Contingent labor has always been a part of the American workforce. But this decade is seeing a definite shift toward a “gig economy” becoming the new norm for a sizable portion of the working population. According to Smart Business Network, 2017 marks the tenth year in a row for growth in this sector. In a recent article, the Network quoted Andrew Deutsch, an EVP at Nesco Resource, as expecting the percentage of contingent laborers to rise from the current 10% to as high as 25% of the total U.S. workforce in as little as four years. And that may turn out to be a modest estimation. What are some of the factors driving this rise of the scalable workforce?
Why Employers are Choosing Contingent Labor
The economic recession of 2008-2009 brought many companies to the conclusion that they had to cut headcount or go under. But they also needed to be able to ramp up again quickly as the economy began to improve. Contingent labor made sense as a solution that would provide flexibility and scalability with less risk and cost than traditional hiring. Even when the crisis passed, the benefits of using contingent staffing remained. Many employers never went back to their old hiring levels.
What are some of the ways companies use contingent labor? Businesses are increasingly relying on an on-demand workforce for entry-level jobs. This is especially true in sectors like retail and hospitality where seasonal hiring swings pose an ongoing challenge. In fact, relieving the pressure on full-time workers and meeting consumer demand is one of the most common reasons for hiring temp labor.
For many organizations, temporary workers also facilitate growth and innovation. They do so by allowing long-term employees to focus on more complex tasks or strategic initiatives. Today’s economy is constantly presenting fresh opportunities that force companies to act quickly. Businesses that experience non-linear growth when bringing on a new client or opening a new territory can experience a sudden increase in labor requirements. Typically these needs can’t be met with a slow, traditional recruitment process.
At the other end of the scale, a company might also use on-demand talent for highly specialized workers on a fractional basis. Or they might use it for a specific project rather than paying a full-time salary. The “outsourced in-house” model is becoming popular across multiple industries. For everything from IT to Marketing and Accounting, independent professionals are entering the freelance marketplace in droves.
What about the Perspective of Contingent Workers?
While many workers prefer a traditional job, the Millennial generation is much more comfortable with the new gig economy. Younger workers still want income stability. Yet, they often place an even higher value on flexibility in when, where, and how they get the job done. In truth, workers of all ages are coming to terms with the fact that long-term employment opportunities are becoming increasingly scarce. That’s not bad news for workers who have grown tired of the corporate nine-to-five world anyway. For example, Baby Boomers are making a shift toward independent work as a more engaged and lucrative alternative to traditional retirement. Intuit goes into detail about these trends in their recent report on the future of small business.
Technology to source and manage talent is enabling employers and gig workers to make contingent work the new norm. Freelance platforms that connect businesses with independent contractors and help handle everything from hiring to performance management and payment are flourishing. In sectors like retail, businesses might hire content writers for a massive project creating product descriptions for a store’s online shopping portal. For restaurants, adding a delivery option usually means taking advantage of existing platforms like GrubHub or DoorDash rather than hiring delivery drivers in-house.
How Staffing Companies Deal with the Rise of the Scalable Workforce
Of course, for on-site work, staffing agencies are still the prime source for temp labor. As the rise of the scalable workforce continues, staffing companies are playing a major role. They can bridge the gap between pure freelance work and traditional employment. With unemployment rates declining, businesses are in competition to fill even low-skill jobs. Employers benefit from having access to a staffing firm’s deep pool of pre-qualified job candidates to scale their workforce. With contingent labor, it may also be easier to trial new workers and see how they perform.
It’s not just employers who are coming out ahead. Staffing agencies can add value for workers such as:
- Health coverage, vacation days, and PTO
- Access to jobs that may not be advertised on career boards
- A faster track to employment
- The ability to work in a range of environments/roles, adding to skills and experience
- A better chance of being matched with a job and workplace culture that’s a good fit
- Ongoing employment with the agency rather than a series of resume gaps
The Rise of the Scalable Workforce & the Future
No one agrees on exactly how much the contingent labor market will grow. However, the shift away from full-time long-term jobs has reached a tipping point. Businesses and workers are in the process of learning to get what they need from the gig economy. It starts with making the right connections. Staffing agencies along with freelance management platforms will form the foundation of this new model. With more people shifting rapidly from one job to another, the need for hiring software automation will increase as well. To learn how Efficient Hire is dealing with the rise of the scalable workforce and rising to the occasion, talk to our team today.