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How Temporary Work Will Reshape Career Paths and Our Economy

Young people face the prospect of a lifetime of temporary or part time work.

Career paths are being reshaped—some say permanently—partly because of the massive movement toward temporary employment. These changes will have their greatest impact on young people, who face the prospect of a lifetime of temporary or part time work, and uncertain career path, and lower standard of living with little or no payoff for their higher education.

Let’s take a look at the evidence for this rather bleak picture.

In my Financial Post article, “The Notion of Contract Workers Is Here To Stay,” I cited McKinsey & Co. which “reported that 65% of U.S. corporations have restructured their workforce and have no plans to return to pre-recession employment, but rather are opting for contingent and contract work when the need for expansion takes place.” A 2013 Gallup poll reported one of every five workers is now part-time. And according to the U.S. Department of Labor, 30% of all part-timers fall into the involuntary category. The New York Times reported that another rising trend is employers changing part-time workers’ schedules from week to week, with only 10% of part-timers having a set weekly schedule. One of the main arguments against part-time work is that forced part-time workers share far less than full-timers in economic prosperity. Companies invest less in their training; they get less work experience, and fewer promotions.

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Steven Greenhouse, writing in the New York Times, argues “Over the past two decades many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time…[and]the retail and wholesale sector has cut a million full-time jobs since 2006, while adding more than 500,000 part-time jobs.” Susan J. Lambert, a professor of organizational theory at the University of Chicago says that the use of part-timers has escalated because of the declining power of labor unions.

And it doesn’t stop at part-time work. We’re also witnessing the growth of young people working for nothing as interns. Some would argue that by 2050, half of the workforce will be unpaid interns.

Technology firm Mavenlink’s report, “The New Independent Workforce,” shows a significant increase in the number of self-employed, independent service firms, solopreneurs and temporary workers in the U.S. The firm predicts the contingent workforce to grow by 40% by the year 2020 or 65 million people and will not work in what we know as traditional jobs where they work consistently for one employer who provides benefits and insurance.

According to a recent survey from Millennial Branding and Payscale, millennials are now most likely to be employed in service industry jobs. This reflects a report by the

Economic Policy Institute, which predicts 30% of American workers are expected to hold low-wage jobs—defined as earnings at or below the poverty line to support a family—by the year 2020.  Given that roughly 50% of recent college graduates are unemployed or underemployed and those who do work are much more likely to hold these types of jobs, the prosperity prospects for the young are bleak.

The prospect of a generation of workers who are facing job insecurity and uncertain career growth has broader social consequences that go far beyond the critics’ view of millennials being an entitled generation. According the Pew Charitable Trusts foundation, “Americans raised at the top and bottom of the income ladder are likely to remain there themselves. Forty-three percent of those who start in the bottom are stuck there as adults, and 70 percent remain below the middle quintile. Only 4 percent of adults raised in the bottom make it all the way to the top, showing that the “rags-to-riches “story is more often found in Hollywood than in reality.”

Temporary work raises long-term questions for our economy. Over the past two decades, job security has become unraveled, accompanied by a deterioration in benefits, livable wages and clearly defined career pathways. We are witnessing a fundamental shift in the nature of employment, or social contract.

These trends are not isolated in the U.S. alone. A 2012 study by the OECD that looked at 10 countries including Australia, Italy, Japan and Germany found similar declines in full time employment since 1985.

The problem for young people is much more serious than for those in mid career. They will miss out on skill development, and bear the brunt of labor market fluctuations and restructuring their entire lives. And developed nations, which have aging populations, are increasingly reliant on younger workers to fund their entitlements, which require high economic growth rates, and productive young workers.

Erin Hatton, a professor of sociology at the State University of New York and author of The Temp Economy: From Kelly Girls to Permatemps in Postwar America, argues that outsourcing, insourcing, offshoring and many other hallmarks of the global economy owe is indebted to the ideas developed by the temp industry in the last few decades.

The growth of the temporary and contract labor force and disappearance of full time, career path employment will have permanent damaging effects on the economic welfare of the middle class, particularly today’s young people with aspirations to live the prosperous life of middle class success.

 

Ray Williams is the author of Breaking Bad Habits and The Leadership Edge.

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