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Sep 21, 2009 -- Contract employment may be the wave of the future
When employers begin hiring after the recession, it will likely be with more contract work than full-time employment. This looks set to be the start of a long-term trend; you may be signed to a 90-day or 1-year contract.
Basically, employers want the ability to grow or shrink their work force at will according to how business is doing.
Another benefit for employers is that they can sidestep the messiness of layoffs with contract workers. The issue simply becomes will they offer you a new contract or won't they? Much nicer than having to "let more heads roll," which is never a pleasant experience.
Contract employment has long been very popular in Europe and Japan.
Let's face it, the social contract of lifetime employment -- where we worked for one employer who provided a pension -- has long ago faded away. Contract employment is just one more recognition that employers rent us and we rent them for a period of time.
And it's definitely something of a double-edged sword. On one hand, it becomes more difficult to make longterm plans. How can you buy a house and stay in it for a minimum of 5 years (as Clark recommends) when you don't know if you'll be employed? Yet on the other hand it creates more hiring opportunities in a capitalist system.
Yet here's the ultimate downside: One thing you can't measure is how loyal an employee will be and how customer-focused they'll be when they know their employer hasn't made a commitment to them.
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Many of the things said pro & con are true so I will only add this point.
Better get used to it! I have been self-employed or worked as a contractor for 24 years now. If you are one the few who can prosper in this type of environment then you can make a six figure income and maintain control of your personal life to a greater degree.
If you are not of these few then you would better off sloggin day-by-day at a lesser paying but more secure job.
There are still many of those jobs out there they just don't pay as well as contracting IMHO.
Embrace the future
Good catch, but it's not the start but the continuation of a trend. You gotta love how we talk about these "companies" as if they are some mythical beast. "We" own these companies, work in these companies and buy from these companies and are forcing these changes by (rightfully) wanting cheaper and cheaper products.
Fighting these changes is like when the auto workers were fighting robotic automation on the assembly line -- doomed and shortsighted. I say bring it on, just give me a portable pension (better 401k/IRA) and portable, affordable health insurance. How many of us have complained about our employers, and say the only reason for staying is because you have so much invested in them and need the benefits. Make the benefits your own, and you can move to whatever company needs your services and in good times make them bid on you.
I don't know if the current Healthcare bills are any good, but if we are very lucky something will get through this disfunctional Congress to save us from ourselves. The days of the gold-watch are long over, if they ever really existed, and companies are not loyal to anyone.
Grim Future In US For Working/Middle-Class
I agree with Clark and his prediction. I already know MANY who have switched from being a regular benefited employee to a contract worker. I have family and friends at AT&T, Xcel Energy, Honeywell, Hutchinson Technology, Nestle and many other places that have been let go and re-hired as a contract employee or the switchover happened without the act of being let go and it was just a paper switchover. Either way, this is a horrible trend for everybody except BIG BUSINESS. There is NOTHING good about this for the working poor or middle-class. More negative news for an economy that may never recovery.
I have two friends who work as meter readers for one of the above companies, they were forced into contract work 4 years ago. They were notified just last year that those contracts are not being renewed in 2010 because all of the meters in this part of the state, soon the entire midwest, will be automated and read remotely. They both have bought homes and started families before the contract switchover, and were also told once the contracts started up, that they need not worry, it was just a way for the company to save money and the only negative would be loss of health benefits which wasn't the end of the world being the pay was well over $20/hr. in a mid-west setting which is great, especially if your spouse is working also. But soon, as early as Dec 2009, they will be out of work and thrown back into this miserable job market where in this area $8-10/hr. is the norm unless your degree, if you have one, is lucky enough to get you into the medical or tech industry we have here. How can a person or a family plan any future anywhere in a contract for work world? What a sad state of affairs, I remember not too long ago having to choose between jobs because there were so many good ones available, and now, I give an example of a job fair I attended last week, I was one of around an estimated 1,800 people to apply for TWO positions at a plant that pays $18/hr. It's frightening what our future has in store for us.
Contractor
The concept of employee-employer relationship has changed. There is no longer pension plans, where the employer takes care of the employee. There is no loyalty on both sides. If this continues, there will no longer be people who are willing to be employees.
I see problems with it.
just as another commented above, its a way to deny unemployment benefits once they dispose you.
Former contractor
I could not find a job out of college so I had to turn to contract work. I never felt like welcomed. You are often mistreated and referred to contractor instead of your name. I hated every second of my contracting career. Much so that I almost wanted to quit accounting all together. It is insane to see what my billing was 38 an hour and I would only earn 17. The contracting firm earns the other 21 dollars. If the company that I was working for paid me 20 an hour with benefits, I would of been happy.
Contracting is for the birds.
Been There, Done That
I worked for years as a contract worker, with temp agencies and by myself.
The bottom line: If you are not an employee of an organization, you are considered an outsider, expendable, and disposable. None of those labels makes for a comfortable working life. There was a lot of stress on my part not knowing what was going to happen.
Contract Employment
As someone who worked 7 years as a contractor in the IT industry I can give a few words. I loved the fact that I could take off for weeks or even months between contracts. In fact I used this flexibility to renovate my house myself and save money in my down time. After many years the volatility became difficult to manage and the pay differential became less as hourly rates diminished. I also found that contracting firms could walk away with up to 100% of your hourly wages if you did not negotiated aggressively with them. I came to truly despise these contracting firms because in the world of contracting your are the commodity and they are selling you like a TV or stereo. The contracting company does not work in your favor. The less you accept the more they make. The company does not care because they have already generally negotiated the rate they will pay. So, for example if I contracted for $55/hr the company I was forced to work though we simply skimmed me was paid up to $90/hr. When doing government contract work I routinely had to work through two contracting company which again reduced my take home pay. In the end after paying self employment taxes and paying 100% costs for health insurance, disability insurance, corporate insurance, expenses I did not come out ahead financially unless I was paid on a 1099 basis which allowed me to sock away huge amounts of money in a SEP-IRA. But, I did come out ahead in time as I had a lot more time off but the money situation was very volatile and I had to really plan ahead to make sure I did not spend anywhere close to what I was making. I allowed me to build up a huge cash reserve before buying a house but it the income volatility and the work changing constantly cause much stress.
In the end I am now working for a huge IT company as a full time employee and I enjoy the benefits I now receive and I really do appreciate them more than ever. But, I do not enjoy the politics I was able to avoid as a contractor.
The world of a contractor is very volatile and it requires much more work than simply being an employee. You can learn tremendously more as you get exposure to projects and companies you would never see as simply an employee. In the end you can get a lot more time to yourself if you manage the contracts properly but you will not have any merit built up and as you get older your health expenses grow considerably. Some can even make a lot more money, but most do not.
from a long-time contract worked2
I've been a contract worker for my previous full-time employer since my child was born. In the past 6 years, I've worked for 4.5 of those years, about 20 hours/week, always from home. My husband works full-time with benefits. I have a flat hourly rate and go through a temp agency that handles my taxes. My child has autism, and this employment situation uses my training and my experience and gives my family some financial flexibility, all while still allowing me to meet the school bus and drive to the many, many doctor and therapist appointments that we have on a regular basis. Yes, there have been a few months here and there where I've had no income, but I wouldn't trade this employment situation for anything. Contract employment is the only way I can be employed while meeting my child's needs.
Junk Mail
Most of the mail I get is junk mail. It goes straight into the trash anyway. I don't care who delivers the mail.
POST OFFICE
The US Post Office tried this. We stopped it before it spread. The contractor was screened but not the sub-contractor which most were hired. Do you want an illegal alien to deliver your mail?? Thats what will happen with contracting.
It would work for me!
Although contract work would not be desireable for most people, it would work for me. My husband has a government job with great benefits and can support us off just his income. I would be more than happy to work contract for a company- in a sales or marketing position. I am fortunate not to need their retirement or benefits.
Give me a break!
This is just a tool to deny the worker unemployment benefits if laid off. What a shady way to save a buck! Seasonal workers would be sent packing at the end of their usefulness, destined to starve over the winter --construction workers included, to another occupation altogether. Want to see employee loyalty vanish overnight? Push this nonsense and you'll see unionization flourish and quadruple overnight. How does this help anyone???
Its getting to the point where its not worth it. You can spend the best 30 years of your like to get a $150.000 house paid for and loose it in a one week stay in the hospital if you loose your job and have no health insurance. Live rich die poor. The taxman and the doctors are going to get it all in the end.
Contract Employment
I believe this to be the wave of the future. It gives both employers and employees more flexibility. But it will require that people keep their skills up to date and employers to keep their pay and benefits at appropriate levels. I guess that is easy for me to say having been employed by the same monster company for 37 years. But I am convinced that those who have good work habits and skills have nothing to worry about. If anything, they will have more options. You say they have no job security? I say the only security worth while is wealth that has been saved and wisely invested. The rest is an illusion and really always has been.
This is one reason this country is doomed. We no longer make anything and what jobs are left are like this or going part time.
Maybe Not
Once an employer realizes that its labor quality is going down the tube because it can't retain qualified employees, they will outsource the job overseas at half the cost expecting the same bad quality.
Loyalty is a two way street
Contract work may work well for project-specific industries, but most jobs require a longer term commitment for maximum competency. Employees will feel no loyalty to an employer who shows none to them. Once an employer realizes that its labor quality is going down the tube because it can't retain qualified employees, this new trend will reverse.
I Disagree
Having previously worked in contract positions, they are not overly desirable for one major factor Clark sidestepped - downtime.
There are things you can do to fix this. One route is constantly jump contract ot contract but then you get the reputation of not filling the contract obligation. Second is to over-compensate you required salary to make up lost income form downtime.
In this market you can expect to be out of work about 6 months (last figure I heard). Based on this, why would some employer want to pay you $100k over 6 months for a 6 month job that is worth $50k? So they don't have to lay employees off?!!?!?!?
Get real - no employer has any problem doing mass layoffs anymore.
