The Millennial generation wants more freedom and flexibility for their careers, and older workers either don’t want to or can’t retire, and desire to stay in the workforce in some way, which is creating more freelance, part-time and independent contractor employees.
Speaking at the 2016 PLANSPONSOR National Conference in Washington, D.C., Will Hansen, SVP of Retirement at the ERISA Industry Committee (ERIC), noted that as of May 2016, 15 million workers were self-employed; at the same time, a 2014 study found 53 million workers were freelancing, and it is estimated that by 2020, 60 million workers (40%) will be contingent employees.
As an example of what “gig” employment looks like, Hansen noted that car-sharing companies such as Uber and Lyft are leading forces. “How to manage these types of workers and provide benefits is an evolving issue. We don’t have the answers yet,” he said.
Tami Simon, global practice leader, Knowledge Resource Center, Buck Consultants, a Xerox company, noted that lower salary and benefit costs is one reason employers like short-term contracts with employees. In addition, they may have project work that doesn’t require a permanent employee and they can be “global without being global.”
Also, as for older workers, with 10,000 people turning age 65 each day, employers are experiencing a brain drain, Simon pointed out. Using freelance or consulting older employees can help them tap into knowledge.NEXT: How ‘gig’ workers may affect benefit offerings
“How can employers create a benefit package for a workforce that is creating its own ladder?” Hansen queried. Instead of moving up in a company, there will be many lateral moves to different companies. And, Simon noted, many employers question why they should spend money on employees that will not stick around. “But, if they don’t provide benefits for these workers, the country will end up in a big mess,” she said.
“The higher the percentage of contingent workers grows, the offering of traditional benefits may become minimal,” Simon said. She speculated that perhaps these “gig” workers will unionize or use associations to create and participate in retirement plans.
Hansen noted that recent regulations address retirement savings for a gig economy. The Department of Labor (DOL) announced plans to extend opportunities for open multiple employer plans (MEPs), and also proposed guidance for state-run plans for private-sector employees.
As for health benefits, the Patient Protection and Affordable Care Act (ACA) created a public exchange for purchasing health insurance. Hansen speculated that employers may just point workers to the public exchange.
However it plays out, Simon told conference attendees to get ready for the gig economy. “Use analytics for workforce planning. Decide what employees are needed to meet corporate goals, then create a policy to comply with all laws,” she said, adding that the policy should be nimble because it is unsure what the workforce will look like from year to year.
« Retirement Industry People Moves