Members of the labor force who perform freelance work or short-term contracts make up the gig economy. Companies connect with workers through agencies, websites, or increasingly through mobile apps. Full-time employees who stay in positions for longer periods of time run counter to gig economy workers. As companies look to reduce costs they outsource to contract companies and freelance workers to complete projects, functions (such as payroll or mailroom), and flexibility in managing their labor force. There are rewards and risks with being a worker in the gig economy. Here are 5 promises and perils for those looking to participate:
1. Flexible Work Schedule - Freelancers (not working at an employers site) can set their own schedule as long as they meet the employer’s deadline.
2. Avoid organization politics - Many workers don’t enjoy the maneuvering that inevitably happens as full-time employees compete for recognition in hope of professional advancement. This often zero-sum game doesn’t appeal to workers with a freelance mindset.
3. Meetings, meetings, meetings - Organizations have endless meetings that reduce productivity. Freelancers are often excluded from these meeting (sometimes by law) and can focus on completing their assigned tasks.
4. Foot-in-the-door - Some workers use contracts as a way to get in the door at companies they hope to become a full-time employee. They get to know the culture and people within an organization.
5. Broaden Skills - Freelancers get to work on many different projects and develop a range of skills. This is a benefit of working with many different organizations.
1. Isolation - Whether working remotely or in an office freelancers can feel isolated because they may not be treated as part of a team.
2. Insecurity - Contracts can end at any time without knowing where the next assignment will come from. This adversely affects income, skill development, and increases stress.
3. Benefits - Many gig workers don’t have employer provided healthcare. Big employers are starting to require companies who perform specific functions for them to provide things such as paid time off to their contract staff.
4. Legal Protections - There are laws requiring contractors be treated differently than full-time payroll employees. Though companies often break these rules such as allowing contractors into certain company meetings and functions.
5. Building Professional Relationships - When contractors or freelancers are excluded from many activities it is difficult to develop relationships with co-workers essential for getting referrals and knowing about other opportunities within a company or industry.
The gig economy labor force will continue robust growth in the coming years. Millennials are heavily involved and will continue to be the largest, but not the only, group of participants. Determining whether this is right for you requires careful consideration, but those are some of the pros and cons of gig life.
Real wages in the U.S. have been flat since the 1970’s. Despite the number of open positions in the U.S. the figures below show there are still many eligible workers not participating in the current labor market. There is still slack in the labor market that must be reduced to create conditions where wages can increase. Robust economic growth and either a reduction in immigrant hiring or increasing their wages commensurate with salaries for U.S. workers can also increase wages.
According to the Pew Research Center
45m - number of Baby Boomers (ages 51-69) currently in the labor force
53m - number of Gen Xers (ages 35-50) currently in the labor force
54m - number of Millennials (ages 18-34) currently in the labor force
80% - Gen Xers labor participation rate
82% - Millennials labor participation rate*
73% - Workers from 25-54 are in the labor force
41% - of working age Americans are not participating in the labor force
4.1% - Current unemployment rate in U.S.**
Baby Boomer labor participation rate is not included due to aging out of the workforce and minimal affect from immigration, their labor participation will continue to shrink.
* - Workers age 25-34 represent 22% of total labor force. They are assumed to be no longer attending college. Worker age 16-24 represent 13% of total labor force. They are still in school and are employed in lower wage positions.
** - Unemployment rate does not include those who have stopped looking for work but not retired.
The data reveals that even without immigration and globalization there is no shortage of domestic workers currently in the labor force. This also does not include those who have given up searching for work that could re-enter the market if they are buoyed by more robust job growth and renewed confidence they can find work.
The prospect of corporate tax reform could pave the way for some increase in wages for U.S. workers. If business have additional cash some of that money can be invested in workers but it will also be invested in automation which threatens jobs. Pay increases for many businesses is tied to the rate of inflation. The current environment of low inflation also holds wages down.
Here’s the silver lining. As many baby boomers retire their will be a void of seasoned talent among workers. Those possessing the skills needed to fill the knowledge gap will have leverage to negotiate higher salaries. Companies are recognizing this as their most experienced and talented employees accept voluntary separation packages as businesses look to cut costs but lose outstanding people in the process.
Job seekers are frustrated by how long it takes to get to “Welcome Aboard” today. The time it takes to get hired has dramatically increased since the mid-2000’s. With the introduction of applicant tracking systems and social media one would think that filling open positions would be getting more efficient. So why isn’t it? There are many factors placing a drag on the pace of hiring:
Skills Gap - This is particularly evident in health services and STEM (science, technology, engineering, and math). Many of these positions require specialized training and education. For small businesses it is exceedingly difficult to source candidates.
Under-resourced HR - More open jobs means there is more work for human resources staff. Their priorities can shift from day-to-day on which open positions are mission critical. This is more evident in larger companies where division managers compete for priority for their open positions if there are no qualified internal candidates.
Compensation (Economic) Fears - Some employers mask the Robles as a lack of qualified candidates when the underlying issue is uncertainty in the economic climate. This is less obvious but can have a significant impact on hiring. A negative outlook makes companies slower to commit to adding new hires and/or less inclined to pay market ages.
Global Candidates - This is more prevalent in hi-tech. Companies will broaden their search for candidates mostly from India and China. This adds additional time to the hiring process because securing work visas from a sponsoring company can take from 6 to 18 months.
Too Stringent Requirements - Some positions have a list of requirements that are too narrow in their scope. They require a specific set of credentials that eliminate many potentially capable applicants because they want employees who require less training. Candidates who might be able to do the job often will not apply or are overlooked.
Targeting Passive Candidates - Hiring managers will sometimes seek passive candidates who may not be actively looking for a new job. Pursuing these candidates takes much longer. If they are unsuccessful is persuading a candidate from leaving their current company they must then turn their attention to active job seekers.
Interviewing - When several finalists are selected conducting multiple interviews with multiple people is a lengthy process. Scheduling with the necessary parties can be arduous. It’s not uncommon for a finalist to have 6+ interviews before being hired in larger companies. This alone can add a more than a month to the process.
Background/Reference Checking - Once a candidate has been selected there’s a delay in conducting reference checks and background checks. This process can add from 5-10 days to the process.
Indecisiveness - Sometimes employers haven’t thoroughly identified their needs or modify their job requirements during the interviewing process. Fear of making the wrong hire causes delays in making an offer to a candidate.
Losing Top Candidates - Top candidates are often being pursued by other companies as well and have more options (and leverage). As mentioned earlier, an employer may bring in a candidate for multiple interviews only to have that person not accept an offer. Add additional time to the hiring process because the employer must now go back into the pool to find another candidate.
These are factors contributing to the slow pace of hiring to give you an understanding of the hiring and recruiting process.
Next up - trends in the talent pool for different fields.
Ok, the obvious answer is because you have gotten a job, but before getting an offer how do you know whether you are making progress? Job searching in today’s environment can take 4-6 months. The pace of hiring is affected by many factors, from the number of applicants, scheduling interviews, background checks, and slow organizational decision-making. There is a process for job seeking to maximize your effectiveness but you need to be able to measure it. Your time needs to be divided into a few key categories: Networking, Applying Online, and Applying through secondary advertisements. These steps presume that you know what type of position you are seeking and equally important is the amount of time you dedicate to each task.
Networking (60%) - The majority of your time should be spent networking. It is important to develop relationships because you can learn about unpublished positions and get referrals. Employee referred candidates are hired 60% of the time. More than 60% of employers have an employee referral process. The higher up you can go in an organization the better your chances of getting hired. Candidates referred by a director level and above are hired 90% of the time. Personal connection are the most valuable. You often see people with 1,000’s of social friends and connections, this is most likely a facade. Do they really personally know that many people? It’s doubtful. You need meaningful relationships that only come from person to person connections. This is why the majority of your time should be spent cultivating many relationships. You are trying to find out about new opportunities and get referrals from your network. Networking is about quality.
Job Boards (40%) - Job boards such as Indeed, Monster, CareerBuilder, Dice, and company websites post open positions. Some try to make it easy for you to apply by offering single click applications that auto-fill your information into the appropriate fields. Your resume still needs to be tailored to each position you apply for even when using job boards. Don’t just send the same resume to every job. Look at the key requirements and make sure you include those keywords in your resume. Applicant tracking systems use keyword matching as the first filter when scanning resumes. Be sure to add your updated LinkedIn profile to your resume. Recruiters will search for it anyway so saving them some work will be appreciated. Applying online is about quantity (and quality).
NOTE: If you use auto-fill be sure to VERY carefully read through it, because sometimes your information has not correctly imported, BEFORE pressing submit. Make sure that EVERYTHING is correct. Check all content imported from the position you are applying for, dates of employment, details of your employment history, and education. Make sure that each section is completed.
Next up - The Pace of Hiring
Networking is the practice of building and developing professional relationships. It is an important life skill that can produce great results. In your job search, networking can be an effective way to learn about unadvertised positions and to secure interviews. Through networking, you can get your resume in front of the person hiring instead of human resources personnel or a scanning program. Many college students and recent graduates tend to depend too much on internet job searching. Remember, computers don’t hire you; people do!
Beginning your job search
Your job search should rely heavily on networking. A successful strategy includes building relationships with professionals who can help you get interviews and make you aware of positions not advertised to the public. If you can bypass applicant tracking systems (resume scanning software) and human resources staff and get your resume directly to the hiring manager, your chances of getting an interview are greatly increased. Effective networking is about meeting people. There are many ways to connect with people. Here are some ways to develop and grow your network.
Family/Friends in your industry
Your school’s Career Center or Alumni Association
Industry or Professional Associations
Before you make these connections you should prepare your concise description of who you are and what is special about you. The is commonly known as your elevator pitch (or to be self-serving, your Ummercial, pronounced You-mmercial). Often a person hears your pitch before they have seen your resume. A proper Ummercial works for many occasions, letters, emails, in addition to introductions. Here is how to create your Ummercial for every format:
Be brief. In an email it should be 200-250 words written and 45 seconds or less verbally.
Who are you and something to give you credibility. Things such as your love for a hobby, where you went to school, your hometown, or your affiliation with a club or team.
What do you want? Be specific about what you are looking for and how that person can help you achieve it. Are they the decision maker that can give you an introduction to someone who can help you achieve your objective?
Validate your interest. Rather than simply telling them your interest, tell them jobs you have performed, courses you have completed, or relevant projects you have been involved with related to your interest. If you have not done any of those things, take action and start doing something. It is easy to begin by talking to people with expertise.
What are your qualifications? This is where you tell them what makes you worth helping. Show them your skills, enthusiasm, and eagerness. If they believe you are going to be successful they are more likely to assist you. Some things to answer for them: What have you done in your industry/studies? Have you demonstrated leadership and expertise through your work, studies, or special projects? How can you positively impact the company?
Give them a couple of options how they can help. Giving them two options makes it easier for them to choose one and say “yes”. This is not the same as your objective because here you are communicating how they can help you along the path of reaching your goal?
Here is an example that would satisfy each occasion:
Hello Mr Thomas,
It is a pleasure to meet you, my name is Monica Ruiz. I am a social media marketing professional looking for a marketing manager position at Colossal Marketing. I have been especially passionate about media relations and customer engagement since my days as a student at Chicago University. After graduation I immediately joined the National Marketing Association and participated in conferences and seminars. I would really like to meet someone in the marketing department to discuss open positions. Would you mind giving me an introduction or giving me the name of someone in marketing I can connect with? May I call you tomorrow to arrange an introduction or schedule a meeting at your convenience to discuss marketing opportunities at Colossal?
This example could be used as your conversation starter or equally well as an email introduction. All five of the requirements are present and it is clear and concise. Your communication might also include how you are connected to the person and what excites you about the specific company. It is a great way to start the communication.
Next we will expand on Informational Interviews.