There are some clear changes in where unemployed management & executive level are finding “employment” and there is no indication that Washington understands this shift.
More and more of us who were managers, directors and executives in the past are finding ourselves unemployed in this recession. Businesses seem to favor the younger worker who will work for less, is more current with the latest technology and is in tune with the younger people as consumers. It is increasingly difficult for managerial people to re-enter the workplace and when they do it is frequently for less responsibility and less pay than before. As manufacturing and some services are imported and offshored, fewer managers are needed in addition to the floor level and hands on employees that tend to get the vast majority of the media focus.
As managerial level job seekers struggle to find traditional jobs, they are turning more and more to untraditional jobs. These untraditional jobs are typically independent contractor positions referred to at 1099’s in reference to the income tax classification for independent contractors. This is in perfect alignment with business which is shifting more and more of their traditional workforce to contractor status as a way of reducing direct costs, reducing benefits burden and shifting the business risk to the worker.
The trend toward contract employees is most prevalent in sales where it is increasingly difficult to find a sales position with a base salary and benefits. 1099 positions are widely available. There are a number of issues that make these jobs less desirable to qualified candidates. First, there is no base salary and generally a lag time until a person can build up their business base to generate a reasonable level of income. Secondly, all the business risk is shifted to the contractor. If the contractor cannot make a go of selling that offering, they lose. Unfortunately there are a number of companies hiring independent contractors knowing that they more than likely will not earn a sufficient income. The company has not footed their salary until that point of failure, and pay no commissions once the independent contractor moves on to something else resulting in a major savings to the company. Finally, generally speaking there are no benefits available to independent contractors. This can be very problematic for those who find it difficult, costly or impossible to get individual health insurance.
It seems every former executive is now a consultant. Seeing the prospect of future re-employment as long and arduous, it is common for them to “hang out the shingle” to generate some income during the prolonged search. Others feel that consulting is the only career option open to them. The result is more consultants in the workforce than ever before.
In combination with the above trends, people are tending to work more than one opportunity. A single opportunity does not generate enough revenue to meet the individual’s income objectives. Therefore, they become an independent contractor for multiple companies selling different products and services. Often times these are complimentary but in some cases they are totally unrelated. The result is that a person carries multiple business cards.
The greatest problem is that Washington does not recognize this shift in employment to independent contractor status. Current laws and benefit company rules make it very difficult for businesses to create benefit programs for their independent contractors. Unemployment insurance ignores independent contractors. Independent contractors and the self employed who go back into the job market do not show up in unemployment statistics.
Until Washington and the media recognize the trend toward self employment/independent contractors, the laws and aid programs will continue to ignore this rapidly growing segment. Businesses will use independent contractors to skirt paying for benefits and will abuse their independent contractors as an underpaid workforce. any health care program enacted needs to address this growing segment.
