of shares. It will sell class A shares to the general public, and will maintain class B shares for the company founders and other company insiders. The class B shares have 20 times more voting rights than the class A shares.  Increasing numbers of Silicon Valley startups have used this so-called dual-class share structure, which enables owners to maintain control of their companies indefinitely.*

More background

Lyft has nearly 40% of the U.S. ride-share market, according to reports. According to Lyft’s filing, it had 30 million riders and 1.9 million drivers in 2018.

Logan Green and John Zimmer co-founded Lyft in 2007. Following the IPO, the value of their stock is estimated to be worth $570 million and $390 million, respectively.

If you want to find out more about an IPO, read here.  And if you want to learn about a stock prospectus, click here.

*Note: It’s important to remember that all investing involves risk, and that it’s possible for stocks, bonds, and other securities to lose their value due to changing market conditions. Additionally, following an IPO, the market price for the newly issued security, or stock, may be subject to significant fluctuations in response to factors such as lack of liquidity, as well as market and price volatility. Oftentimes, fluctuations are due to the expiration of a lock-up period where company insiders such as employees sign an agreement that prohibits them from selling shares for a specified period of time (in the case of LYFT this is 180 days). When lock-up periods expire, all insiders tend to sell their stock in order to realize profit, depressing the stock price in the process.

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