- Human-resources startups raised $1.2 billion this year
- Critics say many workers would rather have one full-time job
One of the reasons Mustafa Muhammed finally broke down and bought a smartphone was because he needed to find a job.
The 57-year-old cook was tired of using a library computer to look for work and watching friends get a jump on leads via alerts on their phones. After picking up his first phone about two years ago, he downloaded a mobile app called Snagajob. This summer he landed a gig at a new IHOP opening in Harlem after seeing it pop up in his inbox.
“This is job No. 2,” says Muhammed, who also works in the dining hall at Fordham University. “I wanted to pick up a little something extra for the summer. I don’t like to be lazy.”
Snagajob is one of a slew of apps that have sprung up in recent years to serve the so-called gig economy. This year alone human-resources startups have attracted $1.2 billion in venture capital, with much of the funding going to companies designed to profit from the fluid nature of temporary or contract work, according to research firm CB Insights. In an election year dominated by concerns over economic inequality, Hillary Clinton and Donald Trump are pledging to generate more full-time jobs. But Silicon Valley is betting the gig economy is here to stay.
“Two or three years ago, it was pretty rare to have more than one job” says Snagajob.com Inc. Chief Executive Officer Peter Harrison. “Now it’s really very common. What we are really building our business on is the blurring of the line between snagging a job and snagging a shift.”
Founded in 2000 as an online job board focused on “lightly skilled” hourly work, Snagajob says it has nearly doubled revenue derived from employers in the past three years. It claims 10 million unique monthly users and about 425 employees. In June, the Virginia company unveiled a mobile messaging app that lets employers assign shifts and lets workers trade them.
Snagajob charges employers for the number of clicks, applicants, interviews and hires it lines up. It also sells annual subscriptions for use of its hiring software. Harrison, 53, declines to specify revenue but says Snagajob is breaking even. In February, the startup raised $100 million to develop new features and fund acquisitions. The same month, Snagajob announced a partnership with LinkedIn, which has typically represented salaried professionals, to share research and data on hourly workers.
Similar apps are taking off in Europe, as well. Spain, with a large service sector and 20 percent unemployment, has become a testing ground for startups bringing the simplicity of swipes, geolocation and people-matching algorithms to hourly job recruitment. Three of them -- Job Today, Jobandtalent and CornerJob -- have raised some $87 million combined this year.
Job Today helps restaurants and retail mom-and-pops find and interview waiters, sales associates and drivers. Employers can post as many jobs as they like and have 24 hours to shortlist candidates, after which they use a chat feature to discuss the job and schedule face-to-face interviews. Posting a position on Job Today is gratis for now. Eventually, it plans to sell subscriptions that will let employers browse candidates and post jobs on an unlimited basis. The startup says it has about 100,000 business customers and has processed 15 million job applications since its founding a year ago.
Workforce trends are moving in favor of these apps as more people prefer to choose their own hours. In the U.S., even if they would rather work full-time, government policy has increased the incentive for companies to hire temps and contract workers, Snagajob’s Harrison says. To avoid providing health care as mandated by Obamacare, many businesses deliberately ensure workers toil less than 30 hours a week. They may also prefer temps to avoid paying overtime now that the Obama administration has expanded eligibility to millions more Americans.
According to research from Harvard and Princeton universities, “alternative work arrangements” -- including temp work, on-call work, contractors, and freelancers -- accounted for all the net employment growth in the U.S. from 2005 to 2015. That trend is widely expected to continue.
“These new labor platforms are helping people deal with the volatility of their income and the volatility of work,” says Louis Hyman, a professor of economic history at Cornell University’s ILR School and author of a forthcoming book on the rise of temp work in the U.S. “The tech reflects social reality.” Snagajob’s Harrison says companies are “essentially sharing workers” much the way consumers are sharing car rides and vacation rentals.
A handful of large deals, crowned by Microsoft’s $26 billion acquisition of LinkedIn, has fueled investor enthusiasm. In June, Monster Worldwide Inc. bought San Francisco-based Jobr, which applies Tinder-like matching algorithms to job hunters and employers. Last month, Tokyo’s Recruit Holdings, which controls top-ranked job search site Indeed Inc., bought Simply Hired, which operates a global network of job search engines.
Of course, not everyone is as enamored of the gig economy as the tech industry. “This glorification of flexibility is not in line with the reality of what most working people really want,” says Carrie Gleason, who runs the Fair Workweek Initiative, a network of activist groups that has pushed for laws to support predictable scheduling and guaranteed hours in low-wage industries. Shift-swapping is “a survival tool,” she says. “It is not the ideal.”