Even those that do not hold roles responsible for the procurement and management of talent are familiar with the concepts of the contingent workforce and the “Gig Economy.” Many have heard that by 2020, as Intuit’s recent study reports, it’s anticipated that around 40% of the U.S. workforce will be part of this flexible, portable workforce of individuals who choose to work as “independents” vs “employees” of organizations.
However, the measures used to define the contingent fail to accurately capture the various categories of these workers in the market. To help clarify these murky waters, let’s segment the contingent workforce into the following three categories:
· Expert level consultants – subject matter experts billing organizations for project based work in which their expertise supplements knowledge not withheld among the organization’s full time staff
· Senior and mid level contingent workers – highly skilled individuals freelancing for defined periods of time and/or projects, often times networking through on demand talent platforms
· On Demand Workers – individuals earning their income through on demand services such as Uber, Handy, TaskRabbit, filing 1099s for the work, and not eligible for the benefits and protections accorded full time staff
To further complicate our understanding of the contingent worker population, many w2 workers hold freelancing jobs on the side in addition to their “employee” roles within organizations.
So, how does defining the contingent workforce in the Gig Economy impact enterprise and workers? Unfortunately, the failure to accurately measure the contingent workforce will not enable the new administration to develop policy that supports the majority of the needs and desires of both enterprise and worker. Rather, the incomplete data will contribute to increases in the “start/stop” reform attempts we are already witnessing with the changing of administrations.
It is already being witnessed that an approach much different than the last administration’s approach will be taken in terms of employment practice and labor law. The new administration has been vocal about its’ position on immigration policy and is signaling a reduction of the availability of H1B visas which will immediately impact enterprise. Organizations utilizing a high number of individuals working under these visas will need to begin to immediately develop alternative approaches to labor procurement and management. And the current administration is pushing policy in one direction while the new administration pulls it in the other, leaving enterprise and workers awaiting the outcome of the tug of war.
The U.S. has also in the last several years created a market in which healthcare and earned sick time benefits are tied to the individual versus the employer. Most would agree that while these approaches haven’t been perfected and/or are yet to be applied nationally, the momentum has shifted towards empowering more portable careers and autonomy in employment relationships and enabling a broader pool of talent for enterprise. The new administration has also signaled an interest in fundamentally altering these offerings. Yet, it has not shared options for replacement to keep similar benefits intact for those workers that rely on them and the inevitable impact removal of these benefits will have on talent planning for enterprise.
There are new reform efforts underway as well including attempts to close the gender wage gap: Massachusetts recently signed into law that employers will no longer be able to ask salary details of candidates prior to a job offer and that each role’s compensation must be stated prior to hiring. It will take effect in 2018. There is a push for an increase in the federal minimum wage with the most popular reform suggesting $15/hr as an appropriate threshold. The most recent adjustment to the federal minimum wage was completed in 2009 and according to Pew Research Center, it has now lost 8.1% of its’ purchasing power to inflation. The U.S. Bureau of Labor indicates that 3 million workers or 3.9 percent of all hourly workers currently work for the prevailing minimum wage of $7.25/hr; clearly a much needed reform discussion is at hand.
The demands that enterprise now faces to meet talent procurement and management needs in a global economy will only increase in the years of the next administration. There has been a movement driven by various factors for workers to select alternatives to the traditional w2-ed, one employer work model and the current administration has created a marketplace allowing for more portable and flexible careers.
The Department of Labor (DOL) has stated support for the benefits of a flexible contingent workforce model and at the same time it expresses concern over the use of this employment category as a method for organizations to evade legal obligations.
The need for strong data on which to platform ongoing employment reform is more critical now than ever in order to support the talent needed by enterprise and all categories of contingent workers. Here’s hoping the next “Contingent Worker Supplement” survey the DOL will run in 2017 helps to clear up these murky waters and enable holistic reform development.