The rest of the workforce goes independent
Will we ensure the On Demand economy equally benefits the people who power it?
“My neighbor is a mechanic. He quit his job at the repair shop and went to work for MyMechanic. He loves it… it schedules his appointments automatically and ends his day at 2pm every day to go play golf.”
The promise of the On Demand economy was evident in the conversation I had with a friend a few weeks back. A whole new segment of the workforce going independent with all of the flexibility and control that many freelancers have known for years.
The last 15 years have seen the rise of the freelance economy. Knowledge workers have been able to go independent and live the dream — making a living working for themselves. Tom Peters heralded the arrival of the freelance economy in his 1997 article in Fast Company, The Brand Called You.
During this period, a whole crop of services that allow knowledge workers to work independently were created enabling people to make the leap to being independent.
- how do I find work? freelance marketplaces like oDesk, eLance
- where do I work? coworking spaces like WeWork and Launch Pad
- how do I work? tools like Freshbooks and Basecamp
- where can I showcase my skills? profiles on Behance and LinkedIn
The independence movement is now underway for people who don’t sit at computers all day.
The service workforce is going independent — from unskilled to semi-pro, there are new opportunities to join the freelance economy.
This is being driven by the rise of the On Demand platforms and Sharing Economy marketplaces. Uber is the most notable example, apparently now onboarding 50,000 drivers a month.
But there now are over 180 Uber for X companies powered by independent contractors with a variety of skill sets.
So what are the driving forces behind the rise of the marketplaces?
- the shift from laptop to mobile devices — you don’t have to be at a computer to benefit from the internet any more
- fractional work — software that makes scheduling effective. In what only used to be possible through complex systems engineering, marketplaces are starting to be able to efficiently meet supply and demand.
- resource sharing — people can own less, and share what they own, and generate income through their assets.
Though frequently compared to grocery delivery companies like Kozmo.com in the dot.com bust, there are fundamental differences in these services and the market now, 15 years later. One important difference of note is that these companies are being powered by an independent workforce, not employees. This allows the companies to offload the burden of full-time employment and operate efficiently. It likely wouldn't be possible for the vast majority of the services to exist without a workforce of independent contractors. According to MBO Partners:
“Independent workers will be 40% of the workforce by 2018.”
So, what are the implications when so much of a labor pool is independent?
It clearly leads to a degradation of the benefits safety net that employers traditionally provided to employees. Even though many On Demand companies state they would like to provide independents with benefits programs, they are restricted from doing so because of co-employment issues — they dare not cross the line into IRS definition of employee.
Because the workforce is disaggregated and fractionalized, the power of the labor force is cut. Rather than true marketplace dynamics, most On Demand companies set platform-wide pricing, which is great for consumers. But the independent contractors are powerless to negotiate on their own behalf. They can quit the service and find work elsewhere.
Where is this headed?
During the 20th century, workers would have organized and formed a union. What is the 21st century equivalent? Or perhaps regulators step in. The EU and many local governments already have a keen eye on the disruption that Uber has caused to taxi commissions.
I believe in solving problems for people who have real problems. And while the On Demand economy has been a boon of convenience for customers, all of the top companies say their biggest constraint is on the supply side of their platforms.
Can we make this economy equally beneficial for the people who power it?
We can help people move to the independent workforce at all levels of the labor stack from unskilled to the semi-pro. So, let’s get started.
We believe the independent workforce needs:
- Portable reputation — Let’s make it possible to show that you are trustworthy and a good worker when you move between services. Your 5 star rating is valuable.
- Upward mobility — Let’s provide independents with education and skill development to moving people up the economic food chain to higher wage gigs.
- A benefits stack —The traditional benefits stack that was supplied by employers is gone, so let’s restore is by aggregating this workforce and leveraging group buying
I’m co-founding a company called Kung Fu to address the challenges faced by the independent workforce. I’ve been passionate about defining the future of work throughout my career and previously founded Flatstack, a distributed software development team, and a coworking space called Launch Pad in New Orleans.