Contract work is trending with employers as recession fears increase. The Financial Times reports a surge in contract work between May and November 2022—26% more openings than the same time last year—and it doesn’t seem to be decreasing anytime soon. In comparison, full-time jobs increased by only 6% during the same period.
So, is it time to consider contract work? Are your expectations aligned with reality?
Contract work is often tied to the “gig economy,” which may bring up visions of driving for Uber and the like. Bank of America Securities analysts predict that Uber, DoorDash and Lyft could see hundreds of thousands of new gig workers because of recession fears. We’re talking about a potential 450,000 new drivers for Uber and 600,000 new couriers for DoorDash and Uber Eats. That boost, though, comes with potentially terrible news for gig workers: Because of the expected rise in supply, Uber, Lyft and DoorDash could reduce their incentives by as much as 25% to boost their take rates.
Thankfully there’s more to contract work than side hustles. Many of these “gigs” closely resemble other full-time jobs and can even launch you further in your career.
Independent contract work could be your key to success if you’re self-sufficient and good at managing your time and money. It’s essential, however, to understand what defines independent contracting. Generally, a true independent contractor makes their own schedule, uses their equipment/tools, and works for more than one “client.” In exchange, you’re responsible for filing and paying taxes and running your business (finding work, securing benefits) yourself. Rules beyond that are a bit murky, and you can expect a new, stricter test to come out of the Biden administration this year aimed at reclassifying independent contractors who really should be treated as employees.
Dedicated contract work can be different from independent contracting. If you’re hired by a sole employer to show up or work a job regularly as an employee would (given work hours and a lunch break, for instance), you’re receiving a paycheck and perhaps even some benefits, you’ve now exited the territory of independent contracting, even if you’re still considered “contract labor.” You can be a temporary contractor (filling in for someone on leave or working on a one-off project, for instance) or have a contract-to-hire or temp-to-hire arrangement (with an option to hire you as a permanent employee after a certain amount of time, usually dictated by your fit as a team member, the success of the project, or continued funding). This type of contract work is popular in the tech industry. With tech layoffs and hiring freezes showing no signs of slowing, contract roles for tech workers (both independent and dedicated) are on the rise. A LinkedIn Economic Graph analysis shows that, currently, nearly 20% of open tech jobs are for contractors. “That’s more than triple the level at the start of 2021,” says LinkedIn’s George Anders.
While assignments may not last as long as the contract work defined above, temp jobs can be similarly successful in this uncertain economy. Working through a firm with reputable staffing capabilities like The HT Group can result in surprisingly steady engagements and even employee benefits and compensation through the agency. Temp work can be particularly beneficial when switching careers since most contract work requires a certain level of experience and skills (temp work, on the other hand, often comes with valuable hands-on training). According to the American Staffing Association, half (49%) of staffing employees say it’s a way to get a permanent job; nine out of ten said staffing work made them more employable; and 35% are offered a permanent job by a client where they worked on an assignment.
Interim Executive Positions
Are you executive-level and wondering about your next move? Contract work is a viable option for you, too. CEO exits reached their highest-ever rate last year, as did other C-level exits. This is leaving a critical void in executive leadership at many organizations, which you might be perfect for on a temporary basis. Interim executives are highly skilled individuals who fill key executive positions for a period of time—usually until a permanent hire is found or a critical business issue requiring specific experience (an acquisition or a digital transformation, for instance) is solved. Similarly, a fractional executive is someone brought on to fill a partial need—a fractional CFO who splits their time between several companies, for instance. These types of contract work are perfect for executives still planning their next permanent move or off-ramping into retirement or full-time consulting work.
Don’t overlook contract work when job seeking; it goes well beyond Uber driving. You may even find the compensation, predictability, and opportunities surpass many permanent jobs.