The hidden anxieties of the on-demand start-up worker

Of all the inventions that have emerged from the current crop of Silicon Valley start-ups, the one with the biggest long-term impact is likely to be the algorithmically-controlled, smartphone-beckoned temp worker.

1099 workers — named for the IRS classification given to them as freelancers — power the vast majority of today’s on-demand start-ups. Without them, Uber would have no drivers, Postmates would have no couriers, and Homejoy would clean no houses. Collectively, these people enable urban yuppies to live princely lives of venture-backed convenience. And in the future, some Silicon Valley sages predict that there will only be 1099 workers — the full-time worker, bundled with inefficiencies and costly protections like worker’s compensation, will have gone the way of the yellow taxi.

But who are these workers? And how do they feel about their roles powering the new tech economy?

A new study, released on Wednesday by Requests for Startups, a group of Stanford researchers and Y-Combinator alumni, surveyed roughly 1,000 on-demand workers about their work, earnings, and lifestyle. The study was collected electronically from workers who contract with 78 different tech companies, including Uber, Postmates, and Airbnb. Here are their most interesting findings:

The typical on-demand worker is a single, college-aged white man.

Minorities and immigrants may have predominated in the old-line taxi industry, but the “Uber for X” workforce is a young white man’s world. 72.7 percent of respondents to the survey were men, 65.7 percent were unmarried, and 57 percent were white. (African-Americans, Hispanics, and Asians each made up roughly 10 percent of the 1099 workforce.) And young people predominated — more than half the respondents were under 34, and 38.3 percent of those surveyed were college students.

(Interestingly, the exception to white-male dominance was found in “passive income” start-ups like Airbnb, in which 63.3 percent of the workers were women.)

Flexibility isn’t all it’s cracked up to be.

Uber drivers and Postmates couriers may not have regular, employer-determined work schedules. But their schedules aren’t totally flexible, either. The algorithms that determine “surge pricing” and its variants have a huge role in controlling when 1099 workers are on the job. 49 percent of survey respondents said that “peak hours/demand” was a factor in determining their work schedule, compared to only 35.4 percent who listed family as a factor.

There are really two types of on-demand workers.

People tend to lump all Uber drivers, Airbnb hosts, and Postmates couriers together for the purposes of analysis. But in reality, there are two types of 1099 workers: people who are working these jobs as a primary source of income, and people who are working them temporarily to pick up extra spending money or add additional income to a full-time job.

Nearly 40 percent of 1099 workers reported that contract work accounted for less than 25 percent of their household income. But 29 percent reported that it accounted for more than 75 percent.

On-demand workers want basic benefits.

The researchers asked contract workers to rate several factors from 1-10 in terms of desirability. The highest average ranking went to “health benefits,” followed by “retirement benefits” and “paid sick, holiday, and vacation days.” (Far less desired were feel-good perks like “company-sponsored events.”)

Postmates depend on 1099 income more than Uber drivers.

Within the 1099 community, certain segments attract different kinds of workers. Workers for delivery start-ups like Postmates, for example, were far less likely to have a full-time job than other on-demand workers.

On-demand workers will quit if they’re not earning.

For all of Airbnb’s claims of community-building and Lyft’s talk of friendly ride-sharing, it’s all about the money for many 1099 workers. And if the financial arrangements of their gig change, or the demand for their services isn’t there, they’ll bolt. Among 1099 workers who had quit a job, the largest group (42.9 percent) did so because of “insufficient pay.”

Many on-demand workers are doing it temporarily.

Turnover in the on-demand industry is notoriously high. Workers quit when they find full-time employment, or when a more attractive part-time job comes along. And the result is an extremely high-churn workforce. Only 29 percent of the independent contractors surveyed said they expected to be working as a contractor for 3 or more years. Nearly half said they expected to quit within two years.

Many of the on-demand workers surveyed were distressed about their financial situation.

40.9 percent of survey respondents disagreed or strongly disagreed with the statement “I feel secure in my financial situation.” But it’s not all bad. More than a third of the respondents agreed (29.8 percent) or strongly agreed (8.4) percent that “my level of anxiety is low.” And even some of those who are anxious and in financial distress feel satisfied in other ways: over 60 percent of those surveyed characterized their 1099 work as meaningful.

The on-demand economy is no worker’s paradise.

The remarkable thing about the 1099 worker survey results is how normal they were. I suspect that if you asked identical questions of people with regular, W2-classified full-time jobs, you’d get largely the same percentage of people saying they’re stressed about their finances, unhappy with their schedules, and doubtful that they’ll stick around for long.

But the promise of the on-demand economy was that it would liberate workers from these fears. Companies like Uber have signed up tens of thousands of workers by promoting the flexibility and freedom of on-demand work, compared to traditional 9-to-5 jobs.

That freedom comes at a price, however. Because of the platform-only nature of their services, on-demand companies are uniquely able to change the terms of their workers’ jobs on a whim. If a company like Uber decides that it wants to change its star-ranking system in a way that disadvantages drivers, it can. If it decides, as it recently has in certain markets, to take a bigger cut of each transaction, it’s as simple as tweaking a software setting. Contract workers are helpless against these changes, and that fragility may be part of what’s causing their anxiety.

The big lesson of the 1099 study, then, is that algorithmic bosses are still bosses. And the on-demand economy, for all its consumer benefits, is still a place where people work hard, fear for their finances, and expect to get paid a decent wage.