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The On-Demand Economy Is Booming, but What Are the Risks?
Air Date: 09/04/2016
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The On-Demand Economy Is Booming, but What Are the Risks?

WILLIE GEIST, anchor:

Open Table to book a reservation, Uber to get there, and Airbnb to sleep afterwards, apps like these and thousands of others have created a world where consumers get what they want easily and immediately. Olivia Sterns looks at the implications and the future of an entire economy at our fingertips.

OLIVIA STERNS, reporting:

Andrew Noll’s summer has been anything but lazy.

ANDREW NOLL: As you can see, they’re busy in May, and I got my June and July ones, too. I’m pretty booked all the time, seven days a week.

STERNS: His schedule booked, his lawn care business booming. And his new customers in the suburbs of Columbus, Ohio? Well, they’re streaming in from a novel source: an online platform called Next Door.

NOLL: Before I got the app Next Door, I passed out fliers and just went door to door. After I got Next Door, I got a lot more customers, and I’m making more money.

STERNS: Andrew is part of the rapidly-growing on-demand economy that attracts more than 20 million customers spending close to $60 billion a year, customers that aren’t just in the big cities. In fact, most of them are in rural areas and suburbs like Andrew’s, while only a third of customers are in urban areas like San Francisco, where these days there is an app to order just about anything. Mariecar Frias is a former TODAY show producer living in the bay area. She’s been tasked with hosting her monthly wine club dinner, completely on demand. So how much of this dinner party do you think we can actually outsource?

MARIECAR FRIAS: I would like to outsource everything. Is that possible?

STERNS: Let’s try.

FRIAS: Let’s try it. I’m excited.

STERNS: With a host of new on-demand apps, Mariecar flies through her dinner to-do list. Apartment cleaned, check the Handy app. Flowers ordered through Bloomthat. Table settings taken care of with Table and Teaspoon. Massages-- yep, massages-- from Zeel.

FRIAS: Some of the guilt that I feel from ordering mostly everything on demand has been slowly melted away in this massage.

STERNS: That’s good. But there’s more: hair and makeup from Be Glammed. Wine delivery by Banquet. Food and chef from Feastly. And finally, evening attire delivered by The Cut and Stitch Fix. You look great. I love the dress.

FRIAS: Thank you.

STERNS: Love the makeup. You look beautiful. Can you believe that you were able to outsource your entire dinner party?

FRIAS: No, and I’m kind of scared that I know that now.

STERNS: Everything at this dinner party except the charming guests was provided through an on-demand app, including the refills, poured by a bartender hired through TaskRabbit. Max Menzel works 15 hours a week as a tasker for TaskRabbit. He says it works great with his school schedule.

MAX MENZEL: I like the, the flexibility. I’m able to make my own schedule, set my own hours, set my own price rates, so I don’t really have to answer to anyone.

STERNS: Max is one of an estimated 45 million Americans powering this new on-demand economy, either performing a service or offering goods as independent contractors. He says his TaskRabbit work can earn him $1,000 a week. Do you ever find yourself frustrated with the lack of predictability of the scheduling?

MENZEL: Yeah, I do at times when it slows down. It’s hard to-- to plan out your week when you don’t have your schedule set.

STERNS: Yeah. The on-demand economy is a sort of new cultural frontier with plenty of benefits, but also some uncalculated costs. What are the consequences of the rise of the on-demand economy for the American workforce? Jeffrey Pfeffer is a professor at Stanford’s Business School.

JEFFREY PFEFFER: Fewer people have health care, insurance. Fewer people are part of retirement plans. And you cannot build an economy founded on a bunch of crummy jobs, because then you’re going to have a crummy society filled with crummy jobs.

STERNS: 67% of those who worked as independent contractors say they wouldn’t choose to do it again, according to a survey by Deloitte. But in an economy where wages are stagnant, these gig jobs are often filling the gaps. Leah Busque is the founder and executive chairwoman of TaskRabbit.

LEAH BUSQUE: So an average tasker, the way we measure it is that they are paying up to three important bills a month with their TaskRabbit income. So that might mean they are doing, you know, a few jobs a month. But they’re relying on it in some capacity just to make their lives better.

STERNS: For Andrew back in Ohio, the on-demand economy has helped pay off one big bill.

NOLL: I’m heading into my sophomore year of college, pretty much debt-free. It feels really good.

GEIST: Olivia Sterns reporting.