Look Back, Look Forward: The Independent Workforce Year in Review 2019
As 2019 winds to a close, we at MBO Partners like to take the time to reflect in preparation for the year ahead. As is common in any fast-growing industry, we marvel at how much has changed in the past 12 months, and how much will be likely to change again as we head into and through 2020.
We’ve identified and recapped some of this year’s top trends and have given insight into how we see these items developing as we begin the New Year.
1. Highly-Skilled Independent Professionals Took Center Stage
Due to a strong economy and a growing number of areas experiencing talent shortages, skilled independent professionals are more in-demand than ever before. Because of this demand, highly-talented workers are able to start their own businesses where they are able to earn as much or even more money. The number of full-time independents who choose to work this way has remained steady and this group tends to be very satisfied with and committed to independent work.
• Many large organizations—67%—report having difficulty finding talent for their workforce.
• 3.14 million full-time independents earn more than $100,000 per year.
• 44% of the total talent spending at large corporations is on external, non-employee talent.
In 2020 and into the future, more highly-skilled workers will likely become and stay independent. For those who can offer a set of in-demand skills, going independent has many benefits including high compensation, better work-life balance, and greater control over how and where you work.
2. Organizations are Increasingly Relying on Independent Talent
Businesses are becoming increasingly comfortable with the concept of engaging independent talent to fill skill gaps, work on time-sensitive projects, and add flexibility to their workforce. Working with independent talent often gives enterprises the ability to innovate faster and better while lowering employment costs.
• More than 40% of workers in the U.S. are now employed in alternative work arrangements made up of contingent, part-time, or gig work.
• U.S. Internal Revenue Service data shows that small businesses increased their expenditures on non-employee contract labor by 73% between 2011 and 2016.
• More than half of executives say the external workforce enables them to improve the overall financial performance of their company and nearly 64% say their external workforce is important or very important in increasing organizational agility.
If the economy continues to stay strong, it will likely drive even greater demand for independent talent, particularly for those with skills such as cloud computing, biotech, and marketing. A tight job market has created an ideal landscape for independent talent to thrive.
3. States Are Trying to Get Ahead of Worker Misclassification
As the use of independent talent becomes more widespread, so does the issue of compliance risk. In 2019, more states passed laws and created task forces to combat worker misclassification. As these new laws and regulations take place, companies will need to adjust their method of independent contractor engagement.
• California Governor Gavin Newsom signed A B5 into law, a comprehensive law that adopts the ABC standard for classifying workers as independent contractors.
• Arkansas, Oklahoma, and Tennessee passed laws that adopted the 20-factor IRS standard for worker classification.
• Wisconsin, Virginia, and New Jersey established taskforces to combat worker misclassification.
• The National Labor Relations Board (NLRB) and the Department of Labor (DOL) released documents saying that gig platform workers were independent contractors.
The way we work is continuing to evolve and as the project-driven economy grows, employment laws will have to adapt. While some laws have made it difficult for independent professionals to operate in certain states, many interpretations of and challenges to these laws lie head. In the coming year, expect to see more cases and lawsuits arise as the legal standard for classifying workers is shaped.
4. Platforms and Marketplaces are Becoming More Mainstream
2019 saw the growth of technology to help enterprises facilitate sourcing, engagement, and management of the independent workforce. Independents use them as a way to find and obtain work. Marketplaces today allow enterprise managers to post project opportunities that independent contractors can respond to, run a search to find talent, or let proprietary algorithms send talent matches to their inbox.
• Full-Time Independents are increasingly likely to use an online marketplace to find work in the next 12 months—29% said they were likely to do so in the next 12 months.
• 77% of freelancers say technology has made it easier to find work.
• Coupled with technology, direct sourcing is becoming a common strategic approach to find and engage independent talent.
Looking ahead, technology focused specifically on the independent workforce will continue to evolve, helping enterprises efficiently and compliantly find and engage independent talent, and assisting independent talent in finding new clients and projects. As digitally native Millennials replace Baby Boomers as the largest percentage of the workforce, we will likely see increased use of these types of platforms.
5. Digital Nomads are Growing
A digital nomad is someone who embraces technology and location independence, traveling to other cities—and even other countries—to both work remotely and explore new surroundings. Some people travel for years while others go for just a few weeks or months at a time. The digital nomad trend is growing due to many factors including the rise in co-living and coworking spaces, the growth of talent marketplaces, and the rise of technology that allows people to easily work remotely.
• 7.3 million Americans describe themselves as digital nomads.
• More than 70% of US workers believe that flexible working has become the new normal.
• Digital nomads use apps like Slack and Google Translate to organize work and travel.
About 17 million people say yes, they plan on becoming digital nomads over the next 2-3 years, and 42 million said maybe. As mobile and cloud computing technology leads to increased levels of remote work, the number of people working as digital nomads will continue to grow. Generationally, Baby Boomers and older Gen Xers may choose to continue part-time work nomadically, while the digital nomad lifestyle appeals to many Millennials who are interested in travel.
Have additional thoughts? Send us a note, or reach out on social media—we’d love to hear from you about what you’re seeing as industry trends and how you’ll be adjusting your business for 2020.
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