Contingent Workers

The contingent workforce comprises many types of workers, from highly paid management consultants to low-paid service sector employees. No consensus exists on which categories of workers should be included in the definition. Estimates of the size of the contingent workforce range from five percent to 30 percent. Many of these workers have low family incomes--often below the federal poverty threshold. Contingent workers are also less likely than the rest of the workforce to receive health insurance and pension benefits through their employers, either because they are not offered benefits or they lack the number of hours of employment necessary to qualify. Also, many contingent employees, particularly those with low family incomes, do not participate because of the cost of the plans. Workers who are not employees--independent contractors and other self-employed workers--are generally not covered by key laws designed to protect workers. Moreover, it can be difficult to determine whether workers are employees or independent contractors, and some employers misclassify workers as independent consultants who do not have to be offered benefits. Advocates for contingent workers are calling for legislation that would require employers to offer comparable benefits to all employees. Employers might reduce employees' salaries or hire fewer workers to cover the costs of providing benefits. Another proposal would create associations of people in similar jobs that could buy insurance as a group. Still other proposals are designed to increase workers' access to health insurance and retirement benefits by providing tax breaks for the cost of premiums and retirement-related savings accounts.

GAO noted that: (1) the contingent workforce comprises many categories of workers, ranging from highly paid management consultants who are satisfied with their work arrangements to low-paid service sector workers who receive no benefits and would rather have full-time, permanent jobs; (2) the size of the contingent workforce, however, cannot be precisely estimated because no consensus exists on which categories of workers should be included; (3) labor experts and others generally agree that workers who lack job security and have unpredictable work schedules, such as temporary and on-call workers, should be included in the definition of the contingent workforce; (4) however, there is less agreement on whether workers such as independent contractors, self-employed workers, and part-time wage and salary workers should be included; (5) estimates of the size of the contingent workforce range from 5 percent of the total workforce, when only temporary and on-call workers are included, to almost 30 percent when workers in other categories are included; (6) contingent workers are also less likely than the rest of the workforce to receive health insurance and pension benefits through their employers; (7) many of these workers either are not offered benefits by their employers or do not qualify for benefits because they do not work enough hours or have not worked for their employers long enough; (8) furthermore, when their employers offer health insurance and pension plans, many contingent workers do not participate because of the cost of the plans; (9) contingent workers who have low family incomes are even less likely to be included in employer-provided health insurance and pension plans or to participate in the plans when they are offered; (10) most contingent workers who are employees are covered by key laws designed to protect workers; (11) however, workers who are not employees--independent contractors and other self-employed workers--are generally not covered by the laws, and some workers who are employees are not covered or may not be able to take advantage of the protections afforded by these laws; (12) moreover, because it can be difficult to determine whether workers are employees or independent contractors, and because employers sometimes misclassify workers as independent contractors, contingent workers who should be covered sometimes are not; (13) advocates for these workers have proposed a range of strategies to expand coverage for contingent workers; and (14) each strategy involves trade-offs in terms of costs and benefits.