Seismic Shift In Workplace

(This post, written by Rick Dacri, was published in the York County Coast Star on October 24, 2013)

 “There’s something happening here, what it is ain’t exactly clear” are the opening lyrics to Buffalo Springfield’s song “For What It’s Worth.” These same lyrics, ironically enough, describe today’s world of work.

A seismic shift has emerged in today’s post recession workplace. During a “normal” recovery, businesses would be recalling laid off workers and slowly restoring lost wages and benefits. Temporary workers that were initially hired during the early recovery would be converted to full time status. In a short period, the post recession workplace would mirror the prerecession workplace. This has not happened. This will not happen.

Two trends have emerged: 1) employers have replaced permanent full time employees with contingent workers — temporary employees, independent contractors, and outsourced workers, changing the face of the workplace; and 2) there has been an increased use of contingent labor for professional positions rather than exclusively for office/clerical and industrial workers. Employers understand that outsourcing professional positions worked effectively in the past. Expect to see an increased reliance on outsourced and contingent labor for positions that are outside of the company’s core functions. Information technology, marketing, advertising, payroll and human resources are targets.

The new American reality is the belief that both the company and the worker benefit from this paradigm. Companies believe they can increase efficiency and productivity by utilizing “just-in-time” employment practices that allow companies to hire quickly to meet production needs and to lay off just as quickly when demand drops. In addition, contingent workers do not carry the usual burdensome costs of regular “permanent” workers such as health care and time off. The new worker also enjoys the benefits of a workplace that is being dominated by project-based assignments, flexible hours, career mobility, and sometimes higher rates of pay.

While this model may appear to be new, it has been used successfully for decades within the construction and filmmaking industry. To make a movie, skilled labor is hired making up a crew to produce a film and, when completed, the crew is laid off, free to make another film elsewhere. Workers become free agents who can ply their skills with different companies.

While the recession was painful, employers gained some valuable knowledge during this period. Successful companies learned to refocus on their core business, discarding non-essential services and staff. Many embraced technology and the productivity gains that came with it. And lastly, they realized that a smaller workforce that was well trained and technologically savvy was more effective and nimble than their pre-recession staff.

Having survived the recession, these leaner, meaner companies and managers understand they cannot now revert back to the old ways. Growth and profits require that they continue to embrace this new model. Laid-off workers will not be brought back. Those jobs are gone. New, totally different positions essential to the core business will now be added. Highly skilled temporary workers who will be engaged on an as-need basis will supplement workforce-staffing needs.

Workers themselves have benefited from this trend. The explosion of “indies” (independent contractors) and part-timers satisfy a desire to be their own boss, to migrate from project to project rather than to be wed to a single employer, and to enjoy work-life balance. The tax firm MBO Partners reports there are 17 million self identified independent contracts working today in the U.S. The Wall Street Journal believes that number will grow to 24 million in the next five years.

While this shift benefits some, it hurts other deeply. Chronic unemployment and underemployment will continue. The traditional 40-hour work week will no longer be the norm.

This new economy will require major retooling. While employers will maintain a core, full-time workforce, those workers who do not fit into that role will be forced to change and adapt as contingent workers. The education community, who has also been experiencing this migration from full to part-time staff, will have a role in retraining. And government will need to contribute too.

Ironically, “Obamacare,” which shoulders much of the blame, will play a significant role in minimizing the pain. No longer will workers be tethered to a company to obtain healthcare. Similar to what we experienced in the 1980s, when defined benefit plans shifted to 401Ks, allowing workers to take their retirement savings with them, we will see the same with health insurance.

The face of the new economy remains a blur. What we know is it will be very different from the pre-recession image, but what it will be “ain’t exactly clear.”

Want to add to the story? Let us know in the comments or send an email to rick@dacri.com.

For more information about Rick Dacri, click Dacri & Associates.

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