For all the criticisms of the 1099 economy—the cornucopia of app-based, push-button services provided by an army of independent contractors—becoming an on-demand worker can still seem like a very attractive prospect to lots of people. Startups like Uber, Lyft, and TaskRabbit promise they can offer higher wages per hour while letting contractors work whenever they want. They hold out the hope of a bright, flexible future in which you are the micro-entrepreneur---a startup of one. And folks tend to believe them.
Until they actually start doing the jobs. This week, a broad survey of on-demand workers found that many encountered lower pay than they expected and hours tied tightly to periods of peak demand. They discovered they had to work earlier or later than they expected, and longer hours in general, because the systems weren't as flexible as they assumed. The upshot: people are leaving on-demand work after finding out the promised advantages over traditional jobs don't hold up.
And this dissatisfaction could wind up being a big problem for Silicon Valley. The tech industry today is obsessed with so-called “Uber for X” services. Startups are touting solutions for virtually every conceivable real-world chore, leveraging a system of always-connected mobile hardware and software that has made it efficient to track both people and physical objects using the Internet. There are now apps that help you hail a ride, do your laundry, park your car, get food delivered to your doorstep, and more. But it’s easy to forget that these efficient systems rely on a world of independent contractors---workers these companies need in order to provide their services to customers. And right now, at least according to the survey, these workers are struggling to understand and adapt to this new kind of employment.
They're hardly alone. According to a report from the nonprofit Freelancers Union, 53 million Americans now work as freelance contractors—about one in three US workers. And that pool is growing. By 2020, according to estimates by software company Intuit, freelancers will make up 40 percent of the US labor force, with on-demand workers representing a significant subcategory. These are the workers who will make the on-demand economy work. But how well it works will depend on ensuring that the realities of these jobs match the promises made.
The research compiled by data scientists affiliated with Stanford University surveyed 1,330 independent contractors for on-demand startups, including housecleaning services, ride services, delivery services, and real-estate rental services. The respondents were mostly young, white men and were recruited rather than randomly sampled, which means they can't be said to be truly representative of all on-demand workers. Even so, their responses suggest where the weak points lie in companies' recruitment pitches to workers.
An overwhelming majority of respondents---75 percent---said their top reason for doing on-demand work was because they thought it offered “greater schedule flexibility.” Yet nearly half of respondents said “peak hours and demand” was the most significant factor dictating when they worked. (“Family” came in second at 35 percent). Many workers didn’t end up straying too far from a traditional 9-to-5 schedule because this was when demand tended to be high. Inflexible schedules were a particular problem in ride service work.
Still, insufficient pay, not scheduling, turned out to be the most common reason workers left their jobs. In fact, the likelihood of respondents staying in the job or leaving was directly tied to their earnings, which varied depending on the type of on-demand job. The highest-paid on-demand jobs were in ride service and Airbnb hosting ($25 an hour, on average), while making deliveries could net workers $19 per hour. Chores like housecleaning let workers earn an average of $15 per hour. The on-demand workers surveyed earn a median of $18---still above San Francisco’s minimum wage of $12.25. But nearly 40 percent of respondents said their freelancing accounted for less than 25 percent of their household income, suggesting that on-demand workers had other jobs or relied on the incomes of other family members. Workers who had been doing their jobs for longer tended to earn more.
Top complaints from workers included not being able to find enough work, not understanding legal obligations and taxes, and being unable to optimize schedules to maximize earnings. Half of the respondents said they planned to stop working for on-demand companies within the year, citing insufficient pay, lack of enjoyment of the work, or simply because they no longer had the need to work the job.
Enrico Moretti, a labor economist at UC Berkeley, points out that on-demand work long predates the kind summoned via app. Many jobs in transportation, construction, and manual labor have long offered options that didn't require workers to adhere to strict 9-to-5 schedules, Moretti says, though he does acknowledge that mediating this kind of work through apps may have lowered the barrier of entry for these types of jobs, making new demographics, such as college students, aware of such options.
In the end, Moretti says the systems for facilitating on-demand work shouldn't ultimately change the expectations of workers. As has long been the case, the economy values specialized workers with college degrees over those without specialized degrees---and no push-button app can hope to change that. "Yes, technological change and globalization are happening," he says. "But the broad, deep-seated trends in the labor market are not going to be unseated by these on-demand apps."
