If 2017 was the year when the gig economy took center stage, 2018 was the year when many organizations took a closer look—and found there’s more work to be done to understand this dynamic segment.
In June, for the first time in 13 years, the Bureau of Labor Statistics (BLS) released numbers on the gig economy’s size. According to the BLS, the overall number of full-time freelance workers has shrunk since 2005. What that means (and whether it’s even true) has been debated ever since. Even economists Alan Krueger of Princeton University and Lawrence Katz of Harvard recently revised their once-bullish estimates of the growth of the gig economy—though as Emergent Research’s Steve King pointed out, “According to the technical note in [the BLS] release, because of their independent contractor definition, only 3 in 5 of those who are self-employed are included in their number.”
One thing is clear, however: growth in freelance business and professional services has indeed been substantial. Between 2005 and 2017, according to the BLS, it jumped by 21%. More than 460,000 American freelancers now identify it as the industry in which they work. The vibrancy of our own marketplace of independent consultants, experts, and executives is only one indication of the trend.
High growth in the high-end segment
A recent brief by MBO Partners provides more evidence that the marketplace for independent knowledge workers is more robust than its lower-skilled counterpart. MBO examined a specific niche within the broader population of independent workers: high earners. Turns out, that population has swelled by 70% between 2011 and 2018.
What’s more, according to a report by iCIMS, 82% of independents said they have at least one current contract job that is knowledge-based.
As HR thought leader Jon Younger wrote in Forbes, these types of figures suggest that there are actually two gig economies: one where commoditized services are accessed via different platforms (think ridesharing or grocery delivery), and another where highly specific skill sets are sought, no matter what platform delivers them (like freelance strategy consultants).
Solving the talent crunch
By now, the evidence is clear: there’s a shortfall of highly skilled workers. According to Korn-Ferry research, we are headed toward what could be a global talent shortage of more than 85 million people by the year 2030. Meanwhile, an ATD survey found that 83% of companies report skills gaps that threaten their organization’s ability to prepare for the future. The same study found that 50% say their companies had insufficient leadership bench strength, and 47% expected a gap of leadership or executive-level skills in the future.
In Bullhorn’s 2018 North American Staffing & Recruiting Trends Report, researchers found that while revenue and profitability claim the top two spots for HR prioritization, “41% say the talent shortage is their single biggest challenge, and 64% list it in their top three.” For larger firms, the skills deficit is even more pressing: 52% say it’s their biggest obstacle, with IT and manufacturing being among the toughest skills to source.
Independent workers have emerged as a powerful solution to this problem. According to SAP/Fieldglass, 40% of today’s global workforce is already comprised of non-employee talent. 68% say the external workforce is important or very important to developing or improving products and services, and 91% of executives say the external workforce will be important for sourcing skills that are in scarce supply in three years’ time. Per Conference Board Research, nearly 80% of CHROs see independents as a solution to skills shortages.
Indeed, independent talent has now become a strategic advantage for many growing companies. The reasons go beyond the skills gap—independents also provide the new perspectives and agility that today’s companies can’t afford not to have. This improved organizational agility enables companies to remain competitive in an ever-shifting marketplace. As demand for this agility increases, so will the rates that skilled independent talent can command.
But despite the positive impact gig workers have, most organizations fail to implement the workforce strategies needed to drive real business results. A KellyOCG study found that only 13% of organizations today are considered Innovators in terms of their strategic use of gig workers. Just what are the other 87% missing?
- Innovators are nearly 3x more likely to save over 30% on labor costs.
- Innovators are 25x more likely to experience significantly higher performance.
- Innovators are 11x more likely to achieve a significantly higher competitive advantage.
From where we sit, in other words, the gig is definitely not up on the gig economy.
About the AuthorMore Content by Leah Hoffmann