“Is the 1099 simply a temporary situation because employers are skittish about the future? Or are we seeing a permanent change where most people freelance and only a few have full-time jobs?”
These questions are posed by columnist William Fulton in the latest issue of GOVERNING Magazine. He discusses how temporary work is becoming the norm, and how economic developers need to shift from obsessing about creating or saving jobs to the “underlying infrastructure — the dynamic flow of business growth entrepreneurs, financiers, public infrastructure) as well as the labor force (skill levels and the density of the labor supply).” Brian Kelsey also hits on this on his blog.
Fulton, the mayor of Ventura, Calif., describes what he labels the “1099 economy” this way:
It’s just a different way of organizing the economy. Businesses need economically valuable work to be done, but instead of employing people full-time and permanently, they contract with individuals to do the work temporarily. The work ebbs and flows, the businesses come and go, and the 1099 employees work for a while and then move on. It’s a lot more fluid — and seemingly uncertain — than the traditional economy.
This rise of contractors also creates problems with standard labor market data. The Bureau of Labor Statistics, for instance, only tracks workers covered by state or federal unemployment insurance. Fulton points to this in the conclusion of his column: “Traditional statistics may tell you that no jobs are being created and unemployment is high, but somewhere in your community, somebody’s doing work.”
We touched on this issue a few weeks ago in this data spotlight. Nearly every industry is seeing an influx of 1099 workers, and because EMSI incorporates dozens of data sources into our complete employment dataset, we help give practitioners a more thorough picture of any region’s workforce.
For the nation, here’s what the changing landscape looks like: The number of workers not covered by unemployment insurance (and thus not in traditional payroll data) has risen by 4 million since 2005. Overall, the share of contract workers now stands at 23% of the total workforce — up from 21% in ’05.
This chart shows the numbers for the 10 industries that have seen the biggest increase in noncovered workers.