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Silicon Valley's Dirty Secret: Using a Shadow Workforce of Contract Employees To Drive Profits (cnbc.com)
An anonymous reader shares a report: As the gig economy grows, the ratio of contract workers to regular employees in corporate America is shifting. Google, Facebook, Amazon, Uber and other Silicon Valley tech titans now employ thousands of contract workers to do a host of functions -- anything from sales and writing code to managing teams and testing products. This year at Google, contract workers outnumbered direct employees for the first time in the company's 20-year history. It's not only in Silicon Valley. The trend is on the rise as public companies look for ways to trim HR costs or hire in-demand skills in a tight labor market. The U.S. jobless rate dropped to 3.7 percent in September, the lowest since 1969, down from 3.9 percent in August, according to the Bureau of Labor Statistics. Some 57.3 million Americans, or 36 percent of the workforce, are now freelancing, according to a 2017 report by Upwork. In San Mateo and Santa Clara counties alone, there are an estimated 39,000 workers who are contracted to tech companies, according to one estimate by University of California Santa Cruz researchers. Spokespersons at Facebook and Alphabet declined to disclose the number of contract workers they employ. A spokesperson at Alphabet cited two main reasons for hiring contract or temporary workers. One reason is when the company doesn't have or want to build out expertise in a particular area such as doctors, food service, customer support or shuttle bus drivers. Another reason is a need for temporary workers when there is a sudden spike in workload or to cover for an employee who is on leave.
Depending on the industry this can be good, or extremely bad.
It also depends on the long term goals of the individuals, companies, and societies at large.
I work as an engineering consultant. We have an older colleague who does exactly what you describe. He comes in to work on some heavy hitting projects and then he's out the door.
This is great for us as a consulting company, it works well for our clients and solves the immediate problem.
The bigger issue is the other side to my collegues story. He used to be a full time engineer at a chemical plant. They typically hired in a cycle of having one "old timer" and then a middle aged guy, and a young new engineer working all the time. That way they trained up the new people, always having three engineers in any role, one with a LOT of experience, one who did the main work, and a new guy to train and learn the ropes.
As time went on they dropped the new guy-- why waste money training a new guy when they'll have the forty year old around for another 25 years? And who needs the old timer full time when he can go part time? Gotta save those dollars!
Fast forward and you get my colleague, who left his company in the hands of an engineer fresh out of school with no training. When he announced he wanted to go part time they quickly hired someone and told him he had to stay full time and train him. He wanted to retire though, did his best to impart 40 some years of knowledge onto the new kid and then jumped ship for our consulting company where he could work part time (like he expected). When his old company realized they couldn't possibly function without an engineer with intimate knowledge of their plant and systems they reached back out to him. We then billed him back out to his old company... at a higher rate...(part time, of course).
The problem with the gig economy is that while it's great for everyone's bottom line, it isn't usually very good for company or product long term. Sure if you have some unique difficult project work, hire a contractor (or hey! Hire an Engineering Firm like us!), but if your goal is to build and progress knowledge and to make a long term product or company successful, it's a losing proposition.
It's also a losing proposition for anyone NOT in the position to hop job to job making tons of money off their already existing experience. Gigs make sense when you have 20-30 years in a field. When you have 2-5? Good luck bringing in those big dollars, and good luck paying for your healthcare. It's also not a friendly place for someone with any type of continual health costs or disabilities, as gaps in healthcare or high cost care is going to negate the dollar gains from the contracting work.
Even worse is when everyone is fighting for those gig jobs, prices are going to drop, and the tradeoff of "high dollars for unstable work" vs "low dollars for stability" is going to disappear in lieu of just "low dollars for unstable work".
People seem to think their job is immune to this type of thing. If we let it happen we're all just going to be fancy day laborers. It was good while it lasted I guess.