Whatever you call contingent workers — freelancers, consultants, temps, contractors, flex workers or something else — one thing is absolutely apparent: contingent talent use is on the rise and is gaining widespread acceptance as more of the talent chooses this option. The drivers include uncertainty in the business environment, the pace of change, evolving technologies and globalization, to name a few.

Here are some facts and how to prepare for big changes in the labor market. Currently, talent in the marketplace looks something like this:

  • Employees
  • Contingent workers
  • Temporary workers
  • Independent contractors/freelancers
    • Online workers (micro tasks, crowdsourced, etc.)
  • Professional services /SOW consultants – (project based)
  • Outsourced services (ongoing operational work)
  • Partners (supply chain, partnerships, joint ventures)
  • Formal/informal volunteers
  • Franchisees/affiliates
  • Robots/drones/artificial Intelligence
  • Other non-employed workers

The non-employee portion of the overall workforce is increasing at many companies. Companies want the talent, they just want it on demand when and where they need it. The object is to get the best quality, at a fair price, efficiently with low risk. Companies are figuring out how to “flex” their resources and gain a competitive and financial edge. “For every employee we onboard in a given year, we onboard five times the number of contractors,” said a rep of a major pharmaceutical company.

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This is the result of changing dynamics in the way we think about contingent work. Legislative measures like mandated paid sick leave and the ACA drive greater equality among workers of all types. Pensions are a thing of the past in many cases, 401(k) plans, IRAs and other portable retirement savings increase mobility. While company loyalty still exists, a change is reflected in labor participation rates and tenure directly related to benefits, flexibility and increased legislative action. Here are a few factors that are driving contingent work.

Demographics. Let’s look at the size of the labor force in 1950 compared with 2050. In 1950, the size of the US labor force was 62 million, of which nearly 44 million were men and 18 million were women. This number more than doubled during the 1950–2000 period, reaching nearly 141 million total in 2000, with women comprising 47% of the workforce in 2000.

By 2050, the US labor force is projected to reach a whopping 192 million. It will level out as boomers leave the workforce, albeit slowly and millennials, Gen X and others enter. (BLS, Labor Force Change 1950-2050 Mitra Toossi).

Tenure. The median tenure in the US of workers ages 55 to 64 (10.4 years) was the highest but it is more than three times that of workers ages 25 to 34 years (3.0 years).(BLS 2014 Employee Tenure Summary). In Silicon Valley, the average tech worker tenure can be a year (or less!). Loyalty gives way to the quest for innovation, flexibility, soft benefits and other intangibles. As resources for technology continue to grow scarce, worker turnover and cost will increase. Employees are working longer, too; the accompanying graph shows the almost even share of women and men in the workforce over time but also the increased participation by age.

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DOL Labor Force

Elasticity. Will workers want to have more flexibility as they age? If women are in the workforce to stay, will families demand a more flexible working environment? Will technology help drive workers and companies toward better work-life balance that could include flexible work? Time will tell, but there is no doubt much of the workforce is looking at greater work-life balance.

Technology. The optimization of résumé delivery, whether through a link, a video or other dynamic tools, will be a reality for enterprises in every industry. Every company will use data, business intelligence and social networks to make the search for the ideal candidate an easier process. You can be certain non-employee staffing will be an integral part of the mix that drives people to use technology to recruit the best and brightest however they choose to be engaged.

Holistic Approach

Companies are beginning to look more seriously at Total Talent Management and how they integrate non-employees with their employee workforce. Companies that don’t make an effort to engage non-employee workers will most likely see challenges as the competition for talent grows tougher.

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percent making effort

Most companies have not done a very good job engaging their non-employee workforce, either because of risk concerns or it’s just not on the radar. It’s time to start thinking about engaging the non-employee workforce. There are those companies that have started making strides. Happy contractors, who are less dependent on traditional employee engagement models, may not pose the risk they once did. Socio-economic models and preferences have changed. Temping, formerly perceived as what you did when you could not get a job, now is what some of the best workers and highest paid professionals are looking for.

As contingent talent usage and cultural acceptance grows, companies need to prepare for changes in the labor market. The smart ones are planning to or are already engaging their contingent workers to maintain a competitive edge.