Gig economy online human cloud platforms are still small — only one half of 1% of Americans cite an app-based platform as their primary job. However, they are growing and do represent a threat to staffing firms.

That was the message today in a keynote presentation by Stanford University Business Professor Paul Oyer at the Collaboration in the Gig Economy conference in Dallas.

Executives at traditional staffing firms must ask themselves, “What can I do that platforms cannot and customers will pay for?” Oyer said. Traditional firms must move up the food chain and add value – instead of introducing workers, which platforms can do, they must work to assign workers.

In one example of a firm moving up the food chain, Oyer cited the story of a ticket reseller whose business was upended by the arrival of StubHub. The reseller changed strategies, instead of just selling tickets, she began planning and organization entire weekends around events for clients.

For their part, the challenge for gig economy platforms such as Upwork is not to have more people but to have better algorithms to find people.

Some comments about the gig economy and human cloud from Oyer:

• Businesses need a competitive advantage. But a company wouldn’t want gig economy workers to be a competitive advantage. They are undifferentiated and are best relied on in certain cases such as when a skill is needed temporarily. Advantages of employing gig workers include labor arbitrage, choice, faster onboarding, ease of downsizing or to fill needs that call for only a partial worker. Disadvantages include stability and knowledge. Gig economy platform workers can be attractive to startups that want to scale, but their use can be a harder sell for large firms.
• Why work in the gig economy? Flexibility. The downside: Instability.
• “The gig economy is an immigration story. The gig economy has allowed for skills to flow to high value areas.” Oyer cited the example of an IT worker in Ukraine selling skills over Upwork to the US. Another example is the Uber driver who lives in Sacramento but goes to the more lucrative San Francisco Bay Area to drive. “Upwork is an immigration platform as much as it is a gig work platform.”.
• Does the gig economy exacerbate inequality? The average buyer lives in an area with 36% higher income. The average gig worker lives in areas with above-average income, but not at nearly as high a level as the buyers.
• The independent workforce looks very much like the population as a whole. Most also hold traditional jobs, and most are in the independent workforce by choice.
• Oyer is concerned about low-skilled workers, but not because of the gig economy. Independent workers make 6% less per year than traditional workers, but make 15% more per hour.
• In addition to serving as a professor and conducting research for Uber and Upwork, Oyer also rounds out his knowledge as a driver for Uber. “The first thing you learn is you don’t make much money driving for Uber.”
• Gig economy online platforms make the market “thicker” by increasing the amount of information available.
• Uber is still losing money. However, “if someone gives you that much money to lose, you’re doing something right.”

The Collaboration in the Gig Economy conference wraps up today.