As Corporations Embrace Contract Workers, Worker Security Disappears

Mark Warner/Flickr

A contract worker can be fired on their first day and replaced in the same morning.

The rise of the gig economy has pushed beyond the boundaries of Uber and Airbnb to infiltrate numerous industries and professions, leading to predictions that contracted and freelance workers could make up half of the American workforce within the next decade.

Advice for making it in this new world of work abounds, from Forbes to job search websites to Harvard professors.

But what are the implications of such a shift in how people are employed?

In an old metal-stamping factory that was once part of Wheeling, W.Va.'s industrial past, a law firm has set up a futuristic model for how to get legal work done. Unlike the old factory, it relies heavily on new kinds of work arrangements.

"Contractors are hired by the hour," says Daryl Shetterly, director of the Orrick firm's analytics division. "So we might have 30 people working today, and tomorrow we might have 80."

Arrangements such as the one implemented by Orrick are growing in popularity:

Currently, 1 in 5 workers is a contract worker, the poll shows. According to economists Alan Krueger and Lawrence Katz, the percentage of people engaged in "alternative work arrangements" (freelancers, contractors, on-call workers and temp agency workers) grew from 10.1 percent in 2005 to 15.8 percent in 2015. Their report found that almost all — or 94 percent — of net jobs created from 2005 to 2015 were these sorts of impermanent jobs.

Apart from the instability involved with contract or freelance employment, lack of benefits is likely the biggest downside for many in this sector of the workforce:

Sixty-five percent of part-time workers and a little more than half of contract workers work without benefits, according to the NPR/Marist poll.

As more Americans are faced with saving for retirement and health care needs on their own, public and social structures will need to adjust - an issue Glenn Elliott, the mayor of Wheeling, West Virginia, is concerned not enough people are talking about.

"[S]ome people, despite their best efforts, just aren't going to be successful in doing that," Elliott says. "What's going to happen to those who fall through the cracks? Because the 1950s model of retirement and getting your pension check every year from your company is not a realistic model for a lot of people, increasingly."

"It's a much broader problem than Wheeling," he says. But "as a country we need to be having a conversation, which we're not really having right now."

And time is running out to determine how society can or should accommodate this shift, with the gig economy permeating more and more of the U.S. job market on its journey to becoming the new normal.

Arun Sundararajan, a management professor at New York University and author of The Sharing Economy, says "this is the work arrangement for the future." The new normal will be freelance work. "Twenty years from now, I don't think a typical college graduate is going to expect that full-time employment is their path to building a career," Sundararajan says.