Recent ADP Research Report Says Gig Work Is Here to Stay

by | Feb 14, 2020 | Employee Benefits

The Gig Economy is Here to Stay

As you are most likely aware, there is a lot of chatter going on about independent contractors and “gig” workers in the workforce these days. There is no question about it, the independent worker has become a huge part of today’s business culture and it’s here to stay. In fact, many companies have given their own employees the flexibility of working from home. With today’s technology capabilities, why not? It makes sense.

Companies such as Uber, Lyft, Upwork, and Fiverr have helped catapult the gig platform to new heights. And while these companies hire gig workers differently from one another, the concept is the same.

Contrary to popular belief, many gig workers don’t take contract work because they “can’t find jobs” in the marketplace. According to a recent ADP Research report, known as, Illuminating the Shadow Workforce: Insights into the Gig Workforce in Businesses, the main reason these individuals take gig work is they like the flexibility it offers them, first and foremost.

Definitions

To clarify:

  • 1099-MISC employees or independent contractors earn income from multiple sources without employee status. They are entirely independent and do not receive any benefits from the organization they work for apart from their compensation. The report defines them as skilled or highly workers who are older and find work based on their skill set.
  • W-2 employees are short-term employees who receive benefits from the organization. They work on a seasonal basis, have fewer skills, and tend to have lower income.

Key Statistics From the Report

The report finds that 16% of the U.S. workforce comprises enterprise gig workers.

How many gig workers do companies have?

Reporting on the percentage of gig workers in organizations of different sizes, the report finds that:

    1. On average, one in four workers is a gig worker at 40% of companies.
    2. In 6% companies, gig workers make up as much as 85% of the workforce.
    3. 11% companies have about 52% gig workers.
    4. The workforce in the finance sector is made up of 25% of gig workers, primarily independent contractors.

 

ADP Research Report

The study identifies three industries that rank at the top for hiring the largest number of gig workers. They are recreation, construction, and business services. In these industries, gig workers tend to earn more (sometimes far more) than their full-time traditional employee counterparts.

How many gig workers do companies have?

Reporting on the percentage of gig workers in organizations of different sizes, the report finds that:

    1. On average, one in four workers is a gig worker at 40% of companies.
    2. In 6% companies, gig workers make up as much as 85% of the workforce.
    3. 11% companies have about 52% gig workers.
    4. The workforce in the finance sector is made up of 25% of gig workers, primarily independent contractors.

The study identifies three industries that rank at the top for hiring the largest number of gig workers. They are recreation, construction, and business services. In these industries, gig workers tend to earn more (sometimes far more) than their full-time traditional employee counterparts.

What is the average duration of a gig?

The ADP report finds that gig workers expect to work less than a year on any given project or assignment. However, gig workers do not consider themselves “unemployed” even if they’ve been working for fewer than six months. They just move on to the next assignment or project.

Why do gig workers choose gig work?

According to the study, the choice is intentional. Contrary to popular belief the surveyed gig workers report that they prefer flexibility and other gig work benefits over full-time employment. Surprisingly, only 7% of respondents stated they opted for gigs due to a lack of choice.

The report also states that gig workers are very willing to trade off benefits for the flexibility that gig work offers, and they are confident they will continue to receive future work without a problem.

Because the gig workforce is comprised of mainly skilled workers, it has become a large untapped pool for organizations to recruit from. So if a company does find a gig worker they like, they can offer that individual a traditional job with little risk involved.

Who makes up the gig worker demographic today?

The answer might surprise you. It’s not only the younger workforce that wants to participate in all the freedom and flexibility gig work offers. The study found workers above age 55 also choose gig work, making up 20% of the total U.S. based gig workforce!

Interestingly, their choice to “gig it” is primarily so they can do work they enjoy and gives them purpose. These individuals say they would choose such work over compensation and health benefits, which, according to ADP Research Institute’s report, “come in dead last.” It is likely that they have their own health insurance at this point, and as a result don’t need to prioritize it.

According to ADP Research Institute, they have surmised the 55+ year-old gig workers tend to fill skill gaps in the workforce.

What Do These Findings Mean for HR and Organizations?

These findings can give HR some direction on managing a gig workforce. HR professionals would benefit from asking themselves the following questions:

  • Does HR have full-fledged systems in place to manage a gig workforce that is not on their direct payroll?
  • Are more and more HR technology providers focusing on incorporating solutions to manage one in six gig workers (as found in the report) effectively?
  • How can HR leaders further streamline gig worker management – what technologies can they incorporate to enable collaboration between the organization’s traditional employees and external workers?

Building a solid strategy starting with these questions would help manage what seems to be a rapidly increasing, significant portion of the workforce.

Sources:

HR Technologist

ADP Research Institute

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