RISE OF CONTINGENT WORK
TREND SNAPSHOT
Over the past few decades, employers have increasingly changed the structure of their workforce, outsourcing work previously performed by full-time employees to contingent workers. This includes independent contractors, leased workers, temporary workers and on-call workers. We have also seen an increase in tech-mediated, task-based gig work. This shift is significant because these contingent workers aren’t eligible for many of the rights and benefits of full-time employees.
Although contingent work and work without benefits have always existed, many workers in previous generations parlayed years of loyal work for one company into a healthy retirement. But this is no longer the case. This unwritten "contract" started to deteriorate at the end of the 20th century. With smarter technology and the rise of flexible work options—and a greater demand for higher profits—the responsibility for lifelong employment and financial protection has shifted from employers and onto the shoulders of employees. It’s a contract under constant negotiation with no end in sight.
Should contingent (or gig) workers be treated as employees with all the accompanying benefits and protections, or should they be treated as independent contractors, with no protections? It’s a hotly contested issue, and it can be hard to draw clear lines. In fact, in California there have been judicial rulings, new legislation and even a ballot initiative on the topic within the past couple of years. It’s an issue to keep an eye on.
“I have more flexibility and can better collaborate with others in different cities and countries.
However, the burdens of healthcare and retirement fall on me.”
— IIean H., Albuquerque, NM, participant in AARP focus group
HOW WILL THIS AFFECT WORK?
With many employers using contingent workers, there will be opportunities and challenges for employers and workers.
Opportunities for workers
- Contingent work provides more flexibility in terms of scheduling, which can support workers’ caregiving responsibilities.
- Workers have more ways to make extra money and stay involved during retirement.
- Workers can experience a wide variety of workplaces, work cultures and people.
- Supplementing income with independent work can help provide better financial security as well as help with retirement savings needed to support a longer life (see Megatrend: Longevity).
- Contingent work may help older workers bypass age discrimination in hiring.
- Workers may be able to use contingent work as a steppingstone to a full-time job and use the role to help build their resumes.
Challenges to workers
- Contingent workers do not have the same employment protections as traditional employees. This includes occupational health and safety standards, civil rights and age discrimination protections and minimum wage and overtime protections. Plus, they’re not usually eligible for unemployment insurance.
- Contingent workers are not eligible for employer-sponsored benefits, such as retirement savings plans, health insurance and paid leave, among others.
- In addition to needing the skills to complete the work, gig workers must develop marketing skills to promote their services. They also need to manage tax obligations, find and pay for insurance and retirement savings plans, and protect themselves against loss of income due to sickness or economic downturns.
- As a result of the absence of a set salary and unpredictable work hours week-to-week, workers’ earnings can fluctuate significantly over time. This makes planning, paying and saving more difficult—including saving for retirement and managing dependent care and paying for everyday expenses and emergency needs.
- Unpredictable work schedules and income makes it challenging to pursue learning and development opportunities (see Megatrend: Lifelong Learning).
Opportunities for employers
- Utilizing contingent workers can reduce some direct costs and enable more staffing flexibility.
- Bringing in contingent workers allows employers to hire talented workers who want project work.
Challenges for employers
- Managing a pipeline of contingent workers can create a heavy administrative burden.
- There is no guarantee that the contingent worker who is best suited for the project will be available when needed.
- Even with nondisclosure agreements (NDAs), which are unenforceable in some states, there is a risk of knowledge leaks, even if they are unintentional.
- It may be difficult to create or maintain cohesive teams and loyalty unless managers can find ways to integrate contingent workers into the existing company culture.
- There is potential for a high turnover of contingent workers, impacting productivity and continuity of work.
WHAT CAN BE DONE?
- Policymakers can identify new ways to strengthen, facilitate and administer benefits and protections for workers.
- Policymakers and/or employers can provide opportunities for workers to upskill or pivot from their current career to a more relevant one (see Megatrend: Lifelong Learning).
- Employers can provide workers with predictable schedules.