● Point Of View
New Findings Reveal the On-Demand Economy Plays Key Role in Improving People’s Financial Stability
FSP’s Joanna Smith-Ramani sat down with Steve King, a Partner at Emergent Research, to discuss the results of the second On-demand Workforce survey. In 2015, Intuit kicked-off a research project in partnership with Emergent Research and eleven on-demand economy and online talent marketplace companies to gain a deep and objective understanding of the motivations, aspirations and pain points of individuals choosing on-demand jobs. In this latest study, new findings reveal that the on-demand economy has taken on a key role in improving the financial stability of people looking for flexible opportunities to supplement income.
Joanna Smith-Ramani: Can you tell me more about the survey conducted by Intuit and Emergent Research? Who did you interview and what were you trying to learn?
Steve King: This is year two of what is an ongoing study of work in the on-demand economy – the online market places that connect buyers and sellers of services (Lyft, Upwork, Task Rabbit, etc.). Through the survey we sought to learn the demographics, attitudes, and motivation of those working in this sector – who they are and why they choose to do this type of work. This past year, through our work with the Aspen Future of Work program, we decided to add some new questions to help us better understand their financial security and stability.
What were the top reasons cited by participants for engaging in on-demand work?
What we found was pretty consistent with other studies and with the year-one results of this study.
The number one reason people participate in the on-demand workforce is to earn more income or supplement their income. What gets lost in the press is that the vast majority are doing this part time.
We also found there are a lot of reasons individuals participate in the on-demand workforce – it isn’t a universal thing. 57% reported they wanted to supplement their income, 46% reported they liked the flexibility and control provided by this type of work, 35% reported a greater work-life balance, 32% reported liking being their own boss, and 32% wanted to try something new.
How has the on-demand economy taken on a key role in improving the financial stability of people looking for flexible opportunities to supplement income?
There are a few things that stand out. This is almost a new type of work that we have not seen in traditional markets. Basically, what the on-demand economy is showing is a demand on the worker side to quickly get work and not have to jump through the typical job hoops like interviewing, committing to a fixed work schedule, and commuting to another location for part-time work. A key advantage is that these workers can start and stop when they want, they can work the hours they want, and they are not tied to a fixed schedule. The typical work structure of having a boss and working a fixed schedule has locked people like caregivers, mothers, actors, and others who require highly flexible work schedules out of the work place. The on-demand workplace allows these people to participate when they want to.
We also found that people said the on-demand workplace provided opportunities to smooth their income out in the face of financial hardships.
Because American don’t save, they don’t have the financial resources to cover an emergency. If you lose your job, get your regular work hours cut, or have an unexpected major expense, you can quickly pick up work in the on-demand workplace. This helps with smoothing income, which is highly variable for most of those working in the on-demand economy. Only one in three reported having stable and predictable monthly income.
This supplementing of income seems to be a success for many. 39% said they were better off financially because they participate in the on-demand workplace and less than 10% reported that they were worse off. The rest reported they were financially the same, which we take as a positive because they are doing this in the face of a hardship and are still able to maintain their same level of financial stability.
What surprised you most about the results?
What surprised us most is that 21% reported they participated in this type of work to get through a financial hardship or shock. And 41% of respondents had faced a financial hardship in the last year.
That’s two times the national average when compared with the Federal Reserve’s statistics.
There are two things going on with the economy.
First, income volatility is growing and more Americans are facing financial hardships and shocks than in the past. Second, it’s clear that our traditional safety nets are not working as well as they need to.
I think this study highlights a lot of the economic problems we are having, especially for men aged 25 – 54. But as American’s we are industrious and want to fix our own problems. Turning to on-demand work is one way to do this.
Any a-ha moments or insights that challenge conventional wisdom?
We are watching closely and are seeing more traditional self-employees – consultants, micro business owners, freelancers, etc. – turning to these market places to build their business, find new clients, and fill in gaps in their schedules. In most cases they are doing this to help build their business, especially those who are just starting out.
What are the implications of this research for employers, workers, and the financial service industry?
What we found in the data highlights some flaws in traditional labor markets. There is persistent income inequality. Roughly 25% of Americans are thriving, about 30%-40% are doing ok, and a large chunk are struggling. This highlights that, again, Americans don’t sit around – this is an alternative safety net for many. Some blame the gig economy for creating this problem, but the gig economy is a result of these problems. People who are not doing so well in these economic times are turning to the gig economy to make ends meet.
A lot of startups are picking off things here to fix. Stride Health is a good example in the insurance space and a number of other companies are working on savings plans and plans to help boost savings and smooth income month-to-month. For the larger companies, it’s harder to see how to make money – so they aren’t as far along as smaller businesses. And unfortunately government can’t move very quickly. But, there is a lot of activity in this space. Banks are trying to create new products, and QuickBooks and Turbo Tax have been successful in allowing self-employed people to track their own expenses and get help they need with their taxes.
The views and opinions of the author are their own and do not necessarily reflect the view of the Aspen Financial Security Program or our funders.
EPIC is an initiative of the Aspen Institute's Financial Security Program.