The new workforce
The new workforce
It is estimated that as much as 20% of the US workforce are contractors. Independent players in the gig economy are a group that is expected to continue growing over the next decade. Some legislators are raising discussion about the social safety net. Research shows that contractors are much less likely to enjoy benefits of traditional employment like retirement plans, health insurance, and sick pay, not to mention having more volatile income streams. Talk of health care that you can take with you even through job changes continues. Additionally, groups like Freelancers Union are springing up to try to fill the gaps and provide a support system for the new workforce.
Why would organizations want to use contractors rather than hiring regular employees?
- Access to talent. There is a diverse and full range of talent and skills in the marketplace. Companies can more easily find what they need for specific purposes and timeframes. There is some logical appeal to a more project-based economy.
- Speed to hire. It is less risky to take on a freelancer or contractor than it is to make a commitment to a regular hire of training, steady pay, closer supervision, and all that goes along with full access to the company infrastructure.
- Savings on agency and other hiring costs, not to mention cost savings for benefits, which can be costly enough to justify paying a higher rate for a contractor. Plenty of workers have left regular positions to return to the same company as a more highly paid contractor. Of course, the contractor needs to earn a higher rate to cover other costs like higher FICA and Medicare payments and lack of benefits and a steady income stream.
Companies sometimes get into trouble classifying people as contractors, then doing things that imply that they are actually a regular employee like demanding overtime or including them in HR processes like performance management or training programs. Nevertheless, contractors play a large role in partnering with companies and helping to fill gaps to get the work done.