#contingentworker

By Deborah Thoben

A little while ago, Google announced that by January 2020, the staffing companies they work with would be required to pay their contingent workers health benefits, 12 weeks parental leave, $5000 tuition reimbursement each year, and a minimum wage of $15 per hour. The change didn’t come easily, but as Robert McGuire of Nation 1009 noted, “One of the most influential brands in the world is catching up by recognizing the validity & equality of #freelancers.”1

In the beginning, the Gig Economy grew and flourished out of the Great Recession when employers were frantically slashing costs and payrolls. Unlike downturns of the past, however, emerging technology and mobile platforms made it possible for workers to find their own “gigs”  and be their own bosses. Once the recession was over, people had adapted to the new work environment; and so it continues today. By 2020, 40% of the total US workforce are expected to choose working “gigs” over traditional office jobs.2

The Pros for Employers. For employers, the benefits of temporary, vendor and contract workers (TVCs) are pretty obvious.

1. Lower overhead 2. Lower risk exposure 3. Access to a broad range of quality workers across the globe 4. Maximum scaleability and flexibility

The Cons for Employers. On the down side, however, the IRS and Department of Labor are now closely reviewing how employers classify their workers. In 2014, employers had to pay $79 million in back wages to freelancers that the government agencies decided were actually employees. Here’s a brief overview of other issues contingent workers might generate:

1. Lack of availability 2. Lack of company commitment 3. Continual on-boarding 4. Classification2

Contingent Workers in a Tight Hiring Market. According to Tracey Malcolm, managing director and one of the leaders of the Future of Work initiatives at Willis Towers Watson, “Retaining contingent workers typically has not been a priority in the same way it is for full-time staff. However, in the shifting employment environment, taking a more proactive approach with contingent staff is becoming increasingly important.” Malcolm suggests HR, legal and management acknowledge the changing workforce and proactively establish policies for contingent worker interaction.3

Tips for hiring in the Gig Economy. Since today’s worker can just as easily work for themselves as for a company, projecting a progressive company culture and flexible employee experience are more important than ever. Here are some other tips to consider. 4

Market Smarter. Job descriptions should be free of bias, not too short or too long, and interesting enough to capture the attention of a wide range of candidates. Headings for job postings should be A/B tested for ultimate appeal. Companies should strive to have well-designed career websites and Applicant Tracking Systems where they can promote their brand and simplify the candidate experience. Recruiters should use the wide array of advertising opportunities available to them to reach both active and passive job seekers.

Spotlight Employee Experience. Leverage your career website, blog, and social media to put your company culture in the best light possible. List features and benefits of working at your company such as flexibility, growth, and remote work opportunities. Post positive pictures of your employees at work and play, and include employee testimonials. Videos can also provide a compelling platform for employee experience. Highlight flexibility, growth and remote work opportunities if they exist.

Keep it simple.  Now that you’ve taken the time to write better ads and promote an appealing company culture, don’t lose applicants with a difficult and lengthy apply method. Past studies indicate that applications taking less than five minutes to complete result in 250 percent more applications completed.

Look ahead. With a tight labor market, the gig economy, and a high churn rate for workers, recruiting can’t be a one-and-done process. It’s a necessity to keep your funnel full of candidates and and keep candidate data current so that it can be easily accessed, filtered and targeted as needed.

Use technology. Not only do new technology platforms allow workers to participate in the gig economy, technology can also help recruiters and hiring managers. Routine day-to-day tasks should now be automated so that you have time to use your experience and creativity for building relationships with candidates and finding new ways to source open positions. 4

In Conclusion. Current events at Google suggest that it’s now in the best interest of companies to consider the talent experience of all of its workers including employees, contractors, freelancers and contingents. Competing for workers in the expanding Gig Economy will require insight, creativity and a human touch.

1 https://www.forbes.com/sites/laurelfarrer/2019/04/05/google-just-predicted-the-future-of-the-gig-economy/#70261b4f5268

2 https://recruiterbox.com/blog/freelance-vs-fulltime-pros-cons-hiring-independent-contractor

3 https://www.shrm.org/resourcesandtools/hr-topics/technology/pages/google-and-the-gig-workers-what-other-employers-can-learn-.aspx

By Deborah Thoben

It’s the tightest labor market ever seen in the United States with even more open positions than there are workers. However, for trending companies offering flexibility, benefits and a quality work environment, the candidates continue to pour in. Companies like Google and Microsoft are in the enviable position of successfully filling contract-to-hire positions for a large segment of their openings. But, it’s not only the major players offering contract-to-hire. As of March 2019, it’s reported that almost 85% of companies are adding contract workers to their teams and roughly 30% have already made the transition.1

Contract-to-hire positions can fulfill a variety of employer needs. Some companies "try before they hire” with the intention of bringing the contingent workers on full-time if they seem to be a good fit.  Other positions such as seasonal or project work are specifically filled for the length of the contract. Contingent workers may also fill in for employees out for an extended period of time (maternity, e.g.). 

Advantages for Employers 1. Ability to try workers out on a trial basis 2. Save the costs of full-time salaries and benefits 3. Avoid the risk of wrongful termination or discrimination suits 4. Simplify the transition of qualified candidates to full-time1 

Advantages for Contractors Similar to employers, contractors find that they also enjoy the opportunity to see what a position involves and what it is like working for a particular company without a full-time commitment. In the current work environment of part-time gigs, side hustles, and freelance work, contract-to-hire no longer has the stigma that it might once have had. In fact, contract-to-hire workers are frequently considered experts in their field and sometimes are paid more than salaried employees. A few more benefits include giving workers a chance to make money while filling gaps in their resume, learning new skills, and expanding their professional network.

Best Practices Thinking of going the contract-to-hire route? Here are a few best practices to consider.

1. Transparency - Let contractors know whether or not there is the potential for a full-time position at the end of the contract.  2. Expectations - Explain the responsibilities of the job and what is expected of a successful contractor. 3. Training - Assign a mentor that can walk the new contractor through their responsibilities and answer questions as needed. 4. Review - Take note of the contractor’s work and periodically let them know how they are doing.2

Contract-to-Hire can truly be a win-win strategy for both employers and contractors.

1https://www.flexjobs.com/blog/post/need-know-contract-to-hire-jobs/

August 6, 2018

Trump is making good on his campaign promise to create more jobs - unemployment at 3.9% is at an all-time low - and grow the economy - GDP growth of 4.1% during the second quarter of 2018 is the highest rate since the third quarter of 2014. He's having a bit more difficulty fulfilling his pledge to dismantle the Affordable Care Act (ACA), which is probably in his favor as there may be unintended consequences if the ACA is rolled back.

Shortly after the ACA was enacted in 2013, there were all kinds of theories about how accessibility to affordable health care coverage would positively influence the number of self-employed individuals. It seems reasonable to think that the number of self-employed individuals would rise if the worry of accessing and paying for healthcare insurance for themselves and their family were erased. I'm sure everyone knows of someone who has foregone an opportunity to be self-employed because they didn't feel that they could risk leaving their corporate-paid health care benefits. The stories of families facing financial bankruptcy due to uninsured health care claims can certainly crush one's entrepenurial spirit. And as a country that prides itself as a harbinger of innovation, I would think that our leaders would want to support a culture of entrepreneurship.

According to the OECD, the US and Russia have the lowest rate of self-employment at 6.5% and 7.2%, respectively, while Greece, Turkey and Mexico have the highest rates of self-employment at 35.4%, 34.0% and 32.1%, respectively. So apparently the correlation between the health of an economy and the level of self-employment seems to be a negative one.

Not only do self-employed individuals benefit from affordable, accessible health care coverage through the ACA, so do contingent workers. The U.S. Bureau of Labor Statistics defines contingent workers as persons who do not expect their jobs to last or who report that their jobs are temporary (think Uber drivers). Note the use of the term "worker", and not "employees". Contingent workers are not employees, and therefore aren't eligible for an employer's benefits program such as health insurance. And employers who tap into this pool of contingent workers benefit greatly, as they can structure their workforce on an as-needed basis, which should support innovation and enhance efficiencies.

So, has the rollout of ACA marketplace plans in 2014 positively impacted the number of self-employed individuals and contingent workers? A rose-colored CNBC article from January 2017 titled Small-business owners and self-employed more likely to buy Obamacare plans states "One out of every 5 Obamacare customers — 1.4 million people — was a small-business owner, self-employed or both, in 2014, the first year Affordable Care Act plans were available, a government report issued Thursday reveals. The same Treasury Department report also found that workers whose incomes were not primarily from wages were almost three times more likely to buy health insurance coverage from an Obamacare exchange than wage earners in 2014." This sounds pretty positive, that the ACA marketplace is drawing more self-employed workers than your traditional employee. Somewhat of a "duh" statement, but I'll be 'glass-half-full' here.

Another stat from the same government report sheds a different light on the perceived value of Obamacare amongst the self-employed population: "among workers whose income was not primarily from wages, almost ten percent purchased insurance through the ACA's Heath Insurance Marketplaces; such workers represented about 28 percent of all workers (excluding dependents or non-working spouses) with Marketplace coverage." Said another way, only ten percent of workers whose income does not come from wages enrolled in an ACA marketplace plan. That sounds pretty low to me, and suggests that health care insurance is not a "missing link" in driving self-employment. This statistic is from 2014, the first year of ACA marketplace plans, and there is a chance that enrollment figures have increased. Unfortunately I’m not able to find an updated version of this particular metric.

Back to my question about whether the prevalence of self-employed and contingent workers has changed since the implementation of ACA . . .

According to the Department of the Treasury's Office of Tax Analysis Working Paper from January 2017, the number of individuals who filed a return and reported the operation of a nonfarm sole proprietorship increased 34% from 2001 to 2014. I'm not a fan of this particular statistic, because there's no indication of when this increase occurred, and thus there's no way to know if there's a correlation between the rollout of ACA and this particular metric.

Per the U.S. Bureau of Labor Statistics, contingent workers accounted for 1.3 percent (2M) to 3.8 percent (5.9M) of total employment in May 2017. In February 2005, the last time the survey was conducted, contingent workers comprised 1.8 percent to 4.1 percent of employment. So the penetration of contingent workers has declined, in spite of what intuitively appears to be an increase of the "gig economy".

In January 2018, NPR had a series about the rise of the contract workforce: “a new NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract. Within a decade, contractors and freelancers could make up half of the American workforce.” (i). Going back to the Bureau of Labor report, contingent plus alternative workers make up just under 14% of the US workforce.

I don’t think we can answer the question on whether ACA Marketplace plans have had an impact on the prevalence of self-employed or contingent workers because of the lack of historical information on how the prevalence of this workforce has changed. We may be suffering from a lack of clear and consistent definitions of who these particular workers are, and therefore our government number crunchers are spewing out different results that what surveys otherwise suggest.

If the Trump administration is trying to get their arms around the type of worker that will ultimately drive the economy of the future, I think they should take seriously the survey data suggesting that a growing number of individuals identify themselves as freelancers. With that in mind, policy makers will have to decide the implications of having - or not having - access to affordable health care coverage. Does it really make sense to have a talented freelance individual who can make a positive impact on their community decide to spend their precious time working a retail job because of the health care benefits?