Rise of On-Demand Economy– Reshaping Nature of Business, Uber-ization of Work: Great Gigs Vs. Less Security…

The ‘on-demand’ economy is reshaping the nature of companies, structure of work, consumer behavior… It’s a new wave business model where workers are on-tap, ready in instant, available at moment’s notice to service consumer demand…

And, depending on who you ask ‘on-demand’ proliferation will either create a Dickensian-era nightmare of unregulated capitalism that eviscerate workers rights, or usher-in worker-centric utopia in which workers control all aspects of their working lives…

According to Sharon Florentine; none of this is really new; workers have been doing it forever, it’s just the new way to look at things as an ‘instant-on’ economy… but like most things in business; what’s new is really what was old, just renamed.

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According to The Economist; the on-demand economy is relatively small but growing rapidly… and it has profound implications for everything from the organization of work to the nature of the social contract in a capitalist society… According to a report from the nonprofit ‘Freelancers Union’; about 53 million U.S. workers are on-demand workers, i.e., about one in three workers and the pool is growing…

By 2020, according to estimates by Intuit; independent contractors will make up 40% of the U.S. work force, with on-demand workers representing a significant subcategory… According to Leo Mirani; there are only two requirements for an on-demand service economy to work; First, the market being addressed needs to be big enough to scale, e.g.; food, laundry, taxi rides… Without that, it’s just a concierge service for the rich rather than a disruptive paradigm shift, as a venture capitalist might say…

Second and perhaps more important, there must be a large enough labor class willing to work at wages that customers consider affordable and that the middle-people consider worthwhile for their profit margins… There is no denying the seductive nature of convenience– or the cold logic of business that create new jobs… But the notion that brilliant young programmers are forging a new-fangled ‘instant gratification’ economy is a falsehood, instead it’s a rerun of the oldest sort of business, i.e.; middle-people inserting  themselves between buyers and sellers… and all that modern technology has done is make it easier, through the omnipresent of smartphones, to amass fleets of increasingly willing workers on-tap who want more earning power…

The most obvious beneficiaries of a on-demand workforce are businesses and consumers. Large enterprises are increasingly using a flexible workforce to cut costs while addressing bursts in demand, while small business who cannot afford the overhead required for full-time workers– healthcare, vacation, sick time, and the like — are also tapping into a growing pool of available– freelance, contract workers…

While an hourly workforce is a boon for cost-conscious businesses and for certain demographics for others it can be problematic, e.g.; the downside for business is fairly obvious – the workers don’t work for the business, hence they have no real loyalty or skin in the ‘business’ game… and the downside for workers is also fairly obvious– they don’t have the benefits or security of an employee… but, consumers get the best of both world– lower price, great service, within an ‘instant’ of their call…

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In the article On-Demand Not Delivering on Promises to Workers by Avey Alba writes: For all the criticisms of the ‘1099’ economy– the cornucopia of app-based and push-button services provided by an increasing number of businesses is a very attractive prospect for many workers, i.e.; the promise of a good wages while working whenever hours they want. Business promotes the opportunity as a bright, flexible future in which the worker is a micro-entrepreneur; a business of ‘one’…

However according to survey of on-demand workers; many encountered lower pay than they expected and hours tied tightly to periods of peak demand. Workers discovered that they had to work longer hours than expected and the systems were not as flexible as they first assumed. The upshot; many workers are leaving the on-demand economy because– promises, benefits… that were made by business just do not hold-up…

According to research by data scientists affiliated with Stanford University; an over-whelming majority, 75%, of 1330 independent workers respondents from on-demand companies, including; housecleaning services, ride services, delivery services, real-estate rental services… said their top reason for doing on-demand work was for greater schedule ‘flexibility’… and their top complaints, included; not being able to find enough work, not understanding legal obligations and taxes, not being unable to optimize their schedules to maximize earnings…

Half of respondents said they planned to stop working for on-demand business 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… The average hourly wage in the on-demand economy is about $18 an hour. A study of Uber driver wages that was co-written by a company executive said drivers were making an average of $16.20 to $30.35 an hour depending on location. And the wages did not take into account the expenses that drivers have to pay for vehicle up-keep…

In the article Rise of the On-Demand Economy by Irving Wladawsky-Berger writes: Two powerful forces are fueling the trend toward on-demand workers and pushing it into more parts of the economy. First is the availability of ubiquitous, inexpensive smartphones, sophisticated applications, cloud-based services… Second is rapidly changing consumer behavior… However, not all experts see the on-demand movement as an unstoppable force, e.g.; ‘The Economist’ is rather skeptical about the chances for most on-demand  businesses to succeed, citing three main potential obstacles:

First, these businesses face difficulties training, managing, motivating their on-demand workforce… Second, the regulatory, political problems that on-demand business face are very challenging… Third, the on-demand worker pool may be limited in the sense that many people value stability more than flexibility… Although there are many workers who do value flexibility more than security, e.g.; students who want to supplement their incomes; workers who can afford to dip in-and-out of the labor market…

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In the article Uber’s Business Model Could Change Work by Farhad Manjoo writes: The Uberization of work may soon be coming to your chosen profession… Just as Uber is doing for taxis, new technologies have the potential to chop-up a broad array of traditional jobs into discrete tasks that can be assigned to workers– just when needed– and wages set by a dynamic measurement of supply and demand, and workers’ performance constantly tracked, reviewed, subjected to the harsh light of customer expectations…

Uber and its ride-sharing competitors are the boldest examples of this new breed, which many in the tech industry see as a new kind of business– one whose primary mission is to efficiently allocate workers… According to Dr. Sundararajan; this trend may end-up with a future in which a fraction of the work force engages in a ‘portfolio of work’ to generate income, e.g.; Uber driver, Instacart shopper, Airbnb host, Task rabbit… But, the rise of such work makes workers’ income much less predictable and long-term employment less secure… It also relegate the idea of the traditional long-term work career as a distant memory…

According to Robert B. Reich; it’s all nonsense, utter nonsense; the on-demand economy means a work life that is unpredictable, doesn’t pay very well, and is terribly insecure… most workers would much rather have good, well-paying, regular jobs… However, proponents of on-demand work point out that the key perk of an Uber-like job is work flexibility, e.g.; in most of Uber’s largest markets, a majority of its drivers work from one to 15 hours per week, while many traditional taxi drivers work full-time.

A survey of Uber drivers found that most were already employed full or part-time when they found Uber, and that earning an additional income, on the side, was a primary benefit of driving for Uber…The larger worry about on-demand work is not about benefits, but about a lack of agency– a future in which computers, rather than humans, determine what workers do, when, and for how much. The rise of Uber-like jobs is logical culmination of an economic and tech system that holds ‘efficiency’ as its paramount virtue…

What sort of world will on-demand model create? Pessimists worry that everyone will be reduced to the status of 19th-century ‘dock-worker’ crowded on the quay-side at dawn waiting to be hired by a contractor… While boosters maintain that it ushers in a world where everybody can control their own lives, doing the work they want when they want it. Both camps need to remember that the on-demand economy is not introducing the serpent of casual labor into garden of full employment; it’s exploiting an already casual workforce in ways that will ameliorate some problems, even as they aggravate others…

According to Benjamin Sachs; as legal challenges to the ‘1099’ economy mount about the work status of the worker (i.e., are they employees, or not). There may be need to experiment with a new category of worker; a legal work status between ’employee’ and ‘independent  worker’… a status that would ensure sufficient protection for workers in the on-demand economy…

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According to Leslie Tolf; certain aspects of the ‘gig’ (on-demand) economy provides a great opportunity for some workers… but there are many questions about how to protect the workers… The gig economy is here to stay and for many consumers it means more convenience, lower price… However, companies, government, consumers must also consider the rights of the on-demand workers…

Any convenience, no matter how cost- effective or efficient, should never undermine the very work force that makes the economy function, or it will eventual fail… According to Kevin Roose; on-demand economy shows no signs of slowing down in a technology-driven world, but the key to its sustainability is to figure out– how to meet the needs of efficiency conscious business, respecting rights of workers, while meeting consumers on-demand expectations… it’s a challenging balancing act…