Has the Freelancer Boom Overstretched?

The tech press has been alive in recent weeks with debate about how the on-demand economy and freelancers are growing out of love with each other.

Freedom vs Control

The thorny topic of employee vs contractor relationships has been centre stage with class action lawsuits in the US from “workers” for HomeJoy and other responsive labour marketplaces.

The growth in self-employment in the past few years has been rapid, reflecting the growth of outsourcing, general economic upheaval as well as new business models that stimulate flexible employment practices via tech platforms.

But critical to the concept of self-employment on both sides of the Atlantic — is the notion of influence and control by the platform owner.

HomeJoy clearly irked some of its community if comments from their lawyer are to be taken at face value:

“When companies have control over their workers, when they get to dictate how they should act, when they get to decide whether they can work or not work, those are employees. These are the workers carrying out the services that these companies provide. So these workers are entitled to the protections of the law, to get their expenses reimbursed, to be guaranteed overtime, to make [at least] minimum wage.”

But the relationship complexities between on-demand worker and marketplace owner run deeper than this.

Wired reported that on demand workers are dissatisfied with their work and most plan to seek alternative employment within 6 months.

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.

This begs the question whether marketplaces are over promising to their new recruits and selling a pot of gold that fails to materialise.

Do on demand platforms work for every industry?

The motivation of workers on supply sides of marketplaces is not as uniform as you might expect. Neither will all industries benefit from a shift to freelancing. But clearly there are exceptions where certain industry structures often tangible benefits to individuals seeking self-employment.

Fred Wilson blogged about Mary Meaker’s KPCB internet trends report citing that 53 million people consider themselves independent contractors.

But if I were the worker, I would only make the jump if the following criteria were met for the alternative to the status quo.

1. High barriers to entry of Incumbent — London black cab drivers who benefit from fixed pricing, accreditation with “The Knowledge” and an instantly recognisable brand are being destroyed by Uber. Uber claims to be creating 50,000 new jobs in Europe in the next year, but it must at least be substituting many of these for the rapidly degrading Black cab drivers workforce. But this is happy days if you are a minicab driver from the suburbs.
2. Non time sensitive work — If you are a bookkeeper, SEO specialist or graphic designer, platforms such as elance and people per hour provide a steady stream of new leads that raise your income and make self-employment viable. This can hardly be construed as influence and control by naysayers and lawyers and probably is a better deal than status quo ante.
3. When existing work conditions are poor— in some industries workers are treated so poorly by agencies who capture all the value. Any alternative is better and the deciding factor may not be about pay, but having the freedom to perform a vocation and work flexibly.

At Hometouch, we are in the business of improving the quality, punctuality and compassion of care provided to people needing personal and elderly care.

This involves a curated marketplace and enabling experienced carers to better showcase their skills. We do not impose control by determining when they work, how they work or the type of care they deliver. This is up to the client and carer.

Carers are free to charge their own rates and platform architecture should allow for this. The problem with commoditized services like cleaning is that there is a price war — with a race to the bottom — with the push to scale volume over quality.

Rules for Marketplace owners

Some of the key issues I have learnt are as follows:

1. Not all people want to or are suitable to work on self-employed basis. It requires initiative, hussle, self-reliance and so forth. Some people need much more direction than others. That is one of the reasons that the best marketplaces have contractor acceptance rates well below 10%.
2. Self-employment probably works best for people who are passionate about a certain work activity that is principally solitary in type, but who struggle to secure the leads from word of mouth alone.
3. Some workers may find freelance work unsatisfactory, but the alternative is much worse. In the UK, exclusive zero hours contracts have only just been outlawed after controversy in the recent election cycle.

If you can find an industry where these characteristics exist, you can be a liberator and offer passionate people a path to independence and work-life balance.

Dr Jamie Wilson is Founder of On-demand Care Marketplace Hometouch