Up Sucker Creek

Up Sucker Creek
Photo Courtesy of the Lake Oswego Library

Thursday, March 31, 2016

A "gig" economy

Wall Street Journal, March 2 , 2016. 

Silicone Valley "Gig" Economy Spreads Broadly

New research shows labor shift affects health care, education and other industries that have traditionally offered stable employment 

As com­pa­nies look to shed non­core tasks and gov­ern­ment bud­gets come un­der strain, an ex­pand­ing share of the work­force has come un­teth­ered from sta­ble em­ploy­ment and its at­tendant ben­e­fits and job pro­tec­tions.

The rise has hap­pened even across in­dus­tries in­clud­ing health care and ed­u­ca­tion, man­u­fac­tur­ing and pub­lic ad­min­is­tra­tion, with pro­fes­sions that have tra­di­tion­ally of­fered sta­ble employ­ment.

For ex­am­ple, they es­ti­mate the share of work­ers in al­ter­na­tive arrange­ments has more than dou­bled to 11% in man­u­fac­tur­ing and to 16% in health and ed­u­ca­tion. It has quin­tupled, to 10%, in pub­lic admin­is­tra­tion.

Nor have white-col­lar in­dus­tries been im­mune from the shift. The num­ber of work­ers in al­ter­na­tive arrange­ments, for ex­am­ple, in the le-gal in­dus­try has nearly dou­bled over the past decade. The busi­ness process out­sourc­ing in­dus­try—es­sen-tially white-col­lar con­tract­ing firms—had $136 bil­lion in rev­enue last year and has been grow­ing 4% a year since 2000, ac­cord­ing to the in­dus­try re­search firm IBIS­World.

Com­pa­nies seek­ing to re­duce in-house op­er­a­tions have many op­tions. Large staffing agen­cies like Adecco SA, Man­pow­er­Group Inc. and Kelly Ser­vices Inc. can place work­ers into a grow­ing range of roles—in­clud­ing higher ed­u­ca­tion, gov­ern­ment and health care.

In other cases, com­pa­nies con­tract out to shed ben­e­fits they pay to full-time staff, to fo­cus on core com­pe­ten-cies, or to dis­tance them­selves from li­a­bil­ity costs.

Even fed­eral, state and lo­cal gov-ern­ment in­creas­ingly use con­trac­tors through­out their ranks to carry out ad­min­is­tra­tive, man­age­ment and in-for­ma­tion tech­nol­ogy tasks.

A Con­gres­sional Bud­get Of­fice re-port last year said spend­ing for these gov­ern­ment ser­vices had nearly dou-bled be­tween 2000 and 2012, af­ter ad­just­ing for in­fla­tion, ac­count­ing for about $260 bil­lion of spend­ing. The con­tracts were so wide­spread and com­plex that CBO said it was un­able to quan­tify how many peo­ple were in this con­tracted work­force.

Mr. Weil of the La­bor De­part­ment dubbed this econ­o­my­wide phe-nomenon the “fis­sured work­force,” the ti­tle of a 2014 book he wrote on the topic. The new RAND re­search pro­vides the broad­est con­fir­ma­tion to date that these trends are grow­ing. 

DISCLOSURE:  USC is currently a recipient of PERS benefits from a job many, many  moons ago. PERS benefits will continue to deliver a stable, generous retirement to long-term employees no matter their income or the financial condition of the government agency, due to rate increases the agencies are required to pay.  (Number 9 of the top PERS recipients in the state is Bill Korach who receives $250,395. Until the governent entity goes broke and can't pay any of its bills.  What can the poor, beleaguered government agencies (taxpayers) do?  Plenty.  Read more in future posts.  

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