Increase in contract employment fuels anxiety among workers

Flexibility comes with uncertainty about tomorrow.

When the California Labor Commissioner’s Office ruled last month that an Uber driver was an employee deserving of a variety of workplace protections — and was not, as the company maintained, an independent contractor — it highlighted the divided feelings many Americans have about what is increasingly being called the “gig economy.”

On one hand, startups such as Uber, which is appealing the decision, and Lyft make it possible to conjure up rides on a smartphone in a few seconds’ time.

On the other, Uber — which directly employs fewer than 4,000 of the more than 160,000 people in the United States who depend on it for at least part of their livelihood — and similar companies pose a challenge to long-standing notions of what it means to hold a job.

Uber is the culmination of a generation-long trend. Even before the founding of the company in 2009, the U.S. economy was rapidly becoming an Uber economy writ large, with tens of millions of Americans involved in some form of freelancing, contracting, temping or outsourcing.

Concern about hours

The decades-long shift to these more flexible workplace arrangements, venture capitalist Nick Hanauer and labor leader David Rolf argue in the latest issue of Democracy Journal, is a “transformation that promises new efficiencies and greater flexibility for ‘employers’ and ‘employees’ alike, but which threatens to undermine the very foundation upon which middle-class America was built.”

Along with other changes, like declining unionization and advancing globalization, the increasingly arm’s-length nature of employment helps explain why incomes have stagnated and why most Americans remain deeply anxious about their economic prospects six years after the Great Recession ended.

Last year, 23 percent of Americans told Gallup they worried that their working hours would be cut back, up from percentages in the low- to mid-teens in the years leading up to the recession. Twenty-four percent said they worried that their wages would be reduced, up from the mid- to high teens before the recession.

Since the early 1990s, as technology has made it far easier for companies to outsource work, that trend has evolved beyond what anyone imagined: Companies began to see themselves as thin, Uber-like slivers standing between customers on one side and their workforces on the other.

“In the past, firms overstaffed and offered workers stable hours,” said Susan N. Houseman, a labor economist at the W.E. Upjohn Institute for Employment Research. “All of these new staffing models mean shifting risk onto workers, making work less secure.”

Contract jobs on rise

The number for the category of jobs mostly performed by part-time freelancers or part-time independent contractors, according to Economic Modeling Specialists Intl., a labor market analytics firm, grew to 32 million from just over 20 million between 2001 and 2014, rising to almost 18 percent of all jobs. Surveys, including one by the advisory firm Staffing Industry Analysts of nearly 200 large companies, point to similar changes.

Apple is a vivid example of the trend toward relying on outsiders, directly employing fewer than 10 percent of the more than 1 million workers around the world who are involved in designing, making and selling all those iMacs and iPhones.

The leaner, more flexible workplace is unquestionably a boon to many workers. A company called HourlyNerd, based in Boston, connects alumni of top business schools and other specialized programs to companies with projects in need of completing, like market analysis or examinations of pricing strategy. The most sought-after experts enjoy a steady stream of work, earn well into six figures and can winter in Buenos Aires if they choose.

Such arrangements can send even highly skilled workers into a precarious state. Unlike many of their colleagues in the fast-growing legal outsourcing and temping market, lawyers who work for Axiom, one of the industry’s leading players, receive health insurance, paid time off, 401(k)s and money comparable to what they would make at a traditional firm or corporation. Yet many live with the uncertainty of not knowing how long they will go between assignments, during which time they earn no income from the company.