The Uberification of the “1099 Economy”

A new buzzword has emerged in the tech lexicon: “1099 economy.” Referring to the growing ranks of single proprietors and contractors, this trend is part of the massive transformation taking place in the local services economy.

This stems from On Demand Local Services (ODLS). The focus of a recent column, this is the exploding and well-funded sector of apps that let you summon services that are fulfilled locally, a la Uber.

Among other things, these apps create transparency in customer demand. Resulting supply-side liquidity empowers individuals to have the customer acquisition prowess formerly reserved for larger companies.

Also handling core operations like payments and scheduling, some ODLS apps are a full blown startup kit in a box. That sidesteps overhead costs endemic to the enterprise service models we’ve known for centuries.

In micro terms, that will do cool things like improve unit economics and pass savings to consumers, as we’re seeing with apps like Urgent.ly. In macro terms, it could be an economic inflection point in local services.

Of course ODLS is nothing new, nor is the 1099 economy itself. But the innovation we’ve seen with Uber, Airbnb and a few other standouts of this sector are about to take over many more local service categories.

“It’s empowering what we’ll call the 1099 ‘economy,'” Urgent.ly CEO Chris Spanos told me. “UberX is probably the best example, but expect that revolution to occur across every vertical that you can imagine.”

Many things are driving this expansion, including smartphone penetration, app innovation, mobile payments, and societal acclimation. But Spanos brings up another important factor: generational.

“An old economy business model that millennials can’t relate to [is] an annual subscription for something you might not need,” he said. “Millennials expect everything now, and they turn to their phones for that.”

Another thing occurred to me after talking to Spanos. On demand mobile services aren’t just a good match for millennials’ proclivities as consumers; but also to their potential to fill the ranks of service providers.

In other words, the same fickle nature of (some) millennials that causes them to not want to commit to subscription services could make many also not want to be caged in traditional 9-to-5 jobs.

The Uberification of the 1099 economy could therefore be form-fitted for a generation that doesn’t want to be told when to come to work. Ask any Uber driver whether they like being able to make their own schedule.

This bodes well for the Ubers of the world, whose supply/demand balance requires constantly adding service professionals in a step function that leads with the supply side (i.e. more drivers).

The question is whether or not this “uberification” extends beyond service industries. If it can move up the ladder to higher paid corporate or creative fields (which it already is), it could employ an entire generation.

Panning back, the combination of an increasingly millennial workforce and a new societal employment structure, could mean we’re entering an era of professionals identified more by 1099s than W-2s.

Michael Boland is chief analyst and VP of content at BIA/Kelsey. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.