In the past few years, Intuit,1 the U.S. government,2 and countless other research firms have all released projections that, by the year 2020, up to 50 percent of the workforce will be ‘contingent’-a catch-all phrase to describe contractors, independent consultants, part-time workers, and those who are self-employed. This is a big leap! In 1989, labor statistics indicated that only 6 percent of the workforce held contingent positions.3 The paradigm of meaningful work is shifting. Many may look at the rise of the ‘gig economy’ as a temporary trend. However, I can tell you from working in the staffing industry, I’ve seen firsthand this segment of the market thriving.
Here are three reasons the contingent workforce is here to stay.
The path to the C-suite is no longer linear.
Unless you are fortunate enough work for a family business, making it to the top of the corporate ladder has traditionally been a straightforward path: start out in a lower level position and over time, with a combination of persistence, hard work and smarts, you may have the good fortune to earn a place at the top. However, new data4 shows that the greatest predictor of becoming an executive in today’s workforce is experience in, not one, but multiple functional business areas.
LinkedIn recently published a study5 that found experience in one additional functional area equaled as much as three more years of experience and improved a person’s odds of becoming a senior executive. Experience in four functional areas was equivalent to having an MBA from a top-tier program. Pretty significant. Indeed and Burning Glass have reported a massive surge in job postings requiring hybrid skillsets (i.e. IT + finance experience) since 2012, and they are often linked to higher overall compensation.6
Contracting and consulting is the fastest route to gaining cross-functional experience. It is likely to become a critical part of the ambitious journey to the C-suite going forward.
Technology is removing barriers.
Technology has had a great impact on the rise of the contingent workforce. It’s enabled both companies and candidates to have greater visibility to one another, dramatically enhanced the ability to work remotely, streamlined the interview process by eliminating the need for face-to-face contact and increased the ability to connect people to projects at lightning speed. The pendulum effect, however, is that the visibility created by technology and social media has given candidates more job options than ever before. New labor statistics7 are showing that the average tenure for employees in 2016 was 4.6 years and for millennials specifically, just over two years. The mainstream career path is changing. People are dynamically seeking advancement in a market flush with diverse opportunities.
It pays to be a consultant.
In 2014, the contingent workforce generated $1.3 trillion in total income (a 20 percent increase from 2012), and it is expected to only increase as more of these jobs are created.8 According to a 2015 Upwork study, freelance workers and independent contractors earn 17 percent more per hour than conventional full-time employees.9 Of course, this begs the question: what about benefits? People are right to assume that companies are saving by not needing to pay benefits to contract workers. However, more and more staffing agencies and companies are offering benefit packages to contractors to remain competitive and retain top talent in this aggressive marketplace.
Top talent continues to be in high demand, and more and more people are finding the benefits of consulting. As a result, the contingent workforce is continuing to grow, and the economy is telling us that it is here to stay.
1. Forbes “Intuit: On-Demand Workers Will More Than Double By 2020”
2. U.S. Government “Contingent Workforce: Size, Characteristics, Earnings, and Benefits”
3. Forbes “Intuit: On-Demand Workers Will More Than Double By 2020”
4. Seattle Times “How to become a CEO? Quickest path is a winding one”
5. Seattle Times “How to become a CEO? Quickest path is a winding one”
6. The Economist “Lifelong learning is becoming an economic imperative”
7. Forbes “10 Workplace Trends You’ll See in 2017”
8. Forbes “Five Reasons Half of You Will Be Freelancers in 2020”
9. Time Magazine “The Gig Economy: By the Numbers”