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Contingent

June 1, 2016

Contingent WorkersContingent: 1.) subject to chance. 2.) occurring or existing only if certain other circumstances are the case; dependent on.

“Tucked away in the pages of a new report by the U.S. Government Accountability Office is a startling statistic: 40.4% of the U.S. workforce is now made up of contingent workers—that is, people who don’t have what we traditionally consider secure jobs.” — Elaine Pofeldt, Forbes, 5/25/2015

It seems reasonable to me to predict that contingent work will only grow as we see a continuing increase in the rate of change in global economic markets. Indeed, another recent report mentioned that the expected increase in contingent workers is 23% by 2020. If that prediction holds true, then by 2020, 50% of work will be completed by contingent workers.

Of course, forecasting a certain future is a fool’s game. We can forecast multiple future states based on various assumptions. We can even assign some probabilities of each state actually occurring. There is no assurance that our predictions will actually materialize in the “real” world. Thus, in order to move quickly as the future unfolds, our companies must be nimble and have a flexible workforce. Not just flexible in numbers but also in skills.

To mitigate one of our biggest expenses, human labor, we would do well to hedge our bets by investing in automation and by enlisting contingent workers — defined as: agency temps, on-call workers, contract company workers, independent contractors, self-employed workers, standard part-time workers. That way, assumptions proved wrong will have a minimal effect on our organizations as we make adjustments. I believe this is a more honest way of employing people. There is no misconception about committing to lifetime employment on either party’s part. All are in agreement that when contracts are completed, they will be renewed or not as business dictates.

I have been part of the contingent workforce for more than 14 years now. I find it to be a more honest relationship with “clients.” I do not expect that everyone will feel as comfortable as I do with this arrangement. Yet, that is exactly where we are headed (some will say we have arrived). The average tenure for knowledge workers appears to be 24 to 36 months as an employee and then we are looking for the next “job.” So there really isn’t consistent employment for many, perhaps even most, workers.

Our employment models will all have to change to accommodate this new reality. Worker retirement/savings plans will have to be portable. Healthcare will have to be a much more reasonable cost than it is presently. Governments will likely insist that contingent workers keep more detailed and verifiable revenue records. We will all have to understand that “job security” is something we develop internally, not something that is provided by a big company.

When it comes to employment, we are in a transition period. The old model (W2, full time) is giving way to transitory employment needs driven by global markets, shifting production, automation and educational requirements. I’m not convinced we are moving quickly enough to keep the transition smooth, but at least the changes are making the business publications. That’s a decent start!

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