Number of High-Earning Independent Workers Is Rising, MBO Report Says

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We’ve been hearing a lot lately about the current “gangbusters” economy — and not only directly from the U.S. president's tweets.

New jobs and unemployment numbers are strong, housing market trends continue their positive climb and, even though consumer confidence is not where it’s expected to be, at least confidence in the country's economic policy is at a 15-year high.

So perhaps it’s not surprising that a select group of high-earning workers has been increasing, according to a recent research brief from MBO Partners, stemming from the firm’s eighth-annual 2018 State of Independence in America report.

The MBO report estimates that of the more than 15 million full-time independent workers, 3.3 million are high earners — defined as earning $100,000 per year or more. This group has grown nearly 70% since 2011, despite that the overall number of full-time independents in total actually declined over that same period.

What’s noteworthy here, according Andrew Karpie, research director of services and labor procurement at Spend Matters, is that “this statistic only accounts for high earners in the full-time category,” as he wrote soon after the full report was released. (In 2018, 82% of higher-earning independents are full time.)

“While it may be much less likely that part-time or occasional independents would earn $100,000 or more from their work over a year, independents in these categories may nonetheless be highly compensated for the work they provide,” Karpie wrote.

Key Drivers of High-Earning Independent Workers

The follow-up MBO research brief dives a bit more deeply into why the high-earnership for independents is more commonplace in 2018.

Essentially, three key things are driving this trend:

  1. The strong economy. According to the report, “since the end of the Great Recession in 2009, the U.S. economy has experienced 109 straight months of employment growth, making it the second-longest economic expansion in U.S. history. This is especially true in high-demand fields such as IT, biotech and marketing.”
  2. Highly skilled external workforce spend is rising. According to a recent SAP/Fieldglass study, 44% of the total talent spending at large corporations is on external, non-employee talent, according to the MBO brief. Surveys of global HR professionals confirm this trend, as do IRS data that show small businesses’ spend on external labor rose 73% from 2011 to 2018.
  3. A self-fulfilling “snowball” of sorts. “The growing use of highly-skilled independent workers draws more professionals working in traditional jobs to switch to independent work,” according to the report.

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According to the SAP/Fieldglass study mentioned above, executives are signing off on external-worker spend mainly to “improve business performance,” rather than simply cut costs. (Although the top reasons to which surveyed execs responded as “important” or “very important” — developing or improving products/services and increasing speed to market, at 68% and 66%, respectively — are not that far off from “managing costs,” at 60%.)

The broader socioeconomic takeaway here is that there is a win-win at play for both corporate organizations and (mainly older) independent workers in this new economy.

The win for organizations, aside from filling the necessary skills gap they have for specific projects or aspects of their business, is the agility they’re able to achieve. Explicitly, that agility relates to “adjusting to shifting markets and competitive pressures,” the study says. But the unspoken truth here is that, in addition, companies are able to cut the burdensome costs that come with FTEs — no benefits packages to manage, for example. With contingent labor management (and the technology platforms that continue to evolve as a result), the value proposition for continuing to leverage external expert talent should increase.

On the other side of the coin, the win for workers (again, mostly for highly skilled older males) is greater work/life flexibility, autonomy and control. In the latest post-recession, high-growth economy climate, with well-documented labor shortages making it a worker’s job market, the higher pay these highly skilled independent workers are able to negotiate may well outweigh the trappings of traditional corporate employment.

Of course, contingent workforce management remains the biggest challenge for organizations.

“What is most important at this time is to put a stake in the ground and start the process — a process that is not going to happen overnight by any means,” according to Karpie. “Many organizations seem to be starting very small with capabilities to manage independent worker talent pools, starting with independents they have already worked with, alumni and so on. A next stage could be developing appropriate processes and focusing more on sourcing.

“In any case, it is very early days — but it is happening, albeit gradually.”

Check out our latest Contingent Workforce & Services SolutionMap, ranking software companies providing Temp Staffing, Contract Services & SOW and Independent Contract Workforce solutions.

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