Job Seekers Remain Hesitant About On-Demand Economy

June 22, 2016 – Job seekers are hesitant to pursue the growing number of independent contractor opportunities with on-demand companies, such as driving for Uber or performing jobs through TaskRabbit, according to a new study released by career network Beyond.

The ‘gig’ economy is the new approach to business structure and employment. Traditionally, employees have a set schedule, received weekly / monthly salary and worked at their employer’s location. ‘Gigging’ is dismantling the bindings on work expectations and allowing employees to set their own hours, availability and deliverables.

The Beyond survey found that 68 percent of respondents indicated that they would not work for an on-demand company or would maybe consider it depending upon their financial situation at the time. The gig economy in the U.S. has grown rapidly in recent years, creating more independent contractor opportunities for workers. However, the survey results showed that the lack of legal rights and benefits for on-demand contractors are deterrents for job seekers.

According to the report, an overwhelming consensus of job seekers (79 percent) believe on-demand companies should consider their workers eligible for entitled legal rights and benefits under certain conditions, with 47 percent of respondents saying they deserve official employee status no matter what, and 32 percent saying they should be considered official employees if working more than 40 hours per week.

Why the Focus Remains On Full-Time Work

While job seekers think that the gig economy will endure, many respondents (66 percent) believe that people are concerned about leaving the traditional workforce to become independent contractors at on-demand companies due to lack of legal perks, benefits and financial security.

And this sentiment remained consistent when asked what they found to be “least appealing” about working for an on-demand company. Job seekers said no job security / guaranteed income (53 percent), no health benefits (28 percent) and that working certain jobs could be dangerous (12 percent). As the debate around workers’ rights in the gig economy continues, the survey revealed that workers, for the most part, remain resistant to embrace the gig economy in the absence of traditional job perks.

“While on-demand companies create unique opportunities, our survey clearly shows that the majority of job seekers would prefer to focus on a full-time job with benefits over a short-term job in the gig economy,” said Rich Milgram, chief executive officer of Beyond. “We all love the flexibility that the gig economy offers, but in reality we need the stability of a full-time position. Finding the right mix of the two is what we strive for in life.”

Respondents did highlight some positives to working as an independent contractor for an on-demand company. Job seekers said flexible work hours (52 percent), the ability to be their own boss (25 percent) and the exciting business model / earning potential (10 percent) were “most appealing” about these types of jobs.

Additional findings from the survey show:

• Gigs are still resume-worthy. When asked if job seekers would include an on-demand job on a resume, 52 percent said they would if the job enhanced their experience regardless of relevance to their field, and 38 percent said they would only if the job was relevant to their field.

• Younger workers are leading the charge. Segmented by generation, Millennials were most receptive to working as independent contractors to make money while they searched for a new job (50 percent), compared to 40 percent of Gen Xers and 38 percent of Baby Boomers.

• Millennials challenge the ‘lazy’ stereotype to earn extra income. Segmented by generation, Millennials were most receptive to earning money as independent contractors in addition to their normal paycheck (32 percent), compared to 26 percent of Gen Xers and 24 percent of Baby Boomers.

• Safety is more of a concern for women. Each gender thought the No. 1 drawback would be the lack of job security / guaranteed income, however, of those who thought jobs would be too dangerous, 15 percent were women compared to eight percent of men.

In 2014, about 34 percent of the workforce was freelance or contract (non-employee) workers and by 2017-2018 it is expected that 50 percent or more will be contract or freelance, says recruiting firm Bohan & Bradstreet. In 2016, over 93 percent of businesses have temporary, contract or part-time employees and view the “new workforce” as a key element to developing and running a successful business.

Sidestepping Talent Gaps

On-demand companies are not the only ones using the services of temporary or contract related employees.

According to a recent report released by CareerBuilder and Economic Modeling Specialists International, hiring temporary and contract employees can help businesses sidestep talent gaps and remain nimble. The study shows more companies will be tapping into this labor segment, with temporary employment expected to add 173,478 jobs from 2016 to 2018 – an increase of 5.9 percent.

“Today, nearly three million people are employed in temporary jobs, and that number will continue to grow at a healthy pace over the next few years as companies strive to keep agile in the midst of changing market needs,” said Kyle Braun, president of CareerBuilder’s staffing and recruiting group. “Opportunities are opening up in a variety of occupations and pay levels, and this is a trend we’re seeing in a wide range of industries and company sizes.”

Another separate report by CareerBuilder found that 47 percent of employers reported that they plan to hire temporary or contract workers in 2016, up slightly from 46 percent last year. Of these employers, more than half (58 percent) plan to transition some temporary or contract workers into full-time, permanent roles.

“Temporary employment benefits both sides of the labor market. Hiring temporary and contract workers helps companies stay flexible and adapt quickly to changing market demands,” said Mr. Braun. “For workers, it opens doors for those who want to utilize various skills, build relationships with different organizations and explore career options.”

These figures coincide with similar findings by The Execu | Search Group. Its ‘2016 Hiring Outlook: Strategies for Adapting to a Candidate-Driven Market’ report found that 26 percent of hiring managers surveyed plan to increase hiring of temporary employees in 2016.

In addition, a recent Adecco study, ‘Definitive Guide to Building a Better Workforce,’ found that 67 percent of companies use contingent labor to enhance their workforce and close talent gaps. The study surveyed 536 C-suite executives across the U.S. regarding the types of talent they need, skills that are most difficult to find, how they are using contingent labor and progressive recruiting methods to enhance their workforces, employee retention techniques and more.

The report found that best-in-class companies are 44 percent more likely to increase the size of their temporary workforce in the next 12 to 24 months. The report also found that 80 percent of employers agree that the U.S. skills gap is a real challenge, and it provides insights into how different companies conceptualize and address this gap in talent. Part of the reason for the increased use of temporary workers: companies are having difficulty finding quality talent.

“With the U.S. unemployment rate at an eight-year low, competition is fierce for skilled talent. That means it’s more important than ever that companies resolve to invest in the recruitment and development of top talent and explore creative, progressive staffing solutions,” said Joyce Russell, Adecco Staffing USA president.

Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media