On-demand workforce to include 7.6 million people by 2020, new study says

Neither regulatory battles facing Uber and Airbnb nor mounting pressure on tech startups to convert their independent contractors to employees will slow the rapid-fire growth of the on-demand workforce, according to a new study released Thursday.

The U.S. on-demand labor force is expected to include an estimated 7.6 million by 2020, according to a study sponsored by Intuit. That represents more than double the 3.2 million people today who work for companies such as TaskRabbit and Uber, make money renting their homes on Airbnb, and find freelance work through websites Elance and Upwork.

The boom of the on-demand economy, a sector of the tech industry built on apps and websites that connect a customer with a service, whether it’s lunch delivery or home repairs, follows the steady growth of self-employment over the last three decades, said Alex Chriss, vice president and general manager of the self-employed business unit at Intuit. In 1986, just 6 percent of American workers were freelancers, contractors or self-employed; today that number is about 34 percent, and Chriss expects it to hit at least 40 percent, or about 66 million people, by 2020.

Hitting 7.6 million, the on-demand economy would represent 11 percent of the total self-employed workforce in just five years.

“Wow, this could really explode,” Chriss said. “This could be the way that people match up” to do business.

The study is based on a survey performed by research and consulting firm Emergent Research of 2,200 adults across the U.S. between July 27 and August 5.

American workers are less interested in relying on a single paycheck and employer for their prosperity, and the demise of pensions, as well as the financial injury of the Great Recession that underscored the vulnerability employees face, have accelerated the movement toward an independent contractor lifestyle. Chriss notes more highly skilled and educated professionals are joining the on-demand workforce — UpCounsel, for instance, is an online marketplace of attorneys who provide legal services to businesses.

Ironically, recent trends in Silicon Valley suggest the longevity of independent contractor workforce may be threatened — facing lawsuits from workers over their alleged misclassificaiton as independent contractors, tech companies have been converting their workforces to full- and part-time employees. Grocery delivery app Instacart and courier service Shyp made the switch, and home tech repair startup Eden and food-delivery service Sprig, while they have not been hit with lawsuits, got ahead of the matter by reclassifying workers.

Some workers and tech industry experts argue that these startups would not survive without their delivery drivers and service providers, many of who rely on the job for their sole income and deserve to have benefits such as health care, sick days and workers’ compensation.

Chriss, however, said this sentiment is largely a misconception of what workers want in a freelance job. What’s more, nearly 80 percent of the Intuit survey respondents said their on-demand work is part-time.

“There isn’t this feeling out there that ‘I want to be an employee for an employer,'” he said.

The recent spate of companies switching from independent contractors to employees “is not going to impact the overall trend,” he said. “You will have some business models that don’t work and will have to be reclassified or will just go out of business, and you will have some businesses that will work very well” with independent contractors.

The many expensive legal battles some companies face as they work to expand the on-demand model to new markets are also not expected to deter workers from becoming Uber drivers or renters on Airbnb.

“This is not a three-year industry that popped up out of no where and was built on stilts and now the stilts are being taken away,” Chriss said. “This is a 25- to 30-year movement and it’s accelerating due to new technology.”

Photo: In this Jan. 4, 2013 file photo, Lyft passenger Christina Shatzen gets into a car driven by Nancy Tcheou, in San Francisco. AP Photo/Jeff Chiu.


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