Uber drivers – those who power the popular mobile ride share app – are filling not only roadways but also headlines as the growth of the sharing economy is gaining more attention. In the next five years the number of on-demand workers – those such as Uber drivers who provide services or goods directly to customers through tech-enabled platforms – is expected to more than double from 3.2 million people today to 7.6 million in 2020, according to a recent study from Intuit and Emergent Research. Companies such as Lyft (rides), Upwork and Fiverr (online talent), TaskRabbit (errands) and many others are accelerating the growth.
This trend and its implications were the topic of a recent panel I was part of at the Aspen Institute entitled “The 1099 economy.” Event speakers, including U.S. Senator Warner and Jared Bernstein (Senior Fellow at the Center on Budget and Policy Priorities), remarked on a common theme – the need to better define and understand the scope of the acceleration of on-demand and self-employed work. At Intuit, we couldn’t agree more and have planned detailed research through a major study of the on-demand economy in the coming months.
What we do know today is the rise in the on-demand labor force is part of a broader growth trend in the contingent (or non-employee) workforce. Thanks to new technologies and a series of macro shifts, the contingent workforce has grown from 25 percent in 1990 to 36 percent today. By 2020 it’s expected to reach 43 percent – meaning that over a third of workers won’t have traditional ties to an employer. (Read more about the research we’ve done on these trends here.)
For this growing group of workers, lack of knowledge and tools on finances and taxes is a detriment to their financial planning and success. For instance, on-demand providers sometimes lack information about the regulatory structure within which they operate and are unaware that under tax law they are a small business. Some do not know that they are being paid in gross or that they should be paying quarterly tax payments. Even if they are aware of their quarterly tax obligations, they may struggle with how to assess and pay them on time. Likewise, new on-demand workers may not be aware of eligible deductions and thus miss out on reductions to their tax liability.
Insights from tens of thousands of Intuit’s self-employed customers point to the need for innovative solutions to address the tax and financial challenges of on-demand workers – challenges we are meeting through a new suite of products and services for these entrepreneurs. Our insights from self-employed customers also command us to engage in education and reform discussions that help our economic structure grow and responsibly adjust to the changing workforce. The question of how we as a society support the growing contingent workforce, and in particular the new on-demand entrepreneurs, opens up a set of important (and often uncharted) economic and social issues around the future of work and what it means for taxes, finances, and other benefits. We look forward to pursuing this discussion with you in the coming months.