Is US Job Growth in Contract Work Only? | DCR Workforce Blog

Is US Job Growth in Contract Work Only?

Contingent workforce is taken as an indicator of the health of the job market. The reasons are not far to seek.

  1. When businesses are not optimistic about the future, they tend to bring in contingent workers to retain the flexibility to reduce their numbers immediately on finding that there is a necessity to control costs. Alternatively, they can also convert temp-to-perm and enjoy the benefits of having full time workers who are already comfortable with the work.
  2. When businesses are optimistic about the future also, they bring in contingent workers and have them handle the additional work coming in before they gain the confidence that the growth in business will prove a lasting phenomenon. They save efforts on hiring and firing and can scale up quickly, on demand.

Contract work today is ubiquitous, as high wage jobs requiring high skills are also being taken over by temporary workers. While some cut hair, drive taxis, design clothing and jewelry, share their homes with paying guests or connect with consumers using technology and Internet-enabled applications, others sell hand-crafted items, market innovative concepts, edit/proof content or many other types of contract work. It could be security, janitorial or even transportation, as with Uber. Today your temporary worker is not some clerk but a CEO, CTO, doctor, engineer and highly specialized Nuclear Plant Outage expert!

Analysts keenly watch the rise and fall of temporary worker hiring to get a pulse of the job market and its growth trends. The staffing industry has long known that contingent workers form a part of permanent corporate policy and has scaled up accordingly to meet the recruitment demands of corporate America. Nothing speaks of this better than the $120 billion revenue the industry notched up in 2015 and the nearly 16 million Americans who worked some form of temporary work in the last year.

The number of temporary workers as per estimates by the Government Accountability Office (GAO) could be anywhere between 8 million to 47 million, while some others put it anywhere from 5% to 33%. Such wildly disparate estimates make it difficult to arrive at a realistic estimate of the actual numbers involved.

But we will soon have the Bureau of Labor Statistics working with the Census Bureau to produce a “Contingent Worker Supplement,” as a part of an upcoming Current Population Survey, set to be released in May 2017. According to research by Harvard economist Lawrence Katz and Princeton’s Alan Krueger the measurement of workers in alternative work arrangements is probably being heavily undercounted. They look at all types of temporary, gig or contract work as alternative work arrangements.

Contingent Worker Supplement

Characteristics of alternative work arrangements

After concluding that the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements, the research of Professors Katz and Krueger throws new light the characteristics of alternative work arrangements:

  • Online gig work has also been growing at a tremendous clip. Uber drivers represent up to two-thirds of all online gig work.
  • Offline workers who find side gigs through more traditional means far outnumber offline traditional workers.
  • There has been a notable rise in the share of women in alternative work arrangements. There’s a notable increase in college graduates, multiple jobholders and Hispanics as well.
  • Manufacturing sector accounts for only 6.2% of all those engaged in alternative work, and just 2.6% of workers who are contracted out.
  • The largest number of workers in alternative arrangements is found in sales.
  • Alternative work is more common among older workers and more highly educated workers.
  • Technological changes that lead to enhanced monitoring, standardize job tasks and make information on worker reputation more widely available may be leading to greater

The research expresses concern that growth in alternative work arrangements could put downward pressure on wages and labor standards, and begs the question of how to extend the social compact between workers and companies to nonstandard employment settings to be addressed.

Yet the increase in contract workers is only going to place increasing burdens on procurement as well as suppliers to fulfill these obligations.

If you’re part of this explosion of contract workers, you need a world-class VMS to handle all the details. It’s time to explore Smart Track. Contact us for a demo today.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.