Self-employed make up larger share of workers

Recruiter says more firms want contingent staff

November 16, 2003|By THE DALLAS MORNING NEWS

Recruitment executive Jon Davis is seeing the first signs of a recovery in the job market, but most of the employers he talks with aren't looking for full-time workers.

They want contractors - independent workers who are paid by the assignment.

"I would say there are more employers today than there were in the past that like the flexibility of a contingent work force," said Davis, branch manager in Dallas for Matrix Resources, an Atlanta-based technology placement firm.

The rising cost of supporting a full-time work force, diminishing worker-employer loyalty and the proliferation of technology are contributing to what may be a permanent shift away from the traditional employment model.

While most workers will continue to hold conventional jobs, data show that more are becoming self-employed as contractors, free-lancers, consultants or owners of small businesses.

The self-employed historically make up about 7 percent of the U.S. labor force, but that could grow to as much as 10 percent over the next several years, said Ed Potter, president of the Employment Policy Foundation, a data research organization in Washington.

Those percentages may seem small, but an increase to 10 percent equates to millions of workers in a labor force of 146 million, Potter said.

Duration debated

Some employment experts argue that the shift is temporary, saying that the economic downturn pushed many workers into contract status and that they will return to traditional jobs.

Others see it as long term for several reasons.

Workers are discovering that the perceived primary benefit of a permanent job - stability - doesn't exist anymore, says author Dan Pink, who published Free Agent Nation in 2001.

"There's a base amount of insecurity in the work force, period," he said. "I can either manage that insecurity on my own or let someone else manage it for me and lay me off whenever they want."

At the same time, employers are reeling from the escalating cost of hiring and maintaining full-time employees, according to Mike Davis, a professor of economics at the Cox School of Business at Southern Methodist University in Dallas. He pointed to exploding health care costs as one of the biggest burdens on employers.

If those costs continue to rise, many employers may stop offering some benefits, which Davis said would demolish another pillar of the traditional labor model.

Historically, self-employment has been a bridge for many workers unable to find permanent positions in faltering job markets.

When the economy stumbled in the early 1990s, the number of people describing themselves to the Labor Department as self-employed rose, peaking at 9.2 million in April 1991 and then falling below 9 million for the next few years as employers started hiring again.

"In the usual scenario, once the economy improves, self-employment goes down to a normal level," Potter said. "But I'm not sure that's going to happen. I think that the difference now is that the nature of work has made it more likely that this could be self-sustaining activity, rather than just an economic Band-Aid in the short term."

Experts say different dynamics are at play in this economic recovery.

One is that technology has advanced to where many workers have fully functioning home offices. Another is that more workers - the older, seasoned baby boom population and young professionals who received entrepreneurial grounding during the tech boom - may feel confident enough to go into business for themselves.

Before writing his book, Pink canvassed the nation to get a sense of whether workers were cutting the corporate cord.

"Like so many things in American life, work is becoming much more idiosyncratic, customized and personalized," he said.

Defining the exact number of independent contractors is difficult because of how jobs data are collected. But Pink's estimates, which include temporary workers, are higher than those of the Employment Policy Foundation. He calculates that there are a little more than 30 million "free agents" in the labor force of 146 million.

When the Bureau of Labor Statistics prepares its monthly unemployment reports, it uses two surveys to gauge the performance of the job market. The first is the establishment - or payroll - survey of 400,000 business establishments with paid employees. It's used to calculate the official number of jobs lost or gained. The second is the household survey, which polls 60,000 households nationwide about occupants' employment status. It's used to calculate the official unemployment rate.

Over the past two years, the surveys have diverged.

The household survey shows that 780,000 jobs have been created since November 2001, the official end of the recession. The payroll survey shows a little over 1 million jobs have been lost.

Though economists point out that the numbers aren't exact, Davis of SMU said the discrepancy is so large that it likely points to job creation outside the traditional workplace.

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