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May
2015
28

GAO Report: 40% of US Workforce Made Up of Contingent Workers; Poverty-Level Wages Rampant

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A new report from the Government Accountability Office shows a shocking 40.4 percent of the U.S. workforce is now made up of contingent workers.  This figure is up nearly 10 percent from 2005, a startling rise among a set of workers who often find themselves without the same labor protections and benefits as traditional employees. 

Economic strain resulting from the great recession has no doubt exacerbated the situation, but the alarm must be sounded that income inequality and job insecurity have the job market by the jugular.

The report combines the following subsets of workers to arrive at the 40.4 percent number:

Agency temps: (1.3%)
• On-call workers (people called to work when needed):(3.5%)
• Contract company workers (3.0%)
• Independent contractors who provide a product or service and find their own customers (12.9%)
• Self-employed workers such as shop and restaurant owners, etc. (3.3%)
• Standard part-time workers (16.2%).

The numbers show that a growing number of American jobs come without the protections of traditional W-2 jobs. In comments issued along with the report, Senators Patty Murray (D-WA) and Kirsten Gillibrand (D-NY) express concern about this trend:

“Because contingent work can be unstable, or may afford fewer protections depending on a worker’s particular employment arrangement, it tends to lead to lower earnings, fewer benefits, and a greater reliance on public assistance than standard work.”

The report also investigated the heightened struggles contingent workers face:

Higher poverty rates: While only 10.8% of standard full time workers have a family income of less than $20,000, 33.1% of core contingent workers—meaning agency temps, on-call workers and contract company workers—report family incomes this low. (In comparison, 18.8% of independent contractors are in this income range).

• Low pay: Contingent workers had median hourly earnings in 2012 of $11.95, compared to $17 for workers with standard full-time jobs. They earned about 10.6% less per hour on average. Reflecting the fact that many contingent workers are involuntary part-timers and can’t always get work when they want it, their median annual earnings were $14,963 vs. $35,000 for full-time workers.

• Greater job instability: Among core contingent workers, 28.5% said they were laid off in the past year, compared to 18.4% of independent contractors, 8.2% of standard full time workers and 5.9% of standard part time workers.

• Less access to to private health insurance: Among contingent workers, 61% were covered by any private insurance plan, compared to 77.9% of workers in standard jobs. Some may be receiving government health benefits, but I didn’t see a statistic for how many in the report.

• Higher reliance on public assistance: Among contingent workers, 11.1 percent were part of a family in which someone received Supplemental Nutrition Assistance Program (SNAP) benefits—which used to be called food stamps–vs. 5.6% of workers in standard jobs. Contingent workers also had a higher rate of using other public benefits. Among these workers, 1.8% received cash benefits from a state or country welfare program, compared to .4% of workers in standard jobs. And 1% received Supplemental Security Income (SSI), compared to .3 percent of workers in standard jobs.

The report also found a broad range of opinions among workers regarding employment status. According to the survey, only 7.5% of self-employed people and 9.4% of independent contractors said they would prefer different employment.  Meanwhile, a whopping 59.3% of agency temps and 48.3% of on-call workers and day laborers said they would like to be W-2 workers.

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2 Comments on “GAO Report: 40% of US Workforce Made Up of Contingent Workers; Poverty-Level Wages Rampant”

  1. Did the survey give any indication of how many of the self-employed were musicians, artists and other creative workers? The 92.5% who indicated that they liked what they were doing suggests that they put a priority on job satisfaction over income. Perhaps we need to offer more government subsidies to the arts like Germany and other nations do.

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