Contingent Work: The Wave of the Future
by Jennifer Sedna
NelsonJobs Contributing Writer
The contingent worker
What do a teacher, software engineer, executive assistant, litigation clerk, and construction manager have in common? They are all part of the contingent workforce. Broadly defined, contingent work is non-traditional, project-based, or temporary employment. In this article, we will take a look at the tremendous growth of contingent work, why it is on the rise, and what types of contingent jobs are available.
The rise of contingent work
Help supply services, which includes temporary help, was one of “the most rapidly expanding industries….between 1972 and 1996” says Angela Clinton, Economist for the Bureau of Labor Statistics. The Bureau’s data shows that staffing agencies grew at a stronger rate than the computer services industry during this time. That’s astounding when you step back and remember that the personal computer was available to the public by 1980. We all know how much growth that industry has experienced from 1980-1996!
Due to the increase in contingent work, professional employment organizations, such as Nelson Staffing, have experienced historical growth, and are expected to continue to do so. Between 1992 to 2002, the amount of contingent work increased by 7.4%, which was more than double the increase for the overall job market (3.2%).
By most predictions, this trend is expected to continue well into the future. In 2006, there was an estimated 5.7 million workers that were classified as contingent, which accounted for about 4% of total employment. Today, contingent work ranks among the top five industries with the fastest employment increases. The Bureau projected an addition of 1.8 million contingent jobs by 2012, a 54% increase.
Why companies use contingent labor
According to the Bureau, companies increased their demand for contract and temporary work growth in the past because they desired new ways to reduce costs and become more responsive to changes in the job market. For example, in the late 1990s, temporary work rose sharply due to the dot com bubble. Rapid technological change demands well-trained workers, but also flexibility, says Sam Black and Robert Tappan, contributing authors for William Osten Center for Workforce Strategies. Hiring contingent workers is advantageous to be prepared for quick advances, but also sharp downturns, preventing companies from doing mass upsizing followed by a large number of layoffs.
Some estimates indicate that 3 out of 4 businesses make use of nontraditional labor.
Fay Hansen, a contributing editor for Workforce Management, a magazine that examines HR trends, says “High-performing companies like Nike now view contingent labor as a critical ongoing complement to a core of permanent employees.” Nike’s annual workforce is made up of 30% temporary workers at any given time. Other well-known companies that regularly staff a substantial amount of temporary workers include Google, Earthlink, Sony, Monsanto and BMW.
To remain competitive isn’t the only reason more companies are employing temporary labor. Contingent labor is also used to help with a shortage of skilled labor for specific positions, says Hansen. Indeed in some cases companies use contingent labor to locate the best talent! A 2007 survey by Staffing Industry Analysts Inc. indicate that 52 percent of those surveyed acquired contingent workers due to the lack of ‘quality people’ available.
According to the Bureau, strong growth into 2012 is expected as companies face increasingly complex employee-related laws and seek to reduce their risk. Companies are also seeking ways to reduce costs by contracting out their personnel management, health benefits, workers’ compensation and payroll responsibilities.
As evidenced by these trends, the temporary workforce is viewed quite differently than it was twenty years ago. Another contributing factor to this is the amount of screening companies and staffing agencies perform. It used to be that companies would send over the first worker who could fulfill their basic needs. Because the screening and interviewing by staffing agencies has increased dramatically, companies view their temporary work more and more as potential permanent hires.
What types of contingent jobs exist
Data gathered by the Bureau of Labor Statistics indicates that contingent workers are distributed throughout the major occupational groups. In 1996, there was a high proportion of temporary workers in professional service, administrative support and labor occupations, according to Anne Polivka, Research Economist for the Bureau. In her study, occupations like teachers, administrative assistants, data entry clerks, file clerks, cooks, bartenders, fabricators and laborers were more likely to be temporary workers than say, managerial and executive occupations. Other occupations with above-average rates of contingency include editors, reporters, photographers, actors, directors and athletes.
In the last 20 years, temporary work has moved from almost exclusively lower-skilled positions to critical positions that require education and/or specialized training. “The industries projecting the greatest contingent workforce growth over the next two years are technology/telecom and retail/consumer” says Bill Bucy for Staffing Industry Analysts, Inc. The five positions experiencing the fastest growth in the contingency workforce are all technology-related positions. Health care and accounting industries already use a substantial amount of temporary workers, but have experienced relatively slower growth.
To determine what type of work is currently in high demand, look at what’s happening in the overall job market since it generally echoes the contingent market. For example, in 1996, teachers (especially post-secondary educators) accounted for more than 10% of all contingent workers by some estimates according to the Bureau. Similarly, after the dot com bubble burst, contingent high tech and IT temporary work decreased. In early 2007, due to the drop in home building, there was a decline in contingent jobs available in the construction industry. With the decline predicted into early next year, many contractors are looking at other fields until the market picks back up.
The wide variety of occupations, and increasing number of jobs available, makes it impossible to classify contingent work as low-skilled work. With contingent work lasting anywhere from a few hours, to over a year, you can virtually pick and choose what will work for you that week, month or year.
Nelson Family of Companies—Nelson Staffing, Nelson Technology, Nelson Legal, and Nelson & Associates—offers contingent and temporary work in the administrative and light industrial industries, IT and tech field, the accounting field, the legal arena and human resource related positions, among many other areas.