How Aspects of Modern Contract and Temporary Work Could Harm Worker Treatment
Two prominent professors of economics believe that the current configuration of the gig economy, where many take on contract, freelance, and temporary work, is lowering good employment opportunities for the economy as a whole.
Lawrence F. Katz of Harvard University and Alan B. Krueger of Princeton University conducted a study, with the results showing that there has been a 4.9% increase in workers engaged in alternative work arrangements. Alongside increases in sole proprietorship and multiple sources of income tax filings, this shows that traditional labor statistics are off the mark when measuring self- and multi-job employment. The current traditional statistics show that the number of workers who are either self-employed or engaged in multiple jobs is declining.
The alternative work arrangements in the study covered those who are on-call, placed through a temporary help agency, contract workers, and freelancers. More than one in five of the people working in these non-permanent roles were in the health services or education sectors. For manufacturing jobs, only 2.6% found employment that had been contracted out.
Katz, in an interview with Harvard Magazine, believes that bolstering these alternative jobs to make them more meaningful and rewarding in terms of compensation and career development is the key to building a robust workforce.
“We’re just not going to bring back 1950s production jobs and manufacturing,” he says. “And even if we did, no one wants to buy black-and-white TVs or drive Studebakers, which is essentially what we’d have to be doing to produce jobs like that.”
The study found that 16% of the U.S. workforce is engaged in alternative work arrangements, heralding a potential paradigm shift in the U.S. workforce. Many of the people working in these alternative arrangements are doing so out of necessity; workers that had just been laid off were three times more likely to transition into these non-permanent roles after a job loss, even though 76% to 80% desired permanent jobs. It’s not all bad news, as 80% of those Americans who are employed as freelancers and contractors enjoy the flexibility and agency. Still, there are a great many setbacks to non-permanent roles.
Between a lack of advancement opportunities, a lack of benefits, abrupt cancellations of contracts, and the general precariousness of such temporary work, having an economy moving towards this future will not benefit the American worker.
Uber Technologies, Inc. is an example of a company that primarily employs people under the terms “contractors” and “freelancers” in order to avoid paying massive benefits to the thousands of drivers on the road.
The future of the gig economy may open up more flexibility, but it may also cost the American worker in terms of benefits, salary, and job security.
“How U.S. Companies Stole American Jobs,” Harvard Magazine, July-August issue, 2017.