Everything You Wanted to Know About Contingent Workforce Definitions but Were Afraid to Ask
With apologies to Woody Allen and his famous movie of similar title, we’re dedicating this post to helping clarify misconceptions about contingent workforce elements that are commonly misunderstood. While not quite as titillating as the subject of sex, there are still a good number of terms, positions and ideas that contingent workforce professionals use, and which are commonly misunderstood or mischaracterized. Using data and concepts drawn from research conducted by Brightfield, ADP, Deloitte and other trusted industry sources, here is some straight talk to demystify and otherwise clarify what these terms and concepts mean.
Misconception – The term “Gig workers” refers to freelancers who do very short-term assignments or perform single tasks (e.g., Uber or Lyft drivers).
Reality – The fact is, the definition of “gig worker” has evolved beyond just those worker types associated with gig economy jobs and job platforms like Uber. Today, the term is applied to all non-employees engaged in roles on a temporary basis, regardless of the length of the engagement.
Misconception – Gig workers are classified by the IRS as 1099/independent contractors.
Reality – Gig workers, whether short-term laborers or specialty-skilled freelancers, may be classified as 1099 contractors. However, they may also be engaged as a W-2 employee by a staffing agency or Employer of Record (EOR) organization and placed on a client assignment for a limited period of time.
Misconception – People take temporary jobs solely when they cannot find permanent employment as full time workers.
Reality – While this may have been true in the past, over the last decade or more, the percentage of workers regularly inhabiting gig economy roles have elected to actively embrace these kinds of “gig roles” because of the increased lifestyle flexibility they offer. This is particularly true for workers over the age of 45.
Misconception – Gig workers are predominantly Millennial or Gen Z age people.
Reality – The swelling ranks of 1099/independent contractors are comprised of professionals with specialized skills. Hiring organizations commonly seek independent contractors and the experience they hold for longer-term, project-based assignments. Because higher levels of specialization can take time to develop, 1099 contractors are more often a bit older than their Millennial cohorts. The bulk of 1099 contractors are Gen Xers or even Baby Boomers.
Misconception – Most Gig workers are engaged by hospitality or construction companies.
Reality — Virtually every industry today is leveraging some kind of contingent worker. In addition to Hospitality and Construction, Business Services, Financial Services, Transportation, Warehousing, Information Systems/Technologies and Education industries report that more that 20% of their workforce consists of temporary workers.
Misconception – Temp workers don’t get health insurance through their employers.
Reality – You may be surprised to learn that more than 90% of 1099 contractors carry health insurance coverage, frequently through a spouse or partner. Fewer than one third of them directly purchase their own insurance.
Misconception – Temp workers are less frequently employed than their full time counterparts.
Reality – While FTEs (full time equivalents) average 11 months of employment on an annual basis, temporary workers are not too far behind, averaging 9 months of employment annually. Moreover, despite the longer tenure of FTEs on an annual basis, 1099s earn higher average annual incomes despite working fewer months.
Misconception — COVID-19 has significantly reduced the growth in contingent worker usage.
Reality — While the pandemic did initially impact contingent workers since temporary labor is often the first to be displaced during an economic downturn, when recovery begins many companies first engage contingent workers. This helps an employer hedge against uncertainty in any nascent recovery. Additionally, evidence suggest that not all skills were negatively impacted by the onset of the pandemic. For example, despite declines in other contingent roles, IT roles have grown month over month throughout the pandemic. Software developer positions have shown the greatest growth.
Misconception — Candidates today focus entirely on social media when conducting a job search
Reality – It is true that social media has grown in use and utilization. However, over the past 5 years the greatest growth channel for finding a new position has been experienced by workers reaching out to employers of previous freelancer gigs – a full 22% of all new placements.