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Ian Brinkley
Economic Advisor
Ian Brinkley

Is the future of work going to be contingent?

Authors: Ian Brinkley Ian Brinkley

31 July 2013

A recent report came my way called It’s (almost) all about me” - which on closer inspection proved to be about the workplace in 2030. Although notionally focused on Australia, it could have been written about almost any other OECD economy. Adopting the current fashion, it sets out a number of “megatrends” – which appears to mean trends happening on a global scale.

For the most part it’s a harmless, if less than convincing, read about how wonderful workplaces will be -full of empowered workers harnessing the latest technologies operating in creatively non-traditional ways. I was a little baffled by the conclusion that future workplaces will “enable people to work in the cloud and have their feet on the ground” but I am sure it means something to somebody. More prosaically, future workplaces will also be full of overweight people and this will affect workplace design – presumably bigger and stronger chairs and wider doors? 

One of the “megatrends” that caught my eye was the assertion that many more people will work in non-traditional forms of employment by 2030. As an example, the report claimed that 45 per cent of US workers will be “contingent” workers compared with 30 per cent today.

This puzzled me even more than the cloud sentence above. The US Bureau of Labor Statistics (BLS) last collected the statistics on contingent labour in 2005, so they are a little out of date. But the Bureau estimated that contingent labour accounted for between two and four per cent of the US workforce. This was almost exactly the same range as in 1995 when the same survey was conducted.  So either something that had shown no previous sign of growing had exhibited rocket powered expansion since 2005, or the future workplace report and the US Bureau were talking about different things.

Seeking enlightenment, I followed the referenced source for the megatrend example.  It was something called the Small Business Labs and appeared to consist of a blog, from which the following quote is drawn:

While hard data on this shift is not available, most analysts following this trend (including us) believe around 30% of America's workforce currently is contingent.  The general consensus (again including us) is this will rise to 40% - 45% over the next decade and become the majority way people work between 2020 and 2030.”

I hate to appear old-fashioned, but surely an absence of hard data either means we don’t know or nothing much is happening? Nor is it correct to say hard data is entirely absent, as we have the BLS official data up to 2005. One possible source of confusion is the elastic way contingent seems to get defined in order to produce a big number – for example, describing everyone not in a full-time permanent job as “contingent”.  However, the BLS survey is quite clear: 91 per cent of part-time jobs in the US in 2005 were not contingent.

"Contingent workers are those who do have implicit or explicit contracts for on-going employment", says the Bureau.  The Bureau has a number of measures based on how long people expect a job to last and the widest definition includes some independent contractors and self employed – this gives a figure of 4.2 per cent.

The Bureau also sets out measures of “alternative employment” which include independent contractors, independent consultants, and freelancers which come to 7.4 per cent. Adding in “on call workers”, temporary help agencies and workers provided by contract firms pushes the total up to 10.7 per cent. 

Now, there is clearly some overlap between the contingent worker estimate and the alternative employment estimate, so you cannot just add one to the other. For example, according to the Bureau about 60 per cent of temporary help agency workers were also classified as contingent.  Moreover, not all contingent workers are in alternative employment arrangements: about 3 per cent of the 123 million US workers on what the Bureau describes as traditional arrangements are classified as contingent.

Even making a generous allowance for some growth since 2005 it is still pretty hard to get anywhere near the 30 per cent figure. And that makes the claim that 45 per cent of the US workforce will be in contingent employment by 2030 even less plausible. 

Ironically, a better case could have been made by looking at some European economies where levels of temporary, other forms of short-term working, and self-employment are very high. But holding up, say, the Spanish workplace and labour market as the model for the future is unlikely to command much support.

If you are going to call something a “megatrend” it really needs to be grounded in more than a source which admits there is no hard data to support their hunch. Until some better evidence emerges, I’m going to stick with the boring official statistics and the official definitions.