“Not Your Father’s Workforce”, 2008 article, somewhat prescient then, is relevant as ever

by workforceplanner

Q: What do you get when you consult Workforce Locator™ and Jay Biggins?

A: Subject Matter Expertise! 

Not Your Father’s Workforce: Reimagining Job Creation Incentives (2008)
By Jay Biggins, Leader Magazine

In today’s work force, jobs are being accomplished in different ways. Job-sharing, flex-time, freelance, contract workers, Professional Employer Organizations (PEOs) – all illustrate newly relevant arrangements for firms striving to remain competitive in an ever changing marketplace. Some would call these the most significant work-force trends of the early 21st Century. A growing number of competent, creative, highly skilled and highly specialized workers in search of meaningful and well paying jobs are opting out of their father’s work force, and opting into alternative arrangements that provide flexibility, independence and a different kind of security.

Increasingly, companies in search of new ways to trim costs and realign functions are finding what they are looking for within this alternative worker pool, and from the PEOs, staffing firms and similar organizations that have acquired the expertise to manage this unique labor force, and make this resource available to employers.

As a result, states in search of a competitive edge to retain and grow employment and to attract new companies and investment are discovering that their existing economic development incentives packages do not always align with this new reality. At issue is the nature of job creation incentives, typically pegged to the number of “full-time permanent” workers to be employed by an applicant company. As employment arrangements have changed (along with responsibility for payment of salaries and benefits), the designs of many incentive programs have not kept pace with the evolution of the work force, and risk becoming non-competitive.

Companies are paying the equivalent of full-time salaries to armies of specialized independent contractors with sophisticated skills across a wide range of specialties – such as IT, human resources, communications, security and the like. But because these companies may not cut the paychecks for these workers, or may retain them on alternative, project-based pay scales, some states consider the jobs to be ineligible for incentives.  Those states are now finding that some important new projects are beyond their reach.

And, as significantly, they run the risk that an existing company may be deemed in default of a current incentives agreement because some or all of their full-time workers are now being compensated via PEOs or other alternative arrangements. “Job growth-related incentives are a primary tool to attract new businesses and to retain existing businesses,” notes Dennis Donovan, a principal at Wadley Donovan Gutshaw Consulting in Bridgewater, New Jersey. “When states subtract all of the consultants used by companies from the employment equation, they are putting themselves and their businesses at a disadvantage.”

Understanding The Contract Workforce

Demography, technology and globalization are all significant influences contributing to the changing nature of employment and the locations where work is performed, and capital is invested. The US Department of Labor recently counted 14.8 million workers in alternative employment arrangements – approximately 11 percent of all US employment. This figure is expected to double within the next decade: the US Occupational Handbook Outlook, the authoritative survey of American labor market trends, projects 45 percent growth in the number of workers employed in non-standard work arrangements.

A significant number of these jobs will be full-time and will be provided standard benefits such as health insurance, retirement plans and paid time off.  While many will be staffed by independent contractors, a growing number will be hired by PEOs and “leased” to other companies.  PEOs help companies staff a variety of functions in a more cost-effective and flexible way. “We will employ your employees,” explains Mike Flagg, senior public relations director for the National Association of PEOs. Flagg notes that the number of companies using PEO services has grown dramatically in the previous decade. “The amount of payrolls have increased at double digit rates during the last few years, and we expect that this growth will continue as companies outsource all their dreary and complicated HR stuff.” Flagg says that PEOs today manage $50 billion in payroll and two million employees.

For more information, download complete article.

Additional  BLS & Co. Articles on Workforce and Workforce Programs

The True Value of Workforce Training (2010)
Learning Curves Ahead (2007)