Cabrera Industries Inc

Unemployment Rates Sink, On-Demand gig Services Rise. Why?

Unemployment falls to a 50-year low in September 2019. As 2019 closed with record low
unemployment rates, 2020 surprises with even lower all-time low unemployment rates and no
reversal in site. This has sent many analysts into a scurry trying to explain the unpredictable
lows. Having spent the last few years analyzing and developing for the on-demand economy,
it has become very clear that one has been directly influencing the other. Wait. What do you
mean? How is that possible? Well, lets review statistics of the last 2 years and compare the
similarities between the 2 figures.

From 2012 to 2019 the unemployment rate in the US dropped from 7.9% to 3.5% 1 . In the US
alone, this means that 7.6 million more people managed to gain employment in the 7 year
time frame. This reflects quite differently on the 20 years prior. Having a fluctuating
unemployment rate that can directly tie to major global economic events, economists have
been able to predict the rise and fall of unemployment rates to the point of almost being able
to control them. One example was when the Job Training Partnership Act and Reagan’s
increase in Military spending boosted the decline of unemployment rates by almost 5%
between 1982 and 1989 1 . Another example, can be seen from the drafting of NAFTA and the
Omnibus Budget Reconciliation Act, both of which directly helped boost the decline of
unemployment between 1993-2000 by over 4% 1 . However, it is noteworthy to point out that
from 2012 to 2019, while no direct influence or stimulus was enacted upon, the economy still
managed to astoundingly drop the unemployment rate by over 4%.

In 2012 to 2019 the On-Demand self employment business model has experienced what
some would consider a critical mass growth. But is this new economy a fad, an ever
dangerous looming bubble, or is it here to stay? Is this truly a new type of employment that is
going to be a permanent staple in our economy or will people revert back to the more
conservative ways to earn an income? To better understand where this economy might go in
the near future, here are some statistics based on feedback from existing on-demand
45 million Americans (22% of the adult population) have offered service in the on-demand
economy 2 . 51% of those who offered service admitted that their financial situation has
improved in the same year 2 .
70% of those who offer on-demand services are satisfied with their work 2 . 81% plan to
continue providing future on-demand services 2 . 63% of those who have tried providing on-
demand services say they are happier in the on-demand economy 2 .
Only 11% of workers in the on-demand economy claim that they do it because they can’t find
any other means of supplementing an income 2 .

As the statistics clearly point out, people prefer the on-demand business model over
traditional jobs. Some of the top common positive feedback to this economy include:
– Freedom of controlling your own hours.
– No boss to report to.
– Ability to work as much and as little as they choose.

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The on-demand economy is rapidly growing. The most common positive feedback provided
by consumers include:
– The personal experience (one-on-one) that the service provides
– Added convenience of the experience
– Ability to get things delivered same day / same hour
– Flexibility of the service provided

Tech startups like Uber and Airbnb comprise the majority of on-demand firms, but major
corporations are starting to adapt to the on-demand markets. Placing huge investments into
Lyft and Onefinestay, GM and Accor are respectively taking major strides to stay ahead of
their competition. Top common warnings from economists and financial advisors include “…
the on-demand economy is becoming too big an opportunity to miss.” 3 and “…too risky to
ignore” 3 . “… existing companies will need to embrace the on-demand economy and transform
their service and delivery systems to meet consumer demand, or find themselves disrupted
by those who do embrace this shift.” 3
As the next few years evolve the way we do business, it has become clear that the new on-
demand economy is becoming a critical part of how we conduct business and it’s here to stay.

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