Rise of the contingent worker

Self-employment continues to increase as a viable option, as full-time employment opportunities decrease. Along with this trend, the benefit safety nets that full time employment provides are also vanishing.

More than 53 million Americans are now doing freelance work. This number is expected to rise to 65 million by 2020 according to CNBC. The United States Department of Labor expresses the concern for understanding evolving trends in the structure of work (as being) crucial. This trend points to the rise of “disposable” or unstable jobs. Up to 33 percent of labor force experiences gaps in employment. Additionally, benefits like having a work-provided retirement plan and other safety net features is two-thirds less likely for contingency workers Richard Greeenwald of Brooklyn College says, “That he is hard–pressed to see a sector of the economy where outsourcing isn’t having a huge impact.” PBS reports that outsourcing is not a temporary thing or an in-between stage…it is the new normal.

What are contingent workers? They are workers who do not have standard work arrangements, like permanent jobs with a traditional employer-employee relationship. They are both temporary and may involve a contract for a specific task. Generally, no worker protection laws apply. Some of the other drawback of this work arrangement includes instability, high turnover and making less money. Contingent workers earn 27.5 percent less per week and 47.9 percent less per year than standard workers (GAO 2015).

Large companies now find outsourcing cost effective and useful. Companies like IBM and even NASA now outsource work. The United States Government Accounting Office (GAO) reports that it is an important concept to understand in the dynamics of the labor market. The GAO acknowledges that “questions remain as to whether contingent employment and alternative work arrangements are growing or evolving, about the impact of the recent recession and recovery on this segment of the labor force, and about the longer term implication of contingent employment arrangements for workers, employers, income equality, and economic growth. Information about contingent employment will help to determine whether the existing framework of labor market protects, predicated on traditional employer-employee relationships, and whether it will continue to be appropriate and adequate in the future”.

Joining the ranks of contingent workers by utilizing self-employment is no easy task. Michigan State University Extension educators working with the MSU Product Center counselors can assist in guiding new businesses establish and maintain sound practices.

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