Category: Contingent Workforce Management

Contingent Employment Arrangements: The Implications of the Bureau of Labor Statistics’ Survey

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The Bureau of Labor Statistics (BLS) released the Contingent and Alternative Employment Arrangements survey on June 7, 2018. The BLS survey represents the first large-scale survey of its kind since 2005. The survey found that 16.5 million workers participate in “contingent” or “alternative work” arrangements, with almost 6 million workers working on a contingent basis and an additional 10.6 million working as independent contractors, on-call workers, temporary help agency workers and those working for contract firms.

Survey highlights include:

  • Contingent workers were more than twice as likely as non-contingent workers to be under age 25. They were also more than twice as likely as non-contingent workers to work part-time.
  • Young contingent workers (16- to 24-year-olds) were much more likely than their non-contingent counterparts to be enrolled in school (62 percent and 36 percent, respectively).
  • Contingent workers were more likely to work in professional and related occupations and in construction and extraction occupations than non-contingent workers.
  • More than half of contingent workers (55 percent) would have preferred a permanent job.
  • While 79 percent of independent contractors preferred their arrangement over a traditional job, only 44 percent of on-call workers and 39 percent of temporary help agency workers preferred their work arrangement.

Key Takeaways

Percentage of Contingent and Alternative Workers Has Slightly Decreased

The survey found that as a percentage of all workers, those in alternative employment arrangements—including contract, freelance and on-call work—was lower in 2017 (10.1 percent) than in 2005 (10.7 percent). This category of independent contractors includes those participating in the “gig economy” as their primary job. Before the BLS survey was released, some experts anticipated an increase in the percentage of alternative and contingent workers from 2005. At its broadest measure, the percentage of contingent workers fell from 4.1 percent to 3.8 percent. The number of both contingent and non-traditional workers grew, but at a lower rate than the overall workforce.

Traditional Work Arrangements Still Dominant as Primary Jobs

Most Americans still work in traditional arrangements for their primary job. “What this says to me is the vast majority of workers in the United States still have traditional jobs as their main source of income,” said Heidi Shierholz, a former chief economist at the Labor Department.

What’s Missing?

Some experts do not believe the BLS survey data paints the whole contingent labor picture. For example, the survey only concentrates on workers whose primary job or modes of employment are contingent roles. Research conducted by the Federal Reserve suggests that a large percentage of those in alternative work arrangements and contingent work are doing it as a side job, rather than as their main occupation. For example, 69 percent of Uber drivers are not considered in the BLS study because they also have full-time jobs.

Moreover, the data collected by the BLS only counts work done in the week prior to the survey. As a result, many workers who sometimes work on a contingent basis, but have not done so recently, may have been missed. Additionally, data about digital platform work and the gig economy is still being analyzed and will not be available until the fall. These workers may be overlooked because the BLS data is gathered from self-reported information about employment and does not incorporate data from gig economy giants like Uber, Lyft and Airbnb.

Capitalizing on Contingent Employment Trends

The BLS survey reports the total number of contingency-based jobs grew from 14,826,000 in 2005 to 15,482,000 in 2017, a gain of 656,000 jobs or by 4.6 percent over twelve years. What’s more, the total number of workers in permanent positions grew by 14,379,000 or by 10.4 percent. Organizations need to realize the workforce is becoming more blended, and to effectively attract talent, they may need a hybridized recruiting strategy.

A Total Workforce Solution is an integrated talent management program that combines elements of RPO and MSP programs to create a total workforce solution designed to help organizations meet it permeant and contingent labor needs. Check out PeopleScout’s Total Workforce Solutions fact sheet to learn more.

PeopleScout Australia Jobs Report Analysis – May 2018

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The Australia Bureau of Statistics released its May Labour Force Key Statistics.  Australian employment rose, but the growth was slower than expected. Job gains were led by increases in part-time work while the jobless rate ticked down to its lowest since November at 5.4 per cent.

The Numbers

12,000: The Australian economy added 12,000 jobs in May.
5.4%: The Australian unemployment rate decreased to 5.4 per cent.
65.5%: Labour force participation decreased to 65.5 per cent.
+6: According to the NAB, the business confidence index fell to +6 index points.

Upside

There was a net job gain of 12,000 in May which continues the trend of monthly job growth. Australia’s annual job growth of about 3 percent was nearly double the U.S. rate of job creation of 1.6 percent. Since May 2017, full-time employment has increased by 178,800, and part-time employment has increased by 125,100.


The labour force participation rate decreased in May but is still near historic highs with more women and senior citizens entering the workforce.  In seasonally adjusted terms, the largest increase in employment was in Victoria (up 22,100), followed by Queensland (up 5,000), and New South Wales (up 2,800). The only increase in the seasonally adjusted unemployment rate was in Tasmania (up 0.5 per cent).

Downside

The job gains in May still fell 6,000 short of the 18,000 expected increase. The net increase was only possible due to a surge in part-time jobs that offset a decrease in full-time employment. The business confidence index fell to +6 – the level of its long-term average. Wages continue to grow at a slow pace which is causing concern about the possible negative impact this will have on the economy as a whole.

The Unknown

The Fair Work Commission raised the minimum wage by 2.4 per cent to $672.70 a week. This will mean an extra $15.80 per week for the 1.8 million workers who are paid the minimum wage in Australia. The increase takes effect on July 1 and equates to a minimum hourly rate of $17.70. It is unclear what the impact of this increase will be on the unemployment rate or the stagnation in wage increases.

Contingent Workforce Landscape: Trends and Strategies

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In the current economy, contingent workers are an integral and growing part of the workforce. Whether freelancers, consultants or contract workers, contingent labor of all skillsets is in high demand. For many organizations, contingent workers are the fastest and most effective way to augment their current workforce and respond to rising talent demands, staff large strategic projects, add new skills and expertise and accelerate growth.

Contingent labor by the numbers:

In this post, we examine the current contingent workforce landscape, the trends shaping how organizations engage contingent labor and the evolving role of MSP providers.

The New Role of Managed Service Providers in Contingent Workforce Management

The role of the Managed Service Provider (MSP) has evolved. According to NelsonHall’s Next Generation Managed Services Programs, MSPs are an increasingly influential and strategic partner in helping organizations better manage their contingent workforces. MSPs provide consultative, data-based insights to clients. From contingent workforce spend and talent channels to supplier performance, the data and analysis provided by an MSP is hugely valuable for organizations as they embrace a more contingent workforce model.

MSPs provide organizations with contingent workforce data, training, and overall strategy. Organizations have continued to use MSP providers that have developed the infrastructure to align suppliers, improve productivity, provide administration and program management and, most importantly, reduce costs of managing contingent labor. Not only are decreased costs a benefit, but MSPs also enable organizations to have direct access to talent.

Total Workforce Solutions

With the growing trend of blended workforces leveraging full-time, part-time, statement of work (SOW) projects and contingent labor, there is a demand to integrate MSP and RPO solutions into one talent management program. Total Workforce Solutions (TWS) allow organizations to streamline talent acquisition for all categories of labor by blending the benefits of RPO with an MSP.

TWS solutions can help organizations source full-time, temporary, statement of work, professional services or 1099 workers to meet hiring needs based on an organization’s business objectives. Integrating RPO and MSP talent management into one program provides organizations with a competitive edge when it comes to understanding their talent needs and their ability to fulfill them.

Freelancing as a Career

With the economy in constant flux it is imperative that businesses remain responsive to change. Organizations are increasingly deciding that it is more advantageous to deploy a more elastic workforce, one that can quickly contract in bad economic times or expand during periods of growth. Workers too are adapting to current economic realities. Based on projected current workforce growth rates, the majority of U.S. workers may be freelancers by the year 2027. Millennials — the largest and generation in the workforce — are spearheading the rise in freelancing, with nearly half of all millennials currently working as freelancers.

Millennials were raised in a digital age, and, as a result, expect to have access to a variety of modern tools and new innovations. Because millennials have been consistently exposed to a consumerized and “on-demand” world, engaging these younger professionals requires a varied set of strategies from social media engagement to sourcing talent on freelancer forums.

Millennials are not the only demographic turning to contingent labor as a career option. According to a study published by the Freelancers Union and Upwork, baby boomers are the generation that’s most likely to make the choice to start freelancing. What’s more, according to the Employee Benefit Research Institute, a significant portion of those reaching retirement age are choosing to remain in the workforce. Twenty-six percent of workers plan to work until age 70, and another 6 percent say they will never want to retire.

When recruiting baby boomers for contingent work, organizations should keep in mind that this generation has different goals than their younger counterparts. Baby boomers and workers beyond retirement age interested in contingent work are likely looking for a way to stay active, socialize and receive recognition for their skills and abilities. So, when engaging baby boomer candidates, organizations should position contingent job opportunities as chances to remain productive but independent.

Recruitment Marketing and Employer Branding

To attract contingent workers, organizations are turning to innovative recruitment marketing tactics. According to research conducted by Aberdeen Group, best-in-class organizations are twice as likely to use recruitment marketing within their talent acquisition function for employees of all classifications.

To reach the best candidates, organizations need to reach out to them where they are. Pew Research has found that 41 percent of adults have used a smartphone at some point in their job search. Organizations looking to recruit contingent workers should create mobile-first application experiences. Content and information should be repurposed from desktop websites to fit the mobile-first design of smart phones and apps.

Organizations should also be mindful of employer branding, as candidates now have more power than ever to affect an organization’s reputation. According to a study conducted by Glassdoor, 70 percent of job seekers consulted the site during their job search. Negative reviews by current and former employees are likely to turn away contingent talent who may have more options when it comes to selecting an employer. Organizations should check job boards and review sites to see what employees have to say about working for them, and address common issues and complaints to improve their employer brand.

The Evolution of Contingent Labor Technology

Vendor Management Systems (VMS) have been around for quite some time, helping organizations better manage the complexities of the contingent workforce. Leveraging the reporting capabilities of VMS software has become more widely adopted as standard practice. What’s more, with advances in VMS software—namely robotic process automation—organizations can more accurately track workers, hours and pay rates and analyze supplier performance, all key components of accurate contingent labor reporting. The speed and accuracy of automated reporting functions allow organizations to make more decisive decisions in real-time with up-to-date data.

MSP providers are also offering new technology to supplement legacy VMS platforms. According to NelsonHall’s study, Changing Shape of Managed Service Programs, approximately 75 percent of MSP vendors either offer Freelance Management Systems (FMS) technology in addition to VMS platforms, or are currently looking to introduce FMS technology in the future. This shift is driven by the need to manage an increasing number of independent contractors and freelancers in the market. FMS technology is newer and better able to process freelancer information (in addition to other contingent workers), compared with VMS technology.

Organizations and MSP providers are not the only ones benefiting from advances in contingent labor technology. New online services make it easier for independent contractors to find and sustain contingent work. Mobile apps like JobStack by PeopleReady and other online freelance marketplaces are growing more popular in the gig economy. They allow organizations to effectively direct source candidates and quickly fill staffing gaps as one piece of an MSP program.

Direct Sourcing is Growing Among Organizations

A study conducted by the Oxford Internet Institute at the University of Oxford notes that from 2016 to 2017, there was a 26 percent increase in the work that organizations source from platforms such as Freelancer, Upwork, PeoplePerHour  and Crowdstaffing Inc. This trend indicates that more and more organizations are internalizing their search for contingent workers.  Even more, the social environment created by these contingent networking opportunities allow the workers themselves to inquire with organizations about opportunities. Below we list benefits and challenges of directly sourcing contingent labor.

Benefits of direct sourcing:

  • The ability to re-engage proven talent over the long-term rather than one engagement.
  • Organizations can gain better data and visibility with metrics and results being tracked in-house.
  • Cost savings from fewer supplier fees and less overhead.

Challenges of direct sourcing:

  • Ensuring in-house program management practices are built to include direct sourcing processes. This will be a challenge because these practices could be different from currently established processes that are applied to third-party suppliers.
  • Managing and keeping track of multiple sourcing channels.
  • Securing buy-in from internal stakeholders who do not understand the benefits of direct sourcing or are unconvinced of its benefits.

Conclusion:

PeopleScout’s MSP programs combine expertise in staffing and supplier management with leading VMS technology to best meet an organization’s business requirements. Each solution offered by PeopleScout is customized to provide the best talent, seamless implementation, strong governance and compliance, comprehensive program management, high touch customer care, value-add services and tangible savings – with a goal of creating operational excellence and yielding sustainable value. Click here to learn more about PeopleScout’s award-winning MSP solutions.

PeopleScout U.S. Jobs Report Analysis – May 2018

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The Labor Department released its May Jobs Report showing 223,000 jobs added to the U.S. economy, which continues the longest stretch of job growth in the nation’s history and brings the unemployment rate to 3.8 percent.

The Numbers

223,000: The economy added 223,000 jobs in May.
3.8%: The unemployment rate dropped to 3.8 percent.
2.7%: Wages increased 2.7 percent over the last year.

The Good

The 223,000 jobs added in May surpassed analyst expectations and lowered the unemployment rate to 3.8 percent. Employment grew in industries including healthcare, retail and construction. The Labor Department revised its figures to show a show a net increase of 15,000 in March and April.
There was good news for Americans without a high school diploma. The unemployment rate for workers 25-years-old and older with less than a high-school diploma dropped to 5.4 percent, down from 6.2 percent at the same time last year and a large decrease from the 8.5 percent rate in September 2016. The unemployment rate for college graduates is holding steady at 2.0 percent.

The Bad

Employers face significant challenges in a market with increasing job openings and very low unemployment. More workers are quitting their jobs, which increases the pressure on employers to take immediate action to both attract and retain talent.
The employment gains made by those with less than a high school diploma may increase the difficulty of staffing seasonal summer jobs, an issue already caused by overall low unemployment. The scarcity of workers for seasonal businesses could lead to higher costs for business owners who may pass the increased costs onto consumers.

The Unknown

There is uncertainty over the repercussions of the recently imposed tariffs on key U.S. allies. The White House announced that the EU, Canada and Mexico will face 25 percent tariffs on steel and 10 percent on aluminum. Retaliation could lead to increased prices and unstable supplies of key commodities, which may stall or reverse the job gains made in recent years.

Compliance Corner: Worker Classification in the Gig Economy

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Earlier this year, a California court ruling established a three-part test that provides the criteria an organization must meet for a person to be considered an independent contractor and not an employee.

The 7-0 ruling by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles laid out the following criteria to determine who may be classified as an independent contractor in cases involving minimum wage and overtime payments:

  • (A) “that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
  • (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
  • (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”

In the ruling, if the worker does not meet all three criteria of the ABC test, then that worker is presumed to be an employee.

Previously, courts had relied on the decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations which adopted the “control-of-work” test that asks “whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.”

However, the court decided that the Borello test “makes it difficult for both hiring businesses and workers to determine in advance how a particular category of workers will be classified, frequently leaving the ultimate employee or independent contractor determination to a subsequent and often considerably delayed judicial decision.” The result of such circumstances “often leaves both businesses and workers in the dark with respect to basic questions relating to wages and working conditions that arise regularly, on a day-to-day basis.”

With the growth of the gig economy, this has significant implications for organizations in California that use independent contractors to provide a core product or service.

Organizations in California should evaluate whether any independent contractors need to be reclassified as employees.

PeopleScout U.S. Jobs Report Analysis — April 2018

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The Labor Department released its April jobs report with 164,000 jobs added to the U.S. economy, continuing the longest stretch of job growth in the nation’s history and bringing the unemployment rate to 3.9 percent – the lowest level since 1970.


The Numbers

164,000: The economy added 164,000 jobs in April.
3.9%: The unemployment rate dropped to 3.9 percent.
2.6%: Wages increased 2.6 percent over the last year.

The Good

The 164,000 jobs added this month may have been less than some analysts projected, according to the Wall Street Journal, but April’s job growth brought the unemployment rate down to 3.9 percent after it held steady for six months. Revised figures show employers added 30,000 more jobs in February and March than previously estimated, bringing the monthly pace of hiring this year to 200,000, compared to the 2017 average of 182,000 jobs per month.


The strongest gains continue to be in the professional and business services sector, which added 54,000 jobs in April. With that, the total number of jobs added in this sector in the last year rose to more than half of a million. Manufacturing also continued to grow with 245,000 jobs added in the last year. The healthcare industry also continued its consistent growth, adding 24,000 jobs in April, and 305,000 in the last year.
Wage growth continued, but at a modest rate of 2.6 percent over last year. While many workers would like to see higher gains, the modest growth is appealing to investors and eases fears about the economy overheating.

The Bad

Unlike the areas of the economy which showed healthy job increases in April, some industries saw little change over the last month – including construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality and government work.
The U.S. workforce shed 410,000 people in April, bringing the total of those out of the workforce to 95.7 million. The tightening labor market brings significant challenges to employers, including potential wage pressure and a diminishing pool of available talent, according to the Washington Post.

The Unknown

Uncertainty over the imposition of tariffs on China and other countries makes long-term planning and growth projections very challenging, the New York Times reports. The possible shift in the price of raw materials resulting from a trade war would likely have the greatest impact on the manufacturing sector.

PeopleScout Australia Jobs Report Analysis – March 2018

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The Australia Bureau of Statistics released its March Labour Force Key Statistics showing slower job growth compared to the past year.

The Numbers

4,900: The Australian economy added 4,900 jobs in March.
5.5%: The Australian unemployment rate remained steady at 5.5 per cent.
65.5%: Labour force participation decreased 0.1 per cent to 65.5 per cent.
+7: According to the NAB, the business confidence index fell two points to +7 index points.

Upside

The 4,900 jobs added to the Australian economy in March brings employment growth over the past year to 367,100, as reported by Business Insider. Employment remains at a record high 12.48 million. The largest increase in employment was in Victoria, followed by Tasmania and Western Australia. Since March 2017, full-time employment has increased by 226,900 persons, and part-time employment has increased by 140,200 persons.


Additionally, the unemployment rate initially reported as 5.6 percent in February was adjusted down to 5.5 per cent. That rate held steady in March. According to Marketwatch, the country is still not yet at full employment.

Downside

The 4,900 jobs created in March fell well below economists’ expectations. This is a sign that the strong run of monthly job increases could be slowing down. Full-time employment actually decreased by nearly 20,000 in March, but an increase of nearly 25,000 jobs created the net increase in employment. There was also a small decrease in the labour participation rate.


The business confidence rate also dropped two points in March to +7. This is still slightly higher than the historical average, but it has fallen four points in just two months.

Unknown

The significant slowing of job creation in March may mark the end of a period of strong sustained job growth. Decelerated job growth has implications for the broader Australian economy, though economists still debate what could happen. While there is still room to grow in Australia’s economy, some economists believe the growth could slow.


Tom Kennedy of JP Morgan notes, “Much of the positivity RBA officials have had on the labour market of late has come from the fact that employment growth boomed last year, with raw job creation making it easy to paper over the various headwinds facing the consumer, such as benign wages growth and high levels of household indebtedness.


However, we had previously flagged the surge in employment growth and participation as being correlated phenomena. While early days it appears this view is broadly tracking, and we retain our forecast for participation to stabilise and employment growth to moderate in 2018.”

PeopleScout U.S. Jobs Report Analysis — March 2018

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The Labor Department released its March jobs report with slower than expected job growth, but the 103,000 jobs added to the U.S. economy extended the longest stretch of expansion to 90 months.

The Numbers

 103,000: The economy added 103,000 jobs in March.

4.1%: The unemployment rate remained steady at 4.1 percent.
2.7%: Wages increased 2.7 percent over the last year.

The Good

After February’s strong jobs numbers, the 103,000 jobs added to the economy seems disappointing. However, according to MarketWatch, the U.S. still added an average of 202,000 jobs each month in the first quarter of 2017. This is still strong growth.
Additionally, the unemployment rate remained at 4.1 percent. Though economists had expected that to fall to 4.0 percent in March, the current rate is still the lowest since 2000.
The 2.7 percent wage growth is largely a positive. It is still moderate – slightly higher than the 2.5 percent seen through most of 2017, but low enough to prevent fears of inflation, according to the Wall Street Journal. However, many workers would like to see this number increase.

The Bad

This is the weakest job growth the economy has seen in six months. In September 2017 after the destruction of hurricanes Harvey and Irma, the economy only added 14,000 jobs, though it was initially reported as a loss. The previous low was March 2017, when the economy added what was revised to only 73,000 jobs. Additionally, retail saw job losses in March after significant gains in February.

The Unknown

According to the New York Times, it still unclear what impact escalating trade tensions with China will have on the U.S. economy, particularly the manufacturing sector. Manufacturing has seen strong job gains over the past year, including 22,000 jobs in March. However, a trade war with China could impact that growth.

PeopleScout Australia Jobs Report Analysis – February 2018

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The Australian Bureau of Statistics released its February Labour Force Key Statistics showing another month of strong job growth, but an unemployment rate that increased due to an increase in labour force participation.

The Numbers

17,500: The Australian economy added 17,500 jobs in February.
5.6%: The Australian unemployment rate increased .1 percent to 5.6 percent.
65.7%: Labour force participation rose .1 percent to 65.7 percent.
+9: According to the NAB, the business confidence index fell two points to +9 index points.

Upside

The 17,500 jobs added to the Australian economy marks the 17th consecutive month of job growth according to Business Insider. This brings employment to 12.48 million, which is the highest ever recorded. The largest increase in employment was in New South Wales.


While economists had expected the unemployment rate to remain at 5.5 percent in February, the increase to 5.6 percent can be attributed to the increase in labour force participation, which shows that the Australian economy is strong enough to pull people to join or reenter the workforce.

Downside

While the numbers were mostly strong, there is still some room for improvement. According to MarketWatch, underemployment is still an issue. Additionally, despite the net growth in employment, the economy actually shed 47,400 part-time jobs. Employment in Victoria saw a decrease of 11,300, though that was offset by increases elsewhere.


The business confidence rate also fell two points in February to +9. However, the NAB attributes this to “turbulence in international financial markets in early February,” and notes that the number remains above the average of +6. On a brighter note, the NAB reports that the business conditions index actually increased three points to a record high +21.

The Unknown

Economists debate how much room there is left to grow in Australia’s economy. The issues of underemployment and the fact that the size of the labour force is growing faster than employment point to an economy with plenty of room for growth. Economists suggest that the unemployment rate will need to fall below 5 percent before workers begin to see significant wage gains.

PeopleScout Jobs Report Analysis – February 2018

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The Labor Department released the February jobs report with higher than expected job gains but slowing wage growth.

The Numbers

313,000: The U.S. added 313,000 jobs in February.

4.1%: The unemployment rate remained steady at 4.1 percent.

2.6%: Wages rose 2.6 percent over the past year.

The Good

February’s jobs report has a lot of good news. The 313,000 jobs added to the economy beat economists’ expectations. The number also marks the fastest pace of job growth in a year and a half according to the Wall Street Journal. Hiring was also spread across industries. Retail, which struggled at the end of 2017, gained 50,000 jobs in February. Professional and business services and manufacturing also saw strong job growth.
The 4.1 percent unemployment has remained steady for the past four months, and it’s the lowest unemployment rate in 17 years. The labor market participation rate ticked up to 63 percent in February, which is its largest jump in three years according to CNN. This shows that economy is still strong enough to pull in sidelined workers, without increasing the unemployment rate.

The Bad

The 2.6 percent wage growth in February can either be good or bad news depending on who you’re asking. Wage growth did slow from January, which is disappointing for workers and more in line with the sluggish wage growth that’s remained consistent throughout the recovery from the Great Recession. However, according to the New York Times, the lower wage growth quiets concerns about inflation.

The Unknown

The biggest question right now is how much room for growth is left in the economy. Despite the strong numbers in January’s jobs report, investors were concerned about inflation, which resulted in large stock market losses. However, February’s report indicates that there is still plenty of room to grow.
“Over the last 2 months, the job market has absorbed 1.3 million new entrants into the labor force, allowing the unemployment rate to stay at 4.1% – a remarkable testament to the underlying strength in this economy,” David Donabedian, chief investment officer of CIBC Atlantic Trust told the Wall Street Journal.