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The future of business resembles a biergarten—workers on tap for companies to pick and choose. With the world considering mimicking Germany’s minijobs and everyone looking to make an extra buck from Etsy to eLance, it’s probably no surprise that, according to the U.S. Census Bureau, 98 percent of U.S. businesses have less than 20 employees. In lieu of long-term cost commitments, this vast majority maintain small core staff while outsourcing all sorts of services.
For great gains, entrepreneurs are applying Henry Ford’s tried-and-true assembly line method to services. Uber offers chauffeurs on demand; with AirBnB, anyone can try to be a Trump; a plethora of restaurant to-go and supermarket delivery apps cover your table and fill your cupboards with a few clicks; high school football coaches have access to the same play-by-play tech as the pros; high school students can make viral videos to become the next George Lucas; and medical, accounting, and legal software let you bypass waiting rooms with professional services on demand. Heck, you can even hire someone to knit a blanket for a really thoughtful and “homemade” baby gift.
It’s as simple as technology facilitating the connection of people who solve the specific problems of others, or, as this week’s lead story in The Economist suggests, the economy is increasingly being divided between “people who have money but no time and people who have time but no money.”
When the job-starved starts meeting the demands of the time-starved, it all seems like a win-win situation, doesn’t it? Well, maybe…
Having employees on tap guarantees the best
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In the ideal world, if anyone can work from anywhere, you have the opportunity to hire the most specialized, best people out there from a limitless pool of choice. Not only that, you are hiring people who work where they want, when they want, so it seems reasonable to assume they are happier workers who deliver better results under less pressure.
eLance found that 85 percent of companies they surveyed actually said they felt that hiring online workers gave them a competitive advantage. Certainly, in such a perfect world, we could break through some barriers of racism, sexism, ageism, and even confidence if entire hiring processes are done online.
There’s also an obvious value for businesses to forgo contracts in order to engage in what The Economist calls the on-demand economy. Companies coming out of eight years of recession don’t want to hire full-time staff. Instead they are running their businesses on month-to-month budgets, allowing temporary hiring for task-based work. They need things done, but aren’t ready to commit to contracts and the benefits they have to pay that come with them.
This motivation to avoid indefinite contracts has increased in the United States with the Affordable Care Act (“Obamacare”) mandating companies to offer healthcare once they have the equivalent of 50 or more full-time workers.
This new on-tap economy allows companies to test out potential employees before accruing long-term costs of salaries and benefits. Since you only have to pay upon service delivered, there becomes less financial risk for employers.
…or does on-demand employment mean settling for less pay?
Still, quality of work is at risk. Like the rampant outsourcing that began almost half a century ago, many businesses will find any excuse to put the buck before the bang, often hiring those that ask for the least amount of money over those that provide the most experience or clearest proof of service delivered.
We have a whole new generation that has to become responsible for declaring its own income and paying its own taxes, as well as funding its own now obligatory healthcare and saving for retirement. Problem is, people that do many of these hourly jobs are living intensely paycheck to paycheck and don’t have the luxury of saving. Mini-jobs, along with a series of part-time and outsourced work, leave people without the ability to plan for the future, get mortgages, build families, pursue education, and other long-term investments.
An economy cannot remain stable atop a market full of those without long-term plans and zero security.
And there’s no doubt that these bargain services for hire are often paired with undeclared income—you get a better deal because many of your services per hire aren’t paying taxes, nor sales tax. Plus, you have less references checked and other sorts of problems. Uber obviously has had issues resulting in its ban, ranging from a security perspective in India to taxation and unlawful competition in Germany and Spain, respectively.
So far, governments are either allowing companies like Uber to regulate themselves or they are flat-out banning this new wave of solopreneur competition and therefore stunting their own economic growth. It’s clear that the economy is waiting for legislation to arise that enables this new made-to-order economy to work, but, in the meantime, in true capitalist fashion, business and the people will regulate in their own ways.
Only time will tell if this hinders or hastens economic and social growth, but there’s no doubt that the mobile world is driving this in the foreseeable future.
Technology is the lynchpin of the new economy
Whether the chicken or the egg, technology is either reacting to these market changes or driving them. Like the new workers’ economy, Software as a Service (SaaS) has also developed a cheaper, pay-by-the-drink model where there’s an app for that. Not just that, specifically That. That exact thing you want to happen the exact time you want it to, from the device that is most convenient to you, integrated with your entire workflow.
This is probably a situation where where business mimics tech; instead of creating catch-all jobs that try to do everything in 40 hours a week, why not hire four experts to do four different job functions in ten hours each? Then use project management apps and function-focused micro-apps to connect all their workflow, building a remote team.
And SaaS isn’t just opening up a world for contracted and full-time employees to work from anywhere, it’s finally enabling businesses to be run from anywhere. Apps like When I Work allow you to literally track workers, letting you manage hourly employee check-ins and time clocks from anywhere.
All of these changes enable a more fluid, agile workforce and economy ready to meet the demands of today. But it may all come at a cost.
How does an on-tap economy help or risk your industry? Tell us below!
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About Jennifer Riggins
A Jersey Girl in Barcelona, using her passion for writing and marketing to help small businesses define their vision and brand. This eBranding Ninja has a special love for Spanish startups, SaaS, and any innovation that helps you grow your business.
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