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Are on-demand workers changing your business?

The on-demand labor world – better known as the gig economy – has been with us for a while now. Some of you run marketplaces focused on on-demand workers; others supply candidates to on-demand companies like Uber or DoorDash. Depending on which forecaster or pundit you believe, the on-demand labor pool may be as much as 50% of the workforce by next year – or as little as 18%.  Yet talking about it at such a high, abstract level isn’t particularly helpful if you’re running a recruiting site focused on a particular niche or location. You probably want to know, ‘What is the on-demand economy doing to my traditional candidates and employers? What is changing, and what is staying the same?’. You want to know that because, well, it’s your business. So let’s get granular.

First, let’s separate out the traditional freelancers – the graphic artists, consultants, and so on – from the on-demand crowd. These folks have been around for a very long time, so to lump them into the on-demand labor economy seems rather misleading. The traditional freelancer often came from a conventional job where he/she learned their skills and made their connections, then made the leap to freelancing for a variety of reasons. These freelancers usually work full-time and treat their freelancing like a full-time job. Many are well-compensated. Most of all, they are skilled at what they do, which allows them to command pay well above minimum wage.

So who, then, are we talking about when we say on-demand labor? We’re talking about low- or unskilled workers doing simple tasks – driving a car, delivering a package, walking a dog, and so on. They usually use a marketplace app to obtain and schedule their work. Research indicates that most are either working on-demand to supplement existing income from a ‘regular’ job, or ‘filling in’ until they can find a more permanent position. Only a small segment are using on-demand work as a full-time, long term job. Why? The employers they are serving are more focused on eliminating the need for humans (think Uber’s push for self-driving cars) than they are in retaining contractors with higher pay. The marketplaces themselves are optimized to pay the minimum amount required for maximum productivity, minute by minute. That means workers don’t see – and can’t expect – a long term future with their employers.

Where does this come into your specific audience of employers and candidates? It probably depends on the types of work performed. Highly skilled jobs requiring considerable expertise, experience, and training are less likely to be affected by the on-demand economy, simply because employers need a higher degree of reliability and continuity than a marketplace can provide. Think about it: if  you’re running a repair shop for an auto dealership, do you want to take your chances on a gig worker showing up on Tuesday morning to work for 3 hours on specific types of cars? Or would you rather have a mechanic that’s been with you for a while, that’s been trained by the manufacturer, and who shows up every day? I’m guessing the latter. And what about the candidate: would he rather have a regular paycheck, benefits, and predictability, or would he like to move from town to town, chasing 3- and 5-hour shifts at different auto shops for higher pay but no benefits? Probably the former.

But what if your candidate audience is low- or no-skilled? What if your employers offer simple, easily-taught tasks (in fact, tasks that may well become automated soon)? In that case, you are probably seeing a decent amount of your market shifting into the on-demand economy. Maybe you saw it coming a couple of years ago, and your ‘traditional’ job board is now a marketplace. If you haven’t, you should be thinking hard about your next moves. Is it worth staying in your niche, if there is a high likelihood of the jobs disappearing due to automation (think about those kiosks that seem to be displacing fast food workers these days)? Or should you follow where the jobs are going (who is going to install and service those kiosks)? Think about moving up the skill chain – finding that next level of work in the niche that requires more skills and training.

It’s obvious that on-demand labor is growing – although by how much is up for debate. It’s also obvious that its effect on some of us will be profound, while others won’t feel a thing. Here’s a question: when was the last time you asked your employer audience about its usage of on-demand labor? Not recently? Never? Well…it might be a good time to start.

Just sayin’.

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