Labor costs are falling and productivity is increasing. Employers are finding new ways to boost profits, including technological changes to increase machine output. Companies are reaching their limits of how much can be produced with the current workforce; even with consistent overtime.


How much is too much to ask of employees? According to Watson Wyatt and World at Work, employers’ cost cutting has contributed to a sharp decline in morale and commitment. Forty-one percent of top performers surveyed believe pay and benefit changes have had a negative effect on quality and service; 29% have lost confidence in management’s ability to grow the business and 26% are less likely to be satisfied with advancement opportunities.


As demand increases, many predict employers will be reluctant to hire, in order to boost profits. Instead, they plan to restore suspended benefits and continue pushing employees to the limit.


Using a contingent workforce may be the answer. Littler Mendelson, an international labor law firm, predicts contingent labor may increase to 50% of the U.S. workforce. Contingent or temporary workers are the first to be eliminated when needs diminish and often the first to be added when the economy improves.


Veritude, a Boston-based staffing company, surveyed companies with at least 2000 employees to gather viewpoints regarding post-recession hiring. Only 3% planned to use their pre-recession staffing model. The goal is a leaner, efficient workforce. Temporary workers are a piece of that puzzle, offering flexibility that accommodates a fluctuating workload.


Of those who are unemployed, 4% have college degrees, an historical high rate for this category. Many are willing to accept a temporary assignment.


Companies that manage projects may find the greatest benefit of a contingent workforce. The idea isn’t new to the construction and movie industries who utilize union hall labor.


A Massachusetts Institute of Technology (MIT) study sees an increase in contract and contingent workers. The study predicts that social networking groups will create a new sense of community replacing the one formerly created by an employer. As a project ends, the contacts move to the next employer’s project.


One thing that holds people back from being an independent contractor or temporary worker is health insurance. If the health care reform makes insurance available and affordable to those without traditional jobs, a surge of professionals will be available on a contingent basis.

Preparing for Contingent Wave

• Determine what percentage of your current workforce is contingent and evaluate how to best utilize that portion of your workforce.
• Stay abreast of laws about contingent workforce, health care reform, and other benefit plans that may impact the new workforce.
• Evaluate vendors; make sure vendor agreements include background checks, anti- discrimination pledges and record retention policies.
• Determine who will be responsible for workers’ compensation, unemployment and other applicable taxes.
• Review non-competes and confidentiality agreements with vendors and contractors.

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