Until the 1980s, people were typically hired with the idea that they would stay with the same company until they retired. Most American company workforces were composed almost exclusively of one career, full-time, long-term employees.
Companies provided their employees with health insurance, paid vacations, tuition reimbursement, and other benefit programs. The employer expected loyalty from its employees and the employees for the most part returned it with hard-work and commitment.
That’s all changed.
Today we have what is called the contingent workforce and by the end of this decade it will double in size. That’s not to place the blame exclusively at the walking feet of the employees. For the past 40 years, companies of all sizes have been laying off, down-sizing, right-sizing, outsourcing, and a long list of other terms that have altered the loyalty bond between employer and employee. On the other hand, many workers have shirked their responsibility to maintain and upgrade their skills as necessary to keep up with changing job requirements, instead expecting training and education to be an all-expense paid perk. The result is a growing independent, freelancing, mobile workforce.
Currently, the contingent workforce makes up about 20 to 30 percent of the workforce in Fortune 100 companies. Dana Shaw, a senior vice president at Staffing Industry Analysts, predicts the contingent workforce will double in size to 50 percent by 2020. There is already evidence that this growth is taking place. According to the Bureau of Labor Statistics, 100 percent of the 3.23 million jobs that have been added to the workforce since 2010 have been jobs that are ineligible to collect unemployment insurance. That means they likely fall into one of these three contingent job categories:
- The self-employed
- Independent contractors
- Employees of family-owned business
This shift from full-time “permanent” employees to temporary and contingent has significant consequences for every employer and business.
The automation that boosted the output of factories in the latter half of the 20th century replaced many workers. As old jobs went away, new jobs were created. The new jobs however resulted in greater output with fewer people. But these jobs were more complex and therefore required more advanced skills. The result was the transformation of American corporations into an organization functioning with a “few good men,” a lean core of essential people and a constantly shifting assortment of contractors and temp workers. Productivity skyrocketed with more work getting done with fewer and fewer full-time salaried employees. Consequently new jobs require a mastery of both process and technology, a combination that narrows the talent pool down to a select few.
Growing that pool of skilled workers is a big challenge and threat facing many employers. Prospects for a near-term solutions doesn’t get much better when you look at how our youth and young adults are being educated. Watch for Part #2 later this week.
[…] Read Part #1 about the growing contingent workforce. […]