Stronger Together: Insights from the 2023 State of Independence Report

[00:00:01] McLean Robbins Are leveling out today so we can go ahead and get started. Today's webinar is going to cover some highlights from our twenty twenty three state of independence. Now it needs thirteenth year. We're gonna be talking about some trends from this report as well as how they matter to your enterprise so that you can appropriately plan for twenty twenty four. I'm gonna introduce our speakers now. We wanna move to the next slide.

We have three amazing speakers today First up, I think many of you guys know Miles, who is MBA's CEO. Most recently Miles was Global Advisory and Consulting CEO for price utterhouse Coopers where he led the company's Asia Pacific America's Advisory and Consulting Business. He had a rich career with PwC, almost three decades in total and had various, roles within that firm before becoming MBO's CEO in twenty nineteen. He is a member of the staffing industry analyst staffing one hundred and an excellent, expert in this space. So I'm happy to have Miles today. We are also very lucky to be joined by Steve King and Carolyn Ockel's, who are co partners and founders of emergent research. They research identify, analyze, and forecast the trends and shifts impacting the future of work and the small business sector of the global economy. Stephen and Carolyn have been leading the research behind our state of independence for all thirteen years of its history, and they are rich experts in the field as well. So we're very lucky to have both of them today to share some of this data. Before we dive in though, I'm gonna move to the next slide, for those of you unfamiliar and just give you a very brief overview of MBO's platform, which enables enterprises to engage, access and manage work with independent talent. We work with over seven hundred enterprise organizations. And on any given day, we have about six thousand independence billing on our platform. Most of whom are high earners. We do the full scope of contingent workforce management from engagement and compliance through the sourcing and workforce optimization. If you have any questions about the platform itself, we're happy to answer them during the q and a. But today, we'll be primarily focused on our research. Before we kick off the webinar, I'm gonna answer the three questions that everybody always has. First, yes, you are going to get a copy of this webinar at the end of the event. We will send it out within a few days. So hopefully by Friday, but definitely by Monday, you'll get a copy of it in your inbox. Next, we will take questions at the end, but depending on your question, we may be able to take them throughout as well. Please use the Q and A function, which is at the bottom of your screen. And last but not least, if you are interested in learning more, We'll put a link to state of independence in all follow-up materials, but you can also visit our website, mbo partners dot com slash insights to subscribe to our blog or our weekly newsletter, the great realization, and we encourage you to do so to keep up with the very latest. With that, I'm gonna kick us over to our speakers for today, Steve, Carolyn, and Miles. Thanks so much.

[00:03:11] Steve King Thank you. Thank you, McLean. What we're gonna cover today, as the claim said, was the state of independence research, which is a thirteen year study of independent workers, and independent workers quickly are are people that have an alternative work relationship relative to having a traditional job. So freelancers, gig workers, independent contractors, self employed, and other types of solopreneurs. And and to us, the most interesting finding of the last couple years of this study has been that there's been a huge surge in the number of independent workers. It's the chart on the left shows. It's actually up eighty nine percent from twenty twenty to twenty twenty three. And what we're also, we find very interesting is traditionally since we've been studying this for the last thirteen years, the number of part time workers has always grown a little bit faster than the number of full time workers. And that's not the case over the last three years. The number of full time workers actually increased ninety one percent, and the number of part time workers just about eighty seven percent. And so for the first time over a three year period, we we saw that happening. And those two things lead us to believe that we're really seeing that we really saw the pandemic as a major accelerator to shift independent work. And it's not just it's not just us saying that, the chart over on the right comes from the US census, and it's their tracking of new business at locations, which are actually tax IDs, but, new business applications. And as you can see from that chart, they also saw surge starting in twenty twenty in the number of new business applications. Now not all applications turn into actual businesses, but a decent chunk of them do. And so what we saw a similar surge in the percentage as we saw in our data, and And again, what's interesting to us, if you go back to say two thousand and five on the on the business applications, you'll see that about two thirds of them came from what the census calls high propensity applications. And those are applications where they think the company will hire employees in the first couple of years. The what's in there in kind of the blue grayish, the solo printer business app applications or what the, census calls applications other than high propensity. Great naming if you ask me, but What that means is those are people that the census based on the applications. Thanks will be solopreneur businesses. So again, they saw surge in the number of businesses, and in particular, the number of businesses that are sole openers. And so that share back in two thousand and five close to two thirds were from employer businesses, and now two thirds are from solo printer businesses. Other studies that are out there also show a similar similar increase. And so we're pretty confident that we the surge we're seeing is the surge that actually have in in the economy. So next slide, please. And what what we find really interesting about that is, during the during the, pandemic, there was a lot of discussion about the pandemic accelerating various trends. And one of the ones that was shown the most was everybody talked about US retail spending. The online version of US retail spending, e commerce had been accelerated by ten or twelve years. So that that quoted quote quite often, during that period. But what's happened since is that trend line is reverted back to the pre pandemic trend line. And so it actually didn't accelerate ecommerce sales. It did temporarily.

And we actually saw firms like Amazon and Spotify, come out in twenty twenty two and twenty twenty three and announced layoffs. And they said, basically, we missed. We thought it had accelerated it much more greatly than it had. That's true for most of the shifts that were talked about being accelerated by the pandemic, but there were some exceptions. And the big one is this growth in independent work. And as you can see from the chart on the right, the traditional trend line going back here, it's on twenty fifteen, but It goes back to twenty eleven when we started this study, has been growing at about two point eight percent a year going into the pandemic. What we then saw was a slight dip, as the economy shut down. And since then, the number of independent workers has been growing at about ten x the per year, the prior trend line. So a very fundamental shift towards independent workers that did not go back to its pre pandemic shift at all. It's it's dramatically higher. There's some other shifts that that were like that too. The big one being remote work and work from home. And, of course, that we found that even prior to the pandemic, to be correlated with the growth of independent workers also. Simply put if you're putting together a team of people and some of them are remote or most of them are remote or all of them are remote it it makes it less of a hurdle to add an independent worker or a freelancer to that team. So the they were correlated before and they continued correlated after. And so, next slide, please. And so what we're gonna talk about today is what's behind this? What's driving this growth? And it's really three major areas. Supply is simply more people are interested in being an independent worker. And are becoming independent workers. And the demand is also growing, businesses of all kinds, all sizes all types of organizations are increasing their use of independent workers. And then the sectors being enabled by a range of products and services that support, both sides of this market. They help independents find work and manage their business, and they also help, companies hire these independent workers, manage them, in a compliant manner. And so that's what we're up to today. Let me just stop there. And Miles, I'm gonna ask you if you have any quick comments on on on this part before we dive into each of these sections.

[00:09:36] Miles Everson Yeah. I guess primarily, I would just highlight. I think it's really encouraging that we have this increase in independence and in particularly the full time independence. One is you know, because when you look at the United States, and it's growth over the, over many, many decades, it's independent entrepreneurs that built that built the country and the economic engine for the country. So I'm, I'm encouraged as American that we've got that engine seems to be revving back up here again, which is very encouraging. And I think part of the reason for that, Steve, is candidly, the barrier entry to getting into business. If you're good at something, the barriers to entry are quite low, because of the innovations and technology that have come out. And so you know, we love being a part of this industry to help people be able to do the work they wanna do, as as independent contractors, you know, solar entrepreneur businesses. I don't see an end to this anytime soon, and I think, you know, when we get into some more of the data here, it kinda gives some of the why why are so many people choosing to be independents because we're getting a view from how what they think about work. So maybe we jump into them.

[00:10:44] Steve King Yeah. That'd be great. So with that next slide, please. Carolyn?

[00:10:50] Carolyn Ockels Yeah. So we we find there are three key drivers to the rise of the independent workforce. The the first, first and foremost, is that the independents really like being independent. If we go back, I mean, the the the views of independent work have changed dramatically over the last twenty five years. We've been following this. And, you know, in the early 2000s, there was a real myth about independent work. It was considered reluctant work that people only did it if they didn't have other other options. So it's the job of last resort. It was risky. It was inferior to traditional work, and and it really messed with people's resumes. It was difficult to explain it away if had had a period where you were working independently. But when we started this study in two thousand eleven, we were pretty surprised at the robustness of, of the sentiments about independent work. I mean, independent workers really like being independent. They choose it. We have two out of three, basically, are saying that they choose to be independent that they are not reluctant workers. That number It it changes a little bit with different economic cycles, but it is stayed pretty true to the, you know, the mid sixties. For, for the bulk of our our studies. Independent workers feel happier and healthier working on their own. And, all of these indicators here are really important for, enterprises to understand because these sentiments are driving a lot of people into a work style that is different than what they have been traditionally set up to deal with. The independent let's see. Next slide. I'm sorry.

Independence have always valued a autonomy, control, and flexibility. And one of the, the, another driver that we've been finding is that in traditional workers are increasingly aligning with those values. A lot of this has come from the pandemic. It's or at least it's accelerated through the pandemic. And people got a little bit of taste of independence by working remotely or, you know, having more control over their schedule. And, and so we're finding now that, that if you look at traditional workers, they are now saying that they would like to be their own boss or they don't want to answer to a boss much more robustly than they did in the past. We also find that they are looking to do something that's more important than just making the most money. These numbers have gone up from, fifty six percent to sixty three percent over just the last, you know, through the pandemic. And, and then They are also looking for, they're they're not finding the same satisfaction in having a traditional job. So those numbers have gone down from sixty four percent to, to fifty seven percent. And so there's less of a sense of satisfaction in working with a traditional enterprise than there have been in the past.

[00:14:02]Steve King Yeah. And what what what I like about this data is it kind of backs up the fact that's obvious from the beginning, which is they're voting with their feet.

They're leaving traditional jobs. And what we saw on the full time side is milestones.

Some of the people moved from part time to full time, but also the number of new start people who are just starting their first year. Had a much higher percentage of full timers than we saw in the past. And so as, you know, when you look across this data, it's clear that the views on on work and its role in their lives definitely changed, and the proof's kind of in the the fact that they're voting with their feet.

[00:14:45] Carolyn Ockels Exactly.

[00:14:46] Miles Everson Yeah. They are. I I think what's to me, what's compelling here, and it's maybe an early indicator for people that are over companies that are over reliant on a full time workforce as part of their workforce strategy. The views of the full time workers are changing to be more open or favorable towards independent work, whether they're doing it or whether their friends or colleagues are doing it, which to me really points to, you know, this this role of the cohort of the independent worker in the workforce, is becoming increasingly important to workforce strategies for companies. And the data helps support that for anyone out there that's trying to convince others in their companies that you should be thinking about this workforce is an important component of a total workforce strategy.

[00:15:33] Carolyn Ockels Hey. Next slide. The third driver is that the the views on risk have been, changing dramatically. And this is also increasing a rise in independent work. The majority of independents now see it risky to work as an independent than to work, as a traditional worker. And if you look at these numbers, this has changed. It's a huge shift from, over the last thirteen years that we've done this study. When we first started in twenty eleven, was only one out of three that said working independently was, was more secure. So they were doing something that gave them autonomy control and flexibility but they did it, with the understanding that it might be a little bit riskier than just having a traditional job. But now we're finding that, independent workers are saying that it is more secure to work independently, and that and we've got two out of three now saying that. And the key reason that we hear is that, well, when I'm working independently, I have multiple streams of income. So if Some client fires me, I can always fall back, onto my other clients. Whereas if I were working in traditional work and I've got to be a curatorial boss or or there's, you know, economic factors that affect that company, I might be thrown out of my job, and then I don't have anything to fall back on. So a big, big shift in, in our thinking, I think, on on the, on what security really is. And what we're seeing in this, we we started asking these questions a little bit later than we we, for traditional workers than we started, for the independence. But we did begin twenty eighteen. And there were very, very few, obviously, people that were, considered independent work less risky, but now that's doubled.

And so, traditional job holders are following suit with independence and saying, oh, well, maybe you know, there's there's a lot of risk to traditional work. Maybe independent work isn't so bad after all. And one of the biggest factors we find in changing that, that mindset is that as you have more friends or or within your network who are working independently, friends or family, you become more comfortable with the concept of working independently.

It's, you know, as with anything, any social trend. If you see more of it, you see people survive well or they're thriving, and you say, oh, that that might be actually better than what I'm doing. And we found both independent workers and traditional workers have, have changed on the social normalization of independent work. Traditional workers are up from twenty five percent to forty one percent, saying that more of my friends are working independently, and independent workers are are, have shifted from thirty nine percent to forty five percent. And a curious factor here is that what what we're really seeing is that they're merging so that it's becoming a national experience that people are comfortable. They're they're seeing people seeing their friends and family working independently, and they're more comfortable with it.

[00:18:53] Steve King Yeah. And that that we consider that one of our favorite questions of of any survey question we ask because it is so impactful. And in this chart, we show it from twenty twenty to twenty twenty three because we're trying to show the causes of the surge but if you go back to twenty eleven and twenty twelve, independent worker data was about twenty percent but traditional worker was about twelve percent. And so over that period of time, the fact that they, as Carolyn mentioned, it converged and are very close to one another is just indicative of how how widespread independent workers become.

[00:19:29] Miles Everson Yeah. And if you think about what we've just said and shared over the last three, four slides here, there's four extremely salient points. The first is this point we were just discussing, which discussing, which is in the most simplest terms, it has become much, much more socially able, if not desirable to work as an independent over the last five to ten years. There's extremely important component there. The other is independence are secure, happy, and healthier people than what they thought they were when they were working as full time employees. And so who doesn't want healthy, healthy, secure employees or workers working for them? So those four points should not be lost again on anyone that's thinking of a total workforce strategy and how do you integrate independence into the way you run your business? It's it's becoming more and more prevalent that independence must be a part of that workforce strategy because they're they're They're here to stay. This is not a flash in the pan kind of trend right now.<

[00:20:34] Carolyn Ockels Alright. Next slide. So this just sort of summarizes the the supply side of the independent workers increasing from the traditional workforce So it's driven by the, the, the last two slides that we were talking about. But we've seen a thirty percent increase in the percentage of traditional workers expressing, and an interest in becoming independent.

And not not everybody will become independent out of that number, but it does show that there is it's it's seen more and more as an option. And, one of, you know, we were talking about, you you see your friends and family, doing working independently, and they are also seeing that their colleagues and their professional circuits, it's not just independent work that is done, done at a lower level, but there is very key strategic roles now that provide, opportunities for people who have great skills to, monetize that and also get that freedom flexibility and control that they're looking for.

[00:21:37] Steve King Yeah. This this state is really interesting because, you know, it goes back to twenty twelve. Other studies ask similar questions around the inclination to start a business or become a small business owner or become an independent worker. And all the studies for several decades it always comes back. It always had come back to around twelve to fourteen percent of Americans at any point in time say they're planning on becoming an independent worker, a small business owner. I mean, it was almost like it was an economic identity. It was so regular. And what Everyone seeing not just us, but like the global entrepreneurship monitor, the US version of that out of Babson College here in the US, along with us, is since the pandemic, we've seen a step change again up to where seventeen, in some cases, eighteen percent are are now saying that. And that's just a substantial shift in a in a data, you know, time series that had stayed just frock solid at twelve to fourteen percent for several decades. So so a clear clear indication of the shift. Let me continue here and, shift over to the supply. The the chart on the left comes from a, consulting firm called Arden Partners that studies the contingent workforce and it's used by corporations. And, and their definition's a little broader than the one we use as independent workers. But the point of this is they've seen the use, in the workforce of, of contingent labor, and theirs includes a lot of outsourcing and and large use of large consulting firms that we we don't include in our data. But it's just shown the steady increase since two thousand and nine which is when they started tracking it. And they're getting it up to where it's almost fifty percent here, this year in terms of the workforce penetration. And when we when the chart on the right shows our our study looking with MBO, looking at the share of the total workforce that's contingent. But in that definition, we were really talking about use of independent workers. And even there, you see it. It's it's they're saying it was currently about twenty four percent, but they expect a pretty substantial increase over the next eighteen months and into five years to where it'll be up to thirty three percent. And and, we it's not just our studies. There have been a series of other studies, a recent one by the Harvard Business Review. The analytics team that that again shows the same level of increase. And so we're seeing corporations doing that, and it it's really about agility and flexibility.

And one of the interesting things that we've seen is when we ask people working in corporate why they're hiring more independent workers and contingent labor. You know, if you go back ten years ago, they would have set cost number one. And cost now has dropped to four or five. And in its place, it's around agility, it's around flexibility, it's around creating variable costs, and it's around accessing scarce column. So there's been an unders a shift in how corporations view this. And I should miles is much more of an expert on that specific topic than I am. So let me turn it over to you.

[00:24:57] McLean Robbins And, Miles, before you jump in, we did get a question from, the audience here, that says now that we're seeing the move for ICs, more likely to considered employees or fewer companies utilizing.

So I think we can see that utilization is up here, but as you chime in, will you also address some of the, I'm gonna caught the compliance landscape of of why we're still able to see this growth even though the compliance is getting increasingly trickier.

[00:25:22] Miles EversonYeah. So maybe I'll tackle that that first. Right? So the the direct point on the question from Shelley, companies are not using fewer independent contractors.

You can see by these numbers here, but my color commentary on this point is a couple things. One is, at least we at MBO, we're focused on really what I think of as the independent knowledge work So these are white collar people that are making a minimum of fifty dollars an hour, often much more than that. So these are informed people capable of making a choice of the type of business or the type of work arrangement they want, and so many people now are choosing to be independent. And so just the nature of the work they're doing, and the contractual structures, it's not a fee to complete that they're classified as an employee. Right? You weren't suggesting that, but there's some out there that are saying that's the case. And it's really not. And so, but even if somebody's classified as an employee, there's still demonstrable benefits, which is getting the right skills on demand, because many of these people are choosing to be independent that are very qualified. Also, there is a cost benefit that comes into play because you don't have all the overheads associated, with independence that you do with full time workforce. So it's an agility thing. There's there's many more benefits than just the worker classification. So we're not seeing any back off, in terms of the growth in you know, it's not just what we're seeing in the historical data, but what you see in front of you here is What, what do they think the share of their workforce is going to be over the next five years? And you can see that you know, there's an expected increase in the share of workforce of thirty three percent of the companies out there are gonna increase it. The other thing we know is that many of the most highly market value capped at least for public companies, their share of independent workers is extremely high relative to their full time workforce.

By no means, are we advocating that full independence will completely eliminate full time workers. That's not what we're saying, but the complement is shifting. And part of it is the supply, I. E. The talent is choosing to work as independent. So if you wanna hire the best and brightest, you're gonna tap into that workforce, at least in that knowledge worker, cohort of talent. You know, so we don't see this, we don't see this backing off anytime soon. And the last point I'll make here is the use of innovations and technology is making it easier for people to work as independents and for companies to engage independence.

You know, the barriers to entry, if you will, for starting a business and being relevant, if you're good at it, you know, or the lowest they've been in decades in this country. So, we see that, that trend to continue is our expectation.

[00:28:24] Steve King Yeah. That's interesting. I I unilever recently put out a a report, a little mini report. Saying that they're over half over half of their, what they consider their workforce is now, non employee labor various kinds. And I was kind we were kind of fascinated by that because, generally speaking, fast moving consumer goods companies, you know, the Procter and Gamble's in the Unilever's of the world.

Have historically had relatively low levels of, non employee labor. And over the last three or four years, five years, they've just re architected their company to a certain degree. Now, they have distribution systems around the world that that are part of that. And so so they're they were higher than a lot of other firms in their industry. But still, I I I found that a fascinating example. 

[00:29:16] Miles Everson Yeah. I mean, look, in the United States, We have a human capital scarcity issue, particularly as it relates to the knowledge workers. We don't have too many workers for the jobs available. And when you look at the macro trends, that's gonna continue. You know, if you're and particularly staying at one company, you know, the US Census Bureau data says you're under forty five, you're gonna change companies every four point one years. And if you're under thirty five, you change every three years. Like, who really believes they're operating a permanent workforce the way we were, you know, ten, fifteen, twenty years ago? It's changed. Like many other industries have changed with mobility capabilities. And so, you know, embracing the fact that there's gonna be more of a, a mobile workforce, in leveraging independence in a way that, you know, helps you achieve your outcomes, not just fill a jobwreck, but achieve the outcomes of the company is becoming increasingly important.

[00:30:16] Steve King Absolutely. Next slide, please. So in addition to the supply and demand factors that that we've covered There's just a growing array of support services and products, and and it's pretty broad. I mean, if you're an independent worker, there are tax products specifically aimed at you, products that help and and professionals who provide services a whole range of products that help you manage your business. And so there's just a a variety of non tech products, but also tech products really help. I mean, when Carolyn and I started Merchant Research, which was several decades ago, we're old. The, the, One of the one of the drivers behind us starting the company was a realization that we could put, statistical software on a PC. Prior to that, you had to have a mainframe and that meant working with a big company to be able to afford a mainframe. And so this this what what's called the democratization of technology, just continues and and where it's really starting to hit in is the use of online talent platforms, for independent workers. And when we first started the survey, as you can see, only about three percent people said that these are independent workers said that they were using some sort of online talent platform. And these were independent workers that provide service and over that time, it's actually grown up to where it's now at forty, forty one percent doing it. And that's just a huge shift And in general, technology has now made it much easier for an independent worker to find work and deliver that work and manage that work. And of course, that that goes back to why many independents see this being an independent is less risky. But on the other side, for hiring organizations, it's made it much easier to find, hire, and manage independent workers, compliantly. And so so this technology and the enablement, which includes both tech products and non tech products is a very important part of of this of the reason why we're seeing the surge today. Miles, I you guys do this. So I'll turn it over to you for a second. 

[00:32:41] Miles Everson Yeah. Look, there's no question that when you bring, technology and platforms into an industry segment, you're going to create more liquidity in the market, which is what's happened in many other platform driven businesses whether it's lodging or rideshare or purchasing of goods, and we're seeing that happen in the talent market here. I mean, when you look at these percentages, it just screams out at you that the way to, you know, get work is increasingly becoming important with the use of technology. It's not just tech, though, it's other innovations, how I think about it, Steve. 

[00:33:15] Steve King Yep. 

[00:33:16] Miles Everson Business model innovations, certainly that are happening. And it's other technology innovations that are helping to drive the use of platforms in a much bigger way. So, we these numbers are gonna continue to go up I mean, it's, it's gonna be a big piece of the, of the market. So and, and it's becoming more it's a more liquid market than it was even a few years ago. 

[00:33:40] Steve King Yes. We're we're also seeing from the data and the intensity of use by independent workers rising. And so when I go back, you go back to twenty eighteen or twenty nineteen, even, most of the people who were using platforms would say, yeah, we're using it, but we use it fill time, use it to find new clients, use it to try out new ideas, learn new skills. You know, it was sort of a secondary or tertiary reason to use them. And now the the share of people that are saying it's our primary source of business. Has grown quite a bit. It's it's still relatively low, but it's in the twenty twenty, mid twenty percent range now, on this topic. So so not only are they using, more more independence using, these talent platforms? They're using them to get more and more work than they had past, which is a group. Good thing for the yeah. 

[00:34:36] Miles Everson Yeah. Well, I I think an important point here not to be lost and you can check me on the data Stephen Carolyn, but if you go to twenty eighteen, again, you see twenty two were using twenty four plan to use in the next twelve. And then effectively, Those are very close to doubles in five years to twenty three as a percentage of the total number of people, but you gotta remember the number of people have also nearly doubled. 

[00:34:58] Steve King Right. 

[00:34:39] Miles Everson Right. So it it it's a much larger increase in absolute numbers than these percentages even portray.

[00:35:05] Steve King Yeah. No. That's definitely true. The numbers that because it is a much larger full of people, using these online pallet platforms. And the number of platforms that proliferated. Depending upon who you talk to, there's between a thousand and two thousand of them, which is a pretty broad pretty broad range. 

[00:35:24] Miles Everson There's one really good one.

[00:35:28] Steve King Yeah. Absolutely.

[00:35:33] Miles Everson Alright.

[00:35:35] Steve King Next slide, please. So We're we're actually I I think we're obligated these days no matter what the topic is to include AI and chat GPT and generative AI in the research and in the discussion. And it's a is a really interesting topic. We what we found in our survey is everybody. Almost everybody has at least heard of generative AI slash chat GPT. And and not only not only of independent workers, ninety two percent. Well, it was like sixty five percent of people who don't have it. Who aren't employed have heard of Chat GPT. We we've never we've never had a technology take off in terms of general awareness, as quickly as generative AI has. I mean, the the numbers are we nothing even close. It's really interesting. We've been studying tech trends for decades, and nothing even comes close. Interestingly enough, almost, thirty eight percent of the independent workers we surveyed said they were using it. That's that's definitely high. I mean, when you ask a aspirational question of people they tend to you tend to get a lot of false positives. I suspect thirty eight percent have tried it. We actually asked the question around actively using it.

And I we we believe that number's lower, but it but it's still high. The the interesting piece is you think it'll actually replace them. Because in the in the media today, We keep we keep hearing that people are very concerned that, that AI is going to replace their jobs. When you actually pull people and ask them, what you hear is it's gonna replace other people's jobs. When you ask them about their own jobs, they say, oh, no, it's not gonna replace mine, but of other people are gonna lose their jobs. And that that survey finding which you can see from the data with our independent workers, you know, they're not feeling much at risk with this. That survey finding that it's gonna replace other people's jobs and not their own jobs is consistent amongst multiple surveys on this topic. Pew Research has done some really good general population surveys on this, and and has come up with pretty much the same same results. And so it's kinda interesting looking at this. We've we've also been doing a lot interviewing and doing our own work chat, GPT, and and what we're finding is, it's a very useful tool, not surprisingly, and we really do like kind of the co pilot way it's discussed by a lot of people. But we also think it will obviously get better And to us, though, the issue is for independent workers is not so much that they will be replaced by generative AI. But those that don't, learn how to use generative AI and don't incorporate it into their work run the risk of being replaced by other independent workers who do know how to use generative AI in their work because we're seeing twenty to twenty five percent productivity gains amongst the people that that do use it and use it reasonably effective. And so our advice to independent workers is, you know, start experimenting with it now and quickly and try to figure out where you can use it to, to improve your work. And we'll have more on this. We're we're sort of in the middle of the interviewing process that we're doing and some of the other experiments that we're doing with it. We'll have more on this in in the near future with 

[00:39:15] McLean Robbins I think we're gonna have a brief coming out in the first quarter of the year. So that's that's great, Steve. I think we're on our last slide today, guys. Correct? We are. Oh my gosh. And we're moving into the Q and A. I have a question from Anne in the chat, and Miles Steve, either it's Carolyn, anybody can take it. It's a good one. Given about fifty percent of US workers lack anything close to adequate retirement savings, Has MBO queried our ICs about their retirement savings over time? Good question. Miles, you wanna kick us off?

[00:39:48] Miles Everson Yeah. I mean, and I may look to to see for Caroline to answer any of the specific survey questions we have that talk to us about this. But What we do know is that they feel more financially secure than they did as a full time employee. And then the other macro trend that we see is that and this is not unique to independent contractors, but in nineteen eighty, if you worked for a private company in the United States, two thirds of those workers, those employees had a defined benefit retirement plan. Today, that percentage is less than ten percent. So nobody really has defined benefit plans anymore. So I'm I'm gonna say nobody very few have do not have a defined benefit plan any longer in the private sector. So you're relying on defined contribution plans which four zero one, I think four zero one plan. And so you have the latitude to have those types of plans, whether you're a full time employee as a four zero one k or as a separate employment plan if you're an independent contractor. So I don't know Steven Carolyn. Have you, whether with us or with others, have you actually asked a specific question about savings rates or anything of that with independent contractors? 

[00:41:05] Steve King Yeah. A couple of years ago, we actually went deep on this as part of the, state of independent study. And and we've not asked us some questions, beyond that. But we went we went into a deep dive on financial security. And and interestingly enough, what we found was that on average, independent workers and those with traditional jobs, sort of report the very similar levels of financial, overall financial security and overall preparation for retirement. Now as Anne points out in your question, that's not necessarily good news since, in and that this number is about half of US workers lack, likely lack adequate retirement savings.

The studies are pretty clear on that. So so with independent workers, you're really talking about a similar problem. But not a worse problem than those with traditional jobs.

The United States just has a retirement problem overall. Now how do you How do you go about fixing that? One of the most obvious ways is most people are gonna end up working longer than the traditional retirement age. If you count the traditional retirement age as either sixty two or sixty five. And so more people are gonna work longer. The one edge independent workers have in this field is their they already have a business that they can continue. They don't have to deal with age discrimination. They don't have to deal with, well, they still have to deal with it, but in a different way. They they have are are already used to going out and earning their own money. They can wind down their businesses, so that they work just part time. So So they likely have more flexibility and we do see this in the data that they have more flexibility about how to address their retirement problem. But I don't wanna give the wrong information.

Independent workers do have a retirement problem mirrors the US worker in general. And much like the US worker in general, it's also dependent on wage levels and asset levels. And so when you're talking about low income independent workers, they have a major problem as do low earning traditional workers. So that's kind of a long way of saying, yes, it's a problem. But they have some independent workers have some advantages. But overall, they're they're facing the same issues as other workers.

[00:43:35] McLean Robbins And I chime in. We have, Anna following up with a question about, do people feel similarly about health care when making the switch? I know we've talked about the fact that quite frankly, many ICs use their spouse's healthcare plan, and then, of course, we talk about the the rise the marketplaces and things like that for for health care, but, do either of you care to chime in on on Anna's question about the the state of health care for ICs as well?

[00:44:03] Miles Everson Look, I'll chime in and then, Carolyn and Steve may have some broader industry data, but when I came to MBO four years ago, I had a coming in view that one of the things that absolutely had to be solved was health care for independence because there was a fair bit of, I'll say noise in the system, Anna, about, you know, people need health care. They want health care. And I accepted that and said, yeah, that makes sense to me. But then when we went out and started doing d detailed surveying of how many people would actually pay for health care, even at the same amounts of the equivalent of what people who are at a five hundred person full time employment company would pay. Effectively, the answer's No. Because of the point that McLean said, they're using it. They they have a spouse that they're getting it from. And if they don't have a spouse or a partner that they're getting it you know, from through that way, they're going to the the public exchanges or just buying it on their own. And so it became less of an issue than what I expected it to be. Now having said all that, I think with we as we get improvements in whatever form of universal health care we get rolled out in this country. Over time, I think that will help, people be willing to take a bit more of the risk if you will to go out on their own because they know that at least their healthcare is covered. But it was kind of a surprise when we did the detailed analysis on it. So, do do you guys have any different data, Carolyn? 

[00:45:31] Steve King Yeah. If you if you go back to twenty twelve, it's a twenty twelve or twenty eleven, I'm I'm now forgetting when the Affordable Care Act finally passed, which is also known as also known as Obamacare care, Obamacare. About thirty five percent of independent workers back then. Maybe thirty seven did not have health insurance. Since that past, the share that did not have help that does not have health insurance fell quite dramatically. It's about eleven percent today, maybe ten percent. So the Affordable Care Act, and then for traditional for people who aren't independent workers, it's about eight percent. So it's it's and back before the ACA, it was about fourteen percent. So so independent work, the ACA has effectively closed the gap. On between those who have, independent workers with insurance and traditional workers with insurance. So so it's been a big success. It it's really interesting in that when you go out and ask people why they don't wanna be an independent worker, one of the first things you'll hear is is health and and benefits. And and in fact, back when the ACA was passed, there was a a fame well, a famous within the circle of people that care about these things. A famous Rand, some not broadly famous. A famous Rand study that said that self employment would skyrocket because of the lack of what's called, economists called benefit job lock. And that didn't actually happen. And and, And so in a lot of ways, lack of health insurance and benefit is used as a reason not to say particularly in surveys and interviews. I I don't wanna be an independent worker. Our deeper work shows that that that's more of a risk profile issue. But the people who are set using that don't wanna say, well, honestly, I don't wanna admit that I think it's too risky or I'm not brave enough or whatever. And so so the gap has definitely been narrowed thanks to the ACA. Now, Do we still have a health insurance and health care problem in this country? You know, absolutely the you know, when when when you're proud that one in ten Americans don't have health insurance, and, you know, because we've made so much progress. You know, one could argue that that's not nearly as much progress as we need. And then It ignores the whole issue around health debt, added health costs, health related bankruptcies. And so both groups and and all groups have problems with those issues. So we saw it a long way to go, but but, but health care is is definitely we've made a lot of strides, in terms of independent workers having access to to good health insurance.

[00:48:21] McLean Robbins I see. Yeah. One I'm sorry. 

[00:48:23] Carolyn Ockels Yeah. There the a lot of traditional workers are now having to pay more and more health care costs. That, you know, that's been that's that's one of the, the the burdens that have come on to traditional workers. And so that is affecting the way that they're looking at the, at the whole equation of do I do I go independent or do I not? If I'm already paying this much on a monthly basis for my health care, maybe going to an exchange or doing the ACA is not quite as overwhelming as it was back in the day. So, so we're seeing a shift there too. So there's there's less I would say there's less friction but there still is friction.

[00:49:06] McLean Robbins That's a good point, Carolyn. We have an anonymous, attendees question. This is a good one. So we'll see who wants to chime in. Our HR team knows that we want to incorporate independence into our workforce mix, but there's a consensus across the leadership team that it's very risky. Especially when it comes to retaining maintaining compliance over time. Based on your experience, do you have advice or data within the report? About what we can do to change the risk averse bottom line minds. So I'm gonna give that to miles to start and then Steven Carolyn can chime in.

[00:49:41] Miles Everson That sounds good. So I'm happy to to start with it. Let's let's just start with what data is in here around the macro trends. The first is that we have seventy two million people that are working as independents in this country today. It's the fastest independence are the fasting cohort of workers in America. The second point is that when you look at those people making over a hundred thousand a year, it's up to four point six million, a ninety percent increase in the last three years. So the macro trends are telling us that more and more people are choosing to be independence. So I would submit by definition. Any CEO that he or she says they're trying to attract the best and brightest talent on the planet, If they're excluding independent contractors from that definition, they will do so at their peril. Because very talented people are choosing to not work as W2p W2 employees. So that's just a macro trend that is happening. When it comes to retaining ICs, I don't, obviously, I don't know the details of the retention at the particular company, right? But I shared the facts earlier about what's happening in the younger kind of, I'll say, under, you know, forty five workforce, the tenure of company changes is down to less than four point one years and three years. So do you really have a permanent workforce, even in your full time workforce? It may not be the way it was as they grew up in the business is what I would say. And then the last piece on the compliance piece, there is a lot of thought by people out there that duration is a compliance issue. It's a legal question, so I don't want to give legal advice. But frankly, there's no case law of any significance that shows that there is a compliance issue of tenure. It has much more to do about the supervision and the structure of the contract. We we'd be happy to share stuff with you. Obviously, we if if you wanna reach out to McLean, we got lots of information. And then as just the final point on this, I'll just add that when I did this with my previous company. I was the CEO of the US business. And before that, I ran the risk management practice. So I was a bottom line risk a first person. When I started looking at the economic returns that we could get by utilizing independent contractors to drive both our growth and profitability, we quickly changed that strategy. So happy to have a more, you know, complete private discussion at some point if that's desirable.

[00:52:11] McLean Robbins Great. Thanks, Miles. Looks like we have time for, you know, maybe one more question if we've got anybody last minute coming in. Otherwise, guys, we'll give you a couple minutes to freshen up before your next call. As a reminder. We will be mailing out this recording, in just a few days. Thank you so so much for your time today. We'll be sending out a link to state of independence. You can search, on our website, state of independence, mbo partners dot com slash state dash of dash independence for the full report as well. And thank you so much to our panelists. Smiles, Carolyn, and Steve today. Have a wonderful afternoon, everybody. [00:52:45] Carolyn Ockels Thank you.

[00:52:45] Miles Everson Thanks, everyone.

[00:52:46] Carolyn Ockels Bye bye.