Employment isn’t what it used to be, and for many tech workers it may never be again. As America slowly emerges from recession, employment growth isn’t following. Increasingly, workers find themselves with piecemeal employment, no benefits and what appears to be no way back into a full-time job.
“Will we all be freelancers soon?” asked a recent headline in U.S. News & World Report. The accompanying story reported how:
6 in 10 companies have plans to hire more freelancers in 2014. Companies report that they do so because it gives them the flexibility to rely on different skill sets as their needs change, and using temporary workers also allows them to spend less money on employee expenses.
Tech and other knowledge workers are among the most in-demand freelancers, the magazine said, though not all those freelancers are as happy as a buoyant market might make it appear.
“Employees who formerly relied on valuable benefits like health insurance are getting the shaft in this economy,” commented one reader. “You can put whatever positive spin you want on these new ‘opportunities,’ but the only people making out are the employers who save substantial sums of money.”
Those savings come from benefits including vacations and healthcare, which aren’t provided to contractors. Worse, contractors often compete in literally a global market, where they face others whose wages are much lower than what American workers made as full-time employees.
Overall, 10 to 12 percent of American workers have temporary or contract jobs, according to government statistics. “In many cases, employers are not confident to bring in regular, full-time employees because it may hurt the entire firm,” James Sherk, senior policy analyst in labor economics at the Heritage Foundation, told Fox News.
“This is the most disturbing trend, due to the weak economy,” Sherk said. “It’s an economy and situation where employers aren’t seeing their shelves pick up, so they won’t commit to hiring a full-time employee.” He doesn’t believe hiring is likely to resume until full economic recovery is achieved.
Or will it? Might companies decide that hiring contractors at a discount is a more economical way to replace workers cut during the recession?
Contracting as the New Normal
In Silicon Valley, working as a contractor has become a new career for displaced workers. But being successful often requires an attitude adjustment.
First, would-be contractors must realize that their new role isn’t tantamount to failure, says Luther Jackson, program manager at NOVA, a federally funded employment and training agency in Sunnyvale, Calif. “I ask, ‘Why is that a failure?’ It’s just the new world. The idea of doing a number of contracts doesn’t mean defeat.”
Jackson says many of his clients have used contract jobs as an entry to full-time employment at their client companies. But, he adds, recovering from job loss can require major changes in how workers present themselves and their skills.
Some freelancers are hired by companies who resell their services to corporate customers. Occasionally, these workers actually end up at their former employers, only earning less money. On the other hand, many of the jobs last a year or more. The better of these contracting firms offer employees competitive salaries and benefits.
Of course, not everyone is able to turn their contract gig into a new career. “Freelancing is better than no income, but not by much,” says one veteran technology marketer who earned more than $120,000 a year before the recession.
The worker, who asked not to be named for fear of chasing off potential employers, still sends out resumes but doesn’t expect responses. Another truth: “Now that I am in my late fifties, companies aren’t even interested in talking anymore.”
Meanwhile, a contract programmer — who was once employed for a leading virtual machine company but has been out of work for more than two years – says his contracting income is a small percentage of what he earned as an employee. “Fortunately, my wife has a stable job and benefits and that’s how we survive,” he says.
One reason for the lower wages paid to contractors, especially through online hiring sites, is global competition fueled by cheap global communication. For employers, that opens up access to a widely flung workforce that lives in places where Western-style wages and benefits are largely unheard of.
The bottom line is the recession and globalization have wrestled power from many but the most specialized and in-demand tech workers. For the rest, even full economic recovery may not be enough to provide a traditional job.