Freelance Nation: Slump Spurs Growth of Contract Workers
Senior Editor, CNBC
Diane Shader Smith was laid off from her Los Angeles public relations job in December, but has found herself working nearly full-time since February—doing freelance PR for various companies.
"It's a very scary job environment out there, and I consider myself lucky to have any work," says the 49 year old Smith. "But I've got a list of seven clients and I love them. I'm very happy."
Shader Smith is part of a growing trend of workers who have gone from regular full-time jobs to contract work—or freelancing. They may not all be happy about it—but at least it's a way to keep working and maintain some income. For some, it also may be the best way to find a permanent job.
At the same time, contract workers are becoming a permanent fixture in the economy that is likely to continue even after the recession is over.
"I think we are seeing a fundamental change," says Tom Mobley, a professor of the Farmer School of Business at Miami University in Ohio. "Companies will staff up at certain levels again, but I think they will use freelancers or consultants on a regular basis going forward."
The recession clearly has prompted the rapid growth of freelancing in a wide variety of professions.
Friday's employment report showed that the number of people forced to work part-time for "economic reasons" rose by 423,000 in March, to 9 million. And a new study by the Human Capital Institute showed that one third of the US workforce is now comprised of non-traditional "contract" workers. The study says the pool of part time workers is growing at more than twice the rate of the regular workforce.
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Cash-strapped American companies are taking advantage of the situation. More than 90 percent of US firms use contract talent, with spending on them doubling in the past six years, to more than $120 billion.
It's a trend that experts in the field say will continue even as the economy recovers.
"It's a paradigm shift," says Dennis Nason, CEO of Nason and Nason, an executive search firm based in Coral Gables, Florida. "Contractors have been used by companies successfully, and it's changed the relationship between worker and management."
According to Elance, an online site that connects businesses with freelance professionals, the skills most required from freelancers are:
- computer programming
- social networking site positions
Other areas of freelance job growth are in health care, such as medical assistants or as a dental hygienist.
Even financials need staffing help, according to Nason, whose firm specializes in finance positions. "Banks have to service their customers so they've turned to temporary workers. We're certainly not going back to what we had in the financial sector when it comes to jobs."
For firms, hiring contract workers or freelancers let's them cut fixed employment costs, such as health insurance and retirement benefits. It also gives them a bigger talent pool to choose from.
For workers, freelance work can mean higher hourly wages and flexibility says Shader Smith. "You can find time to work out, go to the doctor or pick up the kids," Shader Smith says. "And there's no office politics."
It also gives the worker a sense of whether they like a company, says Carrol Van Stone, a freelance publicist.
"I have restructured with a 3 month commitment and go month to month with no increase in pay rate for 12 months," says Van Stone. "What it means is that no one feels stuck and both sides can measure results after a while."
But there are some obvious drawbacks for temporary workers. They have to look for another position if their part time job ends. And if they are feelancing, they have to be searching for new clients.