May 12, 2016
Contingent Labor Force Growing Fast
Most workers quickly realize that the best solution to low earnings in a job with scant or non-existent benefits is to move on to something better.
But this is increasingly difficult to pull off, because technology and other powerful forces are reshaping the 21st century economy – and degrading the quality of the jobs that are available. As companies seek to cut labor costs, technologies like scheduling software for retail and fast-food workers and platforms like Uber and Task Rabbit are making it easier to do.
The result has been a rapidly growing contingent labor force of temp-agency workers, freelancers, independent contractors, workers for contract companies, and on-call workers with unpredictable schedules, according to a recent study by prominent Harvard and Princeton economists. They estimate that this contingent labor force has increased from 10 percent of all U.S. workers in 2005 to nearly 16 percent today. Its growth effectively accounts for all of the net job gains over the past decade.
The transformation under way is so apparent that it has earned nicknames like the “gig,” “sharing,” or “on-demand” economy. The resulting jobs are often touted as giving workers flexibility and the freedom to earn more money – and sometimes they do. The researchers conducted their own survey of more than 3,800 contingent workers, and business consultants and computer engineers might be good examples of the independent contractors and freelancers who said in the survey that they prefer their arrangements to working for someone else.
But the reality, according to the study, has largely been negative for average workers. Most contingent workers earn lower weekly wages than similar workers in traditional employment situations. The vast majority of contingent workers in two of the lower-paid fields – temp-agency employees and on-call workers – said they would prefer steady employment.
The primary reason for the lower earnings, is “a consistent pattern [of] working considerably fewer hours per week than traditional employees,” the researchers, Harvard’s Lawrence Katz and Princeton’s Alan Krueger, wrote in their working paper.
Contingent workers are twice as likely to work part-time. They are also more likely to be women, multiple jobholders, and Hispanics, and the biggest increases have been among older workers
A report by the Aspen Institute views the rise of the contingent workforce as the latest chapter in “a long-developing trend by employers to … free themselves of obligations to employees.”
The report notes that as more low-paid workers are thrown into looser forms of employment, they often lack standard work protections and access to employer benefits like dental insurance and retirement plans. And if they can’t accrue a full-time schedule at a single establishment they might not qualify for unemployment benefits if they lose their jobs or are forced to leave due to untenable work situations.
The Aspen Institute proposed several responses. But at a time the presidential candidates in both parties are appealing to working-class men and women dissatisfied with their job prospects, we need to first acknowledge that the contingent workforce is a growing and potentially troubling trend in the U.S. labor market.