Freelanced: The Rise Of The Contract Workforce

Jan 22, 2018
Originally published on January 23, 2018 1:46 pm

A new NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract. Within a decade, contractors and freelancers could make up half of the American workforce. Workers across all industries and at all professional levels will be touched by the movement toward independent work — one without the constraints, or benefits, of full-time employment. Policymakers are just starting to talk about the implications.

In a weeklong series, NPR will explore many aspects of this change.

In an old metal-stamping factory that was once part of Wheeling, W.Va.'s industrial past, a law firm has set up a futuristic model for how to get legal work done. Unlike the old factory, it relies heavily on new kinds of work arrangements.

"Contractors are hired by the hour," says Daryl Shetterly, director of the Orrick firm's analytics division. "So we might have 30 people working today, and tomorrow we might have 80."

Tenure for workers in the building used to be measured in decades. Now it might last a few days for the workers there today. While the building has had a facelift, Shetterly says, "it is a factory in that we work to drive efficiency and discipline into every mouse click."

The division is a kind of processing center, using artificial intelligence tools and cheaper lawyers to speed up the handling of routine tasks, such as sorting and tagging documents. That frees other lawyers to focus on more high-end work.

It's emblematic of the kind of contract work expanding into every corner of the economy. Machines are siphoning off basic tasks, and temporary workers allow flexibility to size up and down. In the legal field, there are online platforms that match freelance lawyers with clients. It's like dating profiles — but with customer reviews and billing assistance.

The legal job market, in other words, is fragmenting, and with it, its workforce.

"Lots of people go into law expecting that they're headed to a secure, well-paying, intellectually satisfying, high-prestige job, and lots of those people find out that's not what they're headed to," says Gillian Hadfield, who studies legal markets at the University of Southern California.

She says the speed with which business evolves these days forces everyone — from businesses themselves to suppliers to the competition — to respond quickly. Employers need specialized expertise on demand, just not for the long term.

It's not just business driving the trend. Surveys show a large majority of freelancers are free agents by choice.

John Vensel is a contract attorney at Orrick who grew up a few miles from Wheeling, on the other side of the Pennsylvania state line. In his 20s, he was a freelance paralegal by day and a gig musician by night.

"I actually wanted to be a rock star," he says. But these days there are no edgy vestiges of a former rocker, only a 47-year-old family man cooing over cellphone photos of his children, Grace and Gabe.

In the two decades in between, Vensel worked full-time corporate jobs. But he was laid off in 2010, on the eve of his graduation from his night-school law program. He graduated with huge piles of debt, into one of the worst job markets.

"It was terrible; it was like a nuclear bomb went off," he says. "My son had just been born. ... We've been kind of recovering ever since."

For a time, Vensel commuted three hours round-trip to a full-time job in Pittsburgh. But more recently, he quit and took up contracting to stay near home in Wheeling.

"So, like my father, he's in the hospital right now which is like five minutes away, and I'm getting updates on my phone," he explains, glancing at the device. "And if I need to be there, I can be there in five minutes."

He says contract work is today's economic reality. Contracting allows employers to test workers out, he says, but he ultimately is hoping to land a full-time position, with benefits. A new NPR/Marist poll shows that 34 percent of part-time workers are looking for full-time work.

That may be increasingly difficult. Currently, 1 in 5 workers is a contract worker, the poll shows. According to economists Alan Krueger and Lawrence Katz, the percentage of people engaged in "alternative work arrangements" (freelancers, contractors, on-call workers and temp agency workers) grew from 10.1 percent in 2005 to 15.8 percent in 2015. Their report found that almost all — or 94 percent — of net jobs created from 2005 to 2015 were these sorts of impermanent jobs.

Within a decade, many labor economists believe freelancers will outnumber full timers.

Vensel draws a contrast with his father, who retired after working 35 years at the Postal Service.

"He has a pension; we don't have pensions anymore," Vensel says. "It's a totally different world."

Sixty-five percent of part-time workers and a little more than half of contract workers work without benefits, according to the NPR/Marist poll.

Arun Sundararajan, a management professor at New York University and author of The Sharing Economy, says "this is the work arrangement for the future." The new normal will be freelance work. "Twenty years from now, I don't think a typical college graduate is going to expect that full-time employment is their path to building a career," Sundararajan says.

He says that will ultimately lead to many other changes, from education to social structures and public services.

A short distance from Orrick's offices, Wheeling's mayor, Glenn Elliott, is starting to think through the implications of that.

Elliott himself once worked as a contractor at a law firm and says contract work holds both great promise and great peril for the city. On the plus side, he sees more economic opportunities, if it can attract more companies like Orrick. On the other hand, he worries how this also changes the fundamental social contract between employers and workers.

"I don't think that loyalty necessarily exists between employers and their employees that used to be there," Elliott says.

Those looser ties will shift more responsibility to contract workers. They must handle saving for retirement and their health insurance on their own.

"But some people, despite their best efforts, just aren't going to be successful in doing that," Elliott says. "What's going to happen to those who fall through the cracks? Because the 1950s model of retirement and getting your pension check every year from your company is not a realistic model for a lot of people, increasingly."

The public safety net — the budgets for fire departments and social services — is already strained, he says, by the area's opioid problems, among other things. A future where fewer workers have benefits won't help.

Elliott expresses frustration with partisan battles at the state and federal level, while cities like his struggle to figure out how to plan for the future.

"It's a much broader problem than Wheeling," he says. But "as a country we need to be having a conversation, which we're not really having right now."

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

KELLY MCEVERS, HOST:

One in 5 American workers depend on freelance or contract work for their primary income. That is 32 million people. What's more, it's expected that half of American workers will either be freelancers or contractors within a decade. These figures come from an NPR/Marist poll released today, and they represent a remarkable shift in nearly every industry, a shift that means many workers will lose the benefits associated with full-time employment. NPR's Yuki Noguchi reports as part of our weeklong look at the rise of the freelance workforce.

DARYL SHETTERLY: This was a stamping factory back in the early 1900s. I think the building itself is a little more than a hundred years old.

YUKI NOGUCHI, BYLINE: Amid the relics of an old factory in Wheeling, W. Va., a law firm called Orrick has set up a new business model for how to get legal work done. Daryl Shetterly is director of Orrick's analytics division. On the way to his office, he points to faded photos.

SHETTERLY: And these are folks - none of whom I've met - but they've all clearly had some history in the building.

NOGUCHI: The photo captions show the workers' years of service measured in decades. In the building today, workers can be hired for just a few days.

SHETTERLY: Contractors are hired by the hour. We pay them when we're using them, and that is our ability to scale. And so we might have 30 people working today, and tomorrow we might have 80.

NOGUCHI: This used to be, like, a factory, right? And do you consider it sort of a factory now?

SHETTERLY: It is a factory in that we work to drive efficiency and discipline into every mouse click.

NOGUCHI: This division of Orrick was set up as a kind of processing center. Using artificial intelligence and cheaper lawyers speeds up routine tasks such as sorting and tagging documents. The operation is a testament to how contract work is expanding into every corner of the economy. More lawyers are temping or using online platforms to match them with clients. The legal field, in other words, is fragmenting. Gillian Hadfield studies legal markets at the University of Southern California.

GILLIAN HADFIELD: Lots of people go into law expecting that they're headed to a secure, well-paying, intellectually satisfying, high-prestige job. And lots of those people find out that's not what they're headed to.

NOGUCHI: Hadfield says the speed with which business evolves these days forces everyone else to respond quickly. Employers need specialized expertise on demand, just not for the long term. It's not just business driving the trend. The NPR/Marist poll found a large majority of freelancers are free agents by choice.

John Vensel is a contract attorney at Orrick who grew up a few miles from Wheeling on the other side of the Pennsylvania state line. In his 20s, he was a freelance paralegal by day, gig musician by night.

JOHN VENSEL: I actually wanted to be a rock star (laughter).

NOGUCHI: Now 47, there are no edgy vestiges of a former rocker, only a family man cooing over cell phone photos.

VENSEL: Those are my babies. That's Grace, and that's Gabe.

NOGUCHI: In the two decades in between, Vensel worked full-time corporate jobs, but he was laid off in 2010 on the eve of his graduation from his night school law program. That year, he graduated with huge piles of debt into one of the worst job markets in decades.

VENSEL: It was terrible. It was like a nuclear bomb went off when, you know, my son had just been born. It was pretty bad. You know, we've been kind of recovering ever since.

NOGUCHI: For a time, Vensel commuted three hours round-trip for a full-time job in Pittsburgh. But more recently, he quit and took up contracting to stay near home in Wheeling.

VENSEL: So like, my father - he's in the hospital right now, which is, like, five minutes away. And I'm getting updates on my phone. Now it's just buzzing. And if I need to be there, I can be there in five minutes.

NOGUCHI: He says contract work is today's economic reality.

VENSEL: You're trading for that flexibility. You're trading for these opportunities to get your feet wet in certain areas and to try them out as they're trying you out.

NOGUCHI: And is that something you would like to do - is ultimately get a full-time position?

VENSEL: Yeah, absolutely.

NOGUCHI: But that may be increasingly difficult. Within a decade, many labor economists believe freelancers will outnumber full-timers.

VENSEL: My father retired from the post office after 35 years. Yeah, I mean, that's just - we don't live in that world anymore. He has a pension. You know, we don't have pensions anymore. It's a totally different world.

NOGUCHI: A short distance from Orrick's offices, Glenn Elliott is thinking about the implications of that different world. Elliott is the mayor of Wheeling, who himself once worked as a contractor at a law firm.

GLENN ELLIOTT: I only got paid if I did work.

NOGUCHI: He says contract work holds both great promise and great peril for the city. On the plus side, Elliott sees more economic opportunities if it can attract more companies like Orrick. On the other hand, Mayor Elliott worries how this also changes the relationship between employers and workers.

ELLIOTT: I don't think that loyalty necessarily exists between employers and their employees that used to be there.

NOGUCHI: Those looser ties also shift more responsibility to the contract workers. They must handle retirement saving and health insurance on their own.

ELLIOTT: But some people, like, despite their best efforts just aren't going to be successful in doing that. And what's going to happen to those who fall through the cracks? The 1950s model of retirement and getting your pension check every year from your company is not a realistic model for a lot of people increasingly.

NOGUCHI: Elliott says the public safety net is already strained by the area's opioid problems, among other things. A future where fewer workers have benefits won't help. The country needs to be having these discussions, he says, but isn't. And with the workforce changing so quickly, the need to answer those questions is urgent. Yuki Noguchi, NPR News, Wheeling, W. Va.

(SOUNDBITE OF ALL GOOD FUNK ALLIANCE SONG, "I DON'T CARE IF IT'S YOUR BIRTHDAY") Transcript provided by NPR, Copyright NPR.