Are Contract Workers Failing to Benefit from the Tech Industry?

Technologists in general have seen their compensation rise over the past several years. According to Dice’s Tech Salary Report, for example, the average tech salary rose 6.9 percent between 2020 and 2021, hitting $104,566. However, a new report suggests that not everyone in the tech industry has enjoyed significant gains.

The Contract Worker Disparity Project, produced by the TechEquity Collaborative, paints a pretty grim picture of the marketplace for tech contractors. “The prevalence and scale of contingent employment has grown steadily over the past several years, outpacing direct employment at major companies like Google, which in March 2019 employed 121,000 contract workers and 102,000 direct employees,” the report begins. “In the course of our research, TechEquity found evidence that contract workers are less likely to benefit from the traditional pathways into the tech industry and are more likely to belong to underrepresented racial, ethnic, and gender groups than the direct tech workforce.” 

What’s harming contract workers? The report cites several factors, including a “dual management structure” at many companies that can make it hard to advance: Because a staffing agency often handles things like compensation and benefits, it’s difficult for contractors to advocate for themselves with the client company—much less negotiate for things like boosted pay.

As you might expect, many contract workers also face “job precarity,” especially if their contracts are short and a potential extension hasn’t been locked down. That contributes to contractors’ fears about speaking up if they see something amiss or they’re being given too much work to handle. Pay for these contractors is often lower, as well.

Diversity is yet another issue confronting contractors. “In every dataset that TechEquity examined, one fact was glaringly obvious—contract work in tech is disproportionately done by people from under-represented racial, ethnic, and gender groups. Coupled with the lack of representation in the direct tech workforce, the practice of contracting out sets the conditions for occupational segregation,” the report added.

Some 77 percent of the contract workers surveyed by the Collaborative didn’t convert into direct, full-time employment at a tech company. Many of these workers claimed they were told up-front that their contracting tenure wouldn’t translate into a direct-employment position. The report also floats the idea that having a contract gig on your résumé can harm you during the job-interview process: “Recruiters confirmed to TechEquity that those who decide to list the tech companies as their employers are passed over or disadvantaged for other contract work openings.” 

(As the report’s Methodology section breaks down, the sample size was actually quite small, with 512 survey responses. The report authors also relied on a handful of third-party data sources, including the U.S. Bureau of Labor Statistics and HR+A’s Tech’s Racial Equity Gap Report.) 

In an ideal world, tech companies everywhere would institute rules designed to protect contractors, including minimum-pay rules and an explicit commitment to worker wellness and transparency. New laws could also impact things. But is there enough momentum out there to push true change?