Thanks to the on-demand economy – a term so sweeping it’s become almost meaningless – you can summon a massage, a dog walker, a Starbucks latte, a bottle of whisky or legal advice with a few taps on your phone. A new crop of startups wants to make it just as easy for businesses to find temporary workers.
These “on-demand labour” startups, which offer more automated, efficient versions of traditional staffing agencies, say that they are adding more jobs to a well-established part of the labour economy. “We’re not saying, ‘Replace 100 workers (with our app),’ ” says A.J. Brustein, the CEO of an on-demand staffing platform called Wonolo. “There is no way a Wonoloer is going to come in on the first day and be as productive as someone who has been working there for three years. In our mind, our platform has tens of thousands of jobs that wouldn’t have existed before.”
Others, like Susan Houseman, a labour economist at the Upjohn Institute, have suggested that companies’ increasing ability to expand workforces to cover peak times and then downsize them when there’s less work – a trend that has been around for a while – is cutting into the supply of dependable work and income.
The number of workers employed through temp agencies is already at a record high. However you feel about the impact of this kind of work, on-demand labour could push that number even higher.
THE UBER OF TEMP AGENCIES
The largest startup in the still nascent on-demand labour space, Wonolo (the name is a take on “work now locally”), is backed by Coca-Cola and has several hundred businesses signed up as clients. It sets up temp work in the same way that companies like Uber and Handy broker rides and cleaning appointments: Its app pushes short-term jobs like event staffing and warehouse work to potential temp workers via a smartphone app. Workers, who are not classified as employees, but as independent contractors, can choose to accept them or reject them whenever they want.
Most traditional staffing agencies hire their workers as employees (some exceptions have faced lawsuits alleging they misclassified workers as independent contractors). Independent contractors have no right to minimum wage, overtime pay, unemployment insurance, benefits like health insurance, or collective bargaining. Consequently, they cost about 30% less to hire.
Brustein says that part of what makes this classification appropriate is that Wonolo fills a different niche than a traditional staffing agency. “What staffing is great for is helping you deal with predictable work,” he says. “You know you’ll need people over Christmas? Temp staffing is great. Have someone going on maternal leave? Temp staffing is great. Temp staffing generally can’t help you if seven people call in sick with a cold.” Richard Wahlquist, the president and CEO of the American Staffing Association, says temp agencies usually handle jobs with a longer lead time than a day. “Tomorrow is tough,” he says. “Next week is easier. I would say that it would be good to expect at least five days.”
Traditional temp agencies aren’t necessarily strangers to digital marketplaces, however. Kelly Services has teamed up with online job platforms like Upwork to source more skilled jobs, for instance, and some agencies have started to incorporate mobile technology in their scheduling efforts. But Wonolo and another temporary staffing startup, BlueCrew, say their jobs are mostly in call centres, warehouses, and at events, and that they’re putting short-term work into an on-demand format.
ON-DEMAND LABOUR FOR AN ON-DEMAND ECONOMY
For a while, it looked like on-demand companies could just plug labour into their technology platforms as though it were an API: Hire independent contractors, have their apps dole out jobs and instructions, and voila! Then they started getting sued for employee misclassification. They faced high turnover and an inability to train workers to offer consistent service.
Work Genius, a company so new that it barely exists, wants to give on-demand companies the best of both worlds by hiring employees on their behalf, training those employees, and then scheduling them to work with on-demand companies at peak times. It’s not unlike what Trinet does by becoming a co-employer for more traditional companies. “We basically own that relationship, bear all the burden, and allow the companies to have flexibility and not have all this liability on their books,” says Work Genius founder Ben Bear.
Recently, the startup ran a small pilot with 10 workers who filled delivery shifts for Instacart, meal delivery service Bento, and liquor-delivery startup Saucy.
Andrew Carlone, an adviser to Work Genius who is also the former head of operations at Shyp, explains the benefit to on-demand companies like this: “(With employees), you undoubtedly get a situation where you call people to work, and then if demand drops down to zero, you’re stuck paying people who aren’t doing any work,” he says. With Work Genius, “You just do something similar to what you were doing (with contract workers) — say how many hours you need, and then Work Genius supplies the people.”
This sounds great for the companies, but is it good for the people actually doing the work? A recent report from the U.S. National Employment Law Project argues that on-demand companies should have to accept the responsibilities of becoming employers if they want to train and schedule their workforces. “These companies’ success may be due in part to their ability to attract consumers through the ease of their applications,” it says. “But it owes just as much to the efficiency with which they squeeze labour from their workforces, spreading business risks downward to their workers, without whom they cannot succeed but to whom they have no commitment or accountability.”
Gig economy companies often argue, meanwhile, that employees want to be independent. When Uber was sued for misclassification, for instance, it provided 400 notes from drivers who praised the job for its independent nature.
Bear says that Work Genius’s middle ground will be better for workers because his company can guarantee them shifts, even if they’re cobbled together from multiple sources, instead of asking them to sign up on a gig-by-gig basis, which can create a problem of unreliable income. His argument for how this is better for employees is basically the same as that of a traditional staffing agency. “For the individuals who are assigned through temporary staffing firms,” Wahlquist says, “they’ve also increased their job security in that they have many, many, many companies where they could be assigned, as opposed to being married to the fate of one particular company … Every time they get a new assignment, they have something new to put on their résumé.”
Meanwhile, instead of becoming employers, the growing sector of tech companies that supply services like food delivery may have a new route to finally getting a labour API.
This article was written by Sarah Kessler from Fast Company and was legally licensed through the NewsCred publisher network.