Zoe Harte, senior vice president of HR at freelancing platform Upwork, talks with Senior Editor Lauren Dixon about the latest BLS data, as well as the challenges and opportunities HR faces with managing freelancers.
There might not be as many contingent workers as the business world once thought. The Bureau of Labor Statistics reported June 7 that between February 2005 and May 2017, the share of contingent workers actually fell, from between 1.8 to 4.1 percent of total employment to 1.3 to 3.8 percent.
Before the most recent report, survey data from various companies found that the contingent labor force was much higher, or employers planned to increase their use of freelance talent. As previously reported by Talent Economy, EY found that 40 percent of organizations surveyed planned to increase use of contingent workers, with 55 percent of those organizations saying that this is a method to control labor costs. The BLS report didn’t reflect those previously reported trends.
Still, there is a supplemental survey to this report, which is set for release in September. This will include information about “how the internet and mobile apps have led to new types of work arrangements,” according to the Department of Labor press release. It used “four new questions designed to measure an emerging type of work — electronically mediated employment, generally defined as short jobs or tasks that workers find through mobile apps that both connect them with customers and arrange payment for the tasks,” according to Karen Kosanovich, economist at the Office of Employment and Unemployment Statistics in the Bureau of Labor Statistics. This survey will reveal if this type of work were for a main source of income, for a second job or additional pay.
RELATED: The Hidden Downsides of the Gig Economy
It’s important to note that the BLS does not have a definition of “gig economy” or “gig workers.” “In fact, researchers use many different definitions when they talk about the gig economy,” Kosanovich said. “These definitions may overlap with contingent workers and some of those in alternative employment arrangements.”
The Changing Nature of Work?
Employment experts who spoke with Talent Economy said that the contingent and alternative employment arrangement data could help put to rest the narrative that the gig economy is dramatically changing how work gets done.
“People have wrongly said we have a rapidly changing nature of work and the future of work is we’re all going to be freelancers or gig workers,” said Lawrence Mishel, distinguished fellow and labor market economist at Economic Policy Institute, a nonpartisan research organization based in Washington, D.C. “And anyone paying attention to data — at least in my view — would have known that that’s not true.”
While he sees an increase in activity for apps and websites that place workers with temporary work, these have a core of people who do this kind of work on a very part-time basis for supplementary income. There is a difference between the prevalence of gig work and how jobs as a whole change. If making the argument that the gig economy is central to work, then the BLS was right to look at just contingent workers doing these tasks as a main part of their income, he said. Still, he thinks the BLS survey vastly undercounts people working for temporary help firms and staffing firms, as well as the fissured economy, or subcontractors.
His main takeaway from the BLS report is that “it should end the hype that we’re all becoming freelancers of gig workers,” he said. “Traditional jobs are not going out of business.”
What Business Leaders Should Know
A leader of a gig work platform agrees that many of these workers still have a main job and use gig work to supplement income. Wade Burgess, CEO of Shiftgig, a Chicago-based company with a mobile marketplace that specializes in short-term gigs, said his company’s survey of gig workers found that 51 percent of these respondents have full-time jobs.
The driving force of these side hustles is that it is becoming easier to work this way. “As soon as you can put that control in palm of your hand, and it’s as easy to book that side hustle as it is to order pizza, then it’s really open to a lot more workers,” Burgess said.
And that control mirrors the hold that workers have on employment today. With 4 percent unemployment, it’s a job seeker’s market, and “it’s increasingly important to know the worker is in control,” Burgess said.
For jobs of any kind to be seen by top talent, employer branding is crucial. Employers should create fun environments, understand that first impressions are important and welcome the gig worker into the team, culture and values of the organization, Burgess said.
“Great companies know that talent is their top priority. If they don’t realize that, they’re going to get beat by companies that do realize that,” Burgess said.
Other advice for business leaders includes taking ownership of employment data, as well as properly classifying workers.
“Take each report you see, including the BLS, with a bit of a grain of salt,” said Rob Cruz, vice president of contingent workforce compliance and senior legal counsel at TalentWave, a Denver-based SaaS company that helps companies engage with freelance talent. While this report says there are 10.6 million independent contractors, others might say there are 30-50 million people working in this manner. Come to grips that the true number is probably somewhere in between, he said.
Also, “businesses should be trusting their own eyes,” Cruz said. Are organizations actually seeing reported trends? Now is a good time to examine the BLS report and use it as a springboard to conduct internal surveys and audits, identifying all independent contractors and vet if the workers are properly classified. “These studies have to be also taken in light of the fact that misclassification is still an extremely important issue and it’s a hard legal requirement,” Cruz said, adding that the best defense against misclassification is to work with an expert, whether that be through internal programs or with outside counsel.
With today’s pressures to maximize productivity and growth, executives must proactively adapt to modern workplace realities and find the most efficient way to manage their diverse workforce. To do so, today’s executives already meticulously track and manage their company’s finances, resources and materials — but they aren’t dedicating the same amount of attention to arguably their most valuable asset: their employees’ time.
On average, employee time contributes directly and indirectly to 60 percent of a company’s operational expenditures, and the ability to properly optimize this time has the potential to make or break a company’s bottom line. Here’s why the C-suite needs to get smarter about enterprise time in 2018:
The contingent, mobile and deskless workforces are here to stay.
Today’s workforce is more dispersed and diverse than ever; accurately and efficiently tracking it is imperative. Because globalization, technology and shifting demographics are driving the change in how and where we work, executives must make it a priority for their organizations to effectively manage their dispersed workforce in its entirety — from part-time employees and seasonal workers, to full-time employees and remote employees.
Disparate and manual systems create organizational vulnerabilities.
Too many companies still rely on manual, paper-based systems or Excel spreadsheets to try to track such things as time, attendance, vacations, sick leave, project status or billing. The reality is that these systems are hopelessly outdated — they simply cannot track employee time by different billing rates or hourly rates, provide an audit trail or scale with a business as it grows.
Multiple systems track time today — CRM, ERP, HR, PSA, project management — but they all do it in different, unconnected, unshareable ways. Time goes missing because it’s too hard for employees to track it accurately and in real time. Without seeing time across their enterprise in one unified system, executives will lack an easily accessible centralized view of how time is spent on a macro and micro scale in their companies. And, ultimately, if the C-suite isn’t providing a modern, frictionless, time tracking system for employees, they are robbing them of a deeper understanding of how they are spending their time and the opportunity to improve and be more productive (for their own benefit and for that of the company).
Noncompliance is more perilous than ever.
Global labor compliance issues are on the rise. Wage and hour litigation has skyrocketed by 358 percent since the year 2000 in the U.S., and overtime pay salary threshold classifications in the U.S. are in flux. Litigation for unpaid wages has cost Australian businesses more than $250 million in the past decade. Japan is attempting to remedy its rampant overtime problem, and labor disputes are on the rise in the Philippines, South Africa, the UAE and China. Thus, it’s more important than ever for executives to ensure that employee time is tracked and managed in a detailed and accurate fashion.
Executives should be wary of employing simple time-tracking tools because their lack of sophistication can put the organization at risk of noncompliance with specific employment laws (for example, manual time tracking tools cannot flexibly adjust as your company expands geographically).
Time is not treated as an asset
The bottom line? Time is universal in any business. Yet without the right systems, there’s no easy way to understand time spent and connect it to a company’s work, accomplishments, events and results. The disconnected silos of time information (resulting from manual and disparate systems) do not allow the company to treat time as a valuable asset — but that’s exactly what it is.
A thousand-person company has around two million hours at its disposal in any year, and how the C-suite plans and utilizes them is what ultimately drives their company’s success.
“] Agni Skafidas loves the flexibility of being a freelancer but hates the fact that she doesn’t get any kind of health or retirement benefit.
Skafidas has a three-month gig with a company in the auto industry. Because she is in human resources, she is well aware that the rate she is being paid is the same as a full-time employee but without the benefits.
“For them it’s a great deal because I don’t cost them anything in benefits,” she said. “It’s so comical if you think about it. I’m trying to live by my values [by freelancing], and yet I’m being penalized.”
A growing number of workers are leaving their traditional 9-to-5 jobs and are becoming freelancers in the gig economy. Nearly 40 million Americans work in a part-time or a freelance basis according to an October 2017 study by Guardian Life Insurance. By 2020, half of the workforce is expected to be freelancing.
While gigs allow these workers to live a flexible lifestyle, many give up the security of having benefits at a full-time position. Only 1 in 4 of these workers has medical insurance through their contracted company, and only 1 in 3 has access to a retirement plan, Guardian’s report showed.
The future of work is changing with the rise of contract workers, experts agreed, and many of these freelancers are trying to build a career path in the gig economy. Because of this shift, traditional benefits will not hold up in the future, several corporate benefit leaders said, speaking at the American Benefits Council’s 50th anniversary symposium in Washington, D.C.
“We see in this world of gig work or freelance work that it is largely cash-based,” said Fred Thiele, general manager of global benefits for Microsoft Corp. at the December symposium. “Benefits are not usually part of the equation. We are being challenged in this regard.”
Phil Scarfi, founder of Pioneer Mobile Applications, said it’s hard for start-up companies like his to offer benefits. He and his four full-time employees don’t have corporate benefits; neither do the four freelancers he is using.
“It’s a matter of having consistent income on my part to offer this,” he said. “It’s in my plan to offer benefits at some point.”
For now, Scarfi offers perks — annual subscriptions to Spotify or gift cards to help freelancers to feel valued.
“At the end of the day, we want good freelancers to stick around and join the team as an employee down the road when the funds are there,” he said.
Some companies that primarily use freelancers, like Lyft, have begun offering certain benefits. Meanwhile, companies like Stride Health cater to these workers by helping them sift through myriad health care options. Gigster, an online site that helps companies find available software engineers, allows freelancers to participate in a bonus program similar to what many full-time workers enjoy.
“It’s one of the ways that we want to create an employee-like situation,” said Lori Williams, Gigster’s vice president for fulfillment. “We want them to feel there is an upside beyond being paid for a gig.”
Microsoft uses a lot of freelancers and wants to become not only the employer of choice, but the gig of choice, Thiele said. It is looking for ways to give gig workers the benefit security they lack, but in order to do that, Washington needs to adapt rules to this contingent workforce. In many cases, contract workers who are offered traditional benefits may be classified as employees.
“If we are stuck with some old rules, we can’t do it,” Theile said at the December symposium.
A 2016 paper, “Portable Benefits in the 21st Century,” by The Aspen Institute, suggested that all workers, regardless of their working status, should have access to portable benefits. That means a worker’s benefit plan is not linked to one job. Companies would pay into a worker’s benefit package; the payment would hinge on certain factors like hours worked or pay rate.
Some Members of Congress have been working on portable ideas that have fizzled. Several states are also working on portable benefit legislation.
“It is a little early. The reg side has to evolve and this doesn’t happen overnight,” Gigster’s Williams said. “This is the future of the gig economy — how we add that kind of value. We are just constrained legislatively right now.”
Patty Kujawa is a writer in the Milwaukee area. To comment, email email@example.com.
Most working Americans are aware that they need to learn new skills. More than 80 percent of employees feel they have a responsibility to improve those skills, yet about one-third of employees said their employers have failed to offer or pay for them to do so, according to Randstad’s quarterly Workmonitor survey.
Given these trends, other survey findings become more intriguing. Global freelancing platform Upwork commissioned “Freelancing in America: 2017,” a study that revealed 65 percent of freelancers are updating their skills, yet only 45 percent of full-time employees are doing the same.
In an ideal world, employees would take training into their own hands. However, the incentive to do so is more obvious for freelancers, said Stephane Kasriel, CEO of Mountain View, California-based Upwork.
The Future and Freelancers
Full-time employees have the safety net of an employer; they don’t need to worry about finding work because the employer provides it. Freelancers, however, must keep abreast of the most in-demand skills to improve their prospects of finding their next gig and commanding a high premium. “It’s not completely surprising” that freelancers upskill at higher rates than full-time employees, Kasriel said.
As freelancing continues to grow, there will also be more workers with updated skills that companies need. And “the more freelancers we have in the economy, the more resilient the economy is to the changes that are coming,” Kasriel said. “In many ways, it’s a healthier way of building the economy, where the people who care the most about their skills are also put in charge of reskilling themselves.”
Conditioning for Training
There are many reasons why workers become freelancers and then upskill more than full-time employees.
“There’s definitely a chicken-or-the egg issue here,” said Josh Wright, chief economist at iCIMS, an HR software company in Matawan, New Jersey. Some workers will reduce their hours or become freelancers in order to free up more of their days for acquiring skills. Others face difficulties in finding work, so they use their breaks to improve their prospects through educating themselves, he said. “Whatever the cause, these numbers raise the question of whether corporations are investing enough in their own employees’ learning and development and if not, how they should adjust their investment,” Wright said.
More than the cost of learning new skills, others think the issue is a lack of strategic thinking on the part of executives. Some leaders are considering their people strategy in terms of augmenting staff or improving training, but they are not yet planful about how to accomplish the changes, said Michelle Prince, senior vice president and global head of learning and development at Randstad, an employment agency.
Another challenge when improving staffers’ skills is geographic dispersion. A multiday, in-person training event can be expensive, Prince said. Instead, companies often can take more cost-effective approaches. “The whole idea of learning is shifting and changing,” she said.
These new approaches to corporate training can happen on the job, through shadowing and with stretch assignments. These informal training mechanisms fall under the umbrella of upgrading skills, though employees might not agree, which leads to the Randstad finding that many employers don’t offer to pay for upskilling, Prince said.
For those with training programs, it is helpful to simply communicate options to employees. Randstad does this during open enrollment as well as on a quarterly basis, Prince said.
Still, some hesitations hold companies back from providing the necessary training for its workers. One of the greatest barriers is not knowing or communicating about what learning needs to take place, Prince said. Figuring this out should not wait. “If you’re not looking at those things on a strategic basis right now, you’re already a little bit behind the curve,” she said.
“Companies should realize that it is not an acceptable solution to just wait,” Upwork’s Kasriel said. If not retraining, the default is often to simply let their employees’ skills become less relevant, to the point of layoffs. This is an issue for the economy, he said. When large groups of people lose their jobs and lack the skills to gain new ones, then unemployment rises. “In the long term, obviously, it’s bad for the economy and it’s bad for society, but frankly, in the long term, it’s bad for those companies because ultimately, workers are also consumers,” he said.
Lauren Dixon is an associate editor at Talent Economy. To comment, email firstname.lastname@example.org.
While income inequality persists, Walmart is working to change that, writes Quartz.
Younger generations are borrowing money for basic living expenses, sparking discussion about credit use, reports BBC.
Here’s how to deliver bad news to employees, via Inc.
A Colorado school district is partnering with companies so students have jobs and strong tech experience out of high school, writes Wired.
Finally, here are some tips for working with freelancers, via Entrepreneur.