The Structural Shift to a Contingent Workforce

One of the most important trends of the last few decades is the growing use of contingent workers.  This is a structural shift towards employer use of contractors, freelancers, part-timers, etc. instead of hiring full-time, permanent employees.

While hard data on this shift is not available, most analysts following this trend (including us) believe around 30% of America's workforce currently is contingent.  The general consensus (again including us) is this will rise to 40% - 45% over the next decade and become the majority way people work between 2020 and 2030.   

The reasons are pretty straight forward:  (1) technology makes it easier to hire and manage contingents; (2) it is cheaper; and (3) it provides companies with increased business flexibility. 

While everyone focuses on the lower cost of contingent workers, we believe the increased business flexibility they provide is at least an equally important driver. 

This trend started decades ago, but is getting a lot recent attention because the recession has accelerated its use, and a lack of jobs draws attention to the practice.

Robert Reich's NY Times article Entrepreneur or Unemployed covers this trend.  So does CNN's Say Goodbye To Full Time Jobs with Benefits. 

Although he doesn't use the term, Reich's article focuses on the growing number of necessity-preneurs.  These are folks who turn to self-employment because they can't find a job.  The CNN article focuses on the growing use of temps. 

The growth of the contingent workforce is a profound shift in America's employment structure.  The secondary effects of this shift are not well understood, but it is clear it is impacting society on many levels. 

We've followed this trend for years and included it in our 2010 Top 10 Small Business Trends list.  It was also a key factor in our 2008 forecast that the number of small businesses would increase during the recession - a forecast that met with a lot of skepticism but proved correct (OK, I admit to patting ourselves on the back on this one). 

We continue to research this trend - we are currently looking at large company use of contingent workers - and will report back with our findings. 

Comments

[NFL Jerseys]

The colours were appealing but after a while they became a bit too much on the eyes. The black is certainly darker but I think it helps to bring out whats on the page more. Foreground is important while background should only compliment rather then overpower the foreground.

[lacoste shoes]

Every man's work, whether it be literature of music of pictures or architecture of anything else, is always a portrait of himself.Do you understand?

[Bridgette Penel]

The contingent workforce is exactly why I co-founder Werkadoo, a marketplace for the part-timers, freelancers ,independent contractors (a.k.a., anyone not a full-time employee). Reality is businesses are now open to other options and now have technology to support remote, contingent professionals. Werkadoo's entire mission is to be the marketplace they can build a full-time paycheck! Check us out: www.werkadoo.com - tell us what you think!

[www.google.com/accounts/o8/id?id=AItOawlH2_GZNfkF1MCNzkSnpcbyHrLiQRc8Qx4]

Flexibility and efficiency are key, I concur.
Cheaper, too, because with flatter organizations, less management is involved.

I would add that a fourth benefit is an improvement in the quality of work produced.

Compare the capabilities and vested interest of salaried employees versus contracted professionals. The professionals often have larger networks and more resources, and unlike their counterparts, the employees, they command respect and compensation equal to their contribution rather than their title.

My own experience:
December '09, while everyone was getting laid off, I quit my job as executive creative director at a marketing agency and started a a network of media and marketing partners.

I called it a work collective, and I'm in the midst of creating a resource for interdependent professionals (I believe the word "freelance" connotes "hired help".)

http://brotherlab.com
http://workcollective.org

I'd love to hear from those who different perspectives than mine, and opposing views. Thanks!

Lisa

[steve]

Michael: Excellent point and thanks for the pointer to the DOL regs.

We think this is going to be a huge issue - with governments at all levels and labor unions on one side, and businesses on the other.

[www.facebook.com/profile.php?id=500603616]

One of the problems with this is that because the federal/state governments are out of cash, they are going to be heavily scrutinizing any attempts to pass of employees as independent contractors.

See: Play/plan/Prevent:

http://www.dol.gov/regulations/2010RegNarrative.htm