California has hit a new milestone. It is now the fifth largest economy in the world, surpassing the U.K., according to Fortune.
Citing new federal figures that were released late last week, the publication reported that while California has 39.5 million residents and the U.K. has 65.6 million, California would have a comparatively bigger economy if it was an independent country. In front of California are the U.S., China, Japan and Germany.
California‘s robust economy is largely due to the tech sector and Hollywood, two booming businesses. The state accounts for 12 percent of the U.S. population, and was responsible for 16 percent of total job growth from 2012 through 2017, noted the report. Its gross domestic product increased $127 billion from 2016 to 2017. Much of its economic activity is located in the big cities of San Francisco, San Jose, Los Angeles and San Diego.
Other states that ranked high include Texas, which was in 11th place; New York was in 13th place with $1.5 trillion. Prior to 2002, California ranked in fifth place, but fell to 10th place in 2012 due to the great recession, noted Fortune.
California’s gig economy companies, a big contributor to the state’s economy, were dealt a blow after the Supreme Court in California ruled that they can’t count workers as independent contractors instead of employees. The New York Times, citing the court ruling, reported that the judgment could pave the way for California-based companies, such as Uber, to adhere to the state’s minimum wage and overtime laws and to pay the workers’ compensation and unemployment insurance of their employees, as well as payroll taxes – all of which could change their business models.
As The Times noted, industry executives have calculated that classifying gig workers as employees would cost 20 to 30 percent more. However, the companies would be better able to control the schedules of its employees and how they work. “It’s a massive thing — definitely a game-changer that will force everyone to take a fresh look at the whole issue,” said Richard Meneghello, a co-chairman of the gig-economy practice group at the Fisher Phillips law firm.