Last August, 185,000 employees of United Parcel Service of America Inc., incensed by the expanding use of part-time, lower-paid workers at the company, walked out in one of the most publicized work stoppages in years. Although the strike settled within 15 days, UPS estimates it cost the company more than half a billion dollars.
In 1993, independent contractors and freelance workers at Microsoft Corp. sued the software giant for denying them benefits, even though they signed contracts explicitly stating they were not employees. In July 1997, in a ruling that sent shock waves through Silicon Valley, the Ninth Circuit Court of Appeals ruled against Micro-soft–a decision that may ultimately cost the firm $20 million.
Since Delta Express pilots agreed to a new contract in December 1995, their union has been crying foul. The problem, say union officials, is that Delta Air Lines Inc. threatened to mothball the 737 fleet unless pilots for those planes agreed to less money than other company pilots. Delta Express pilots eventually caved in. Delta has since reported record profits in eight successive quarters, a fact that has some Delta Express pilots seeing red.
Given these news stories, you might think the rise of the alternative work force has left both workers and employers disgruntled and disenchanted. Indeed, given the problems–unhappy employees, nasty lawsuits, even nastier strikes–brought on by the hiring of so-called flexible workers, a sane observer might consider the alternative work force more curse than cure for corporate employment ills.
Think again. The alternative work force, which ranges from the lowest-paid temporary secretary to the regular part-timer at UPS to the highest-paid independent computer contractor, is spreading like wildfire. While unemployment has shrunk to its lowest level in decades, the use of part-timers has swelled.
According to the Bureau of Labor Statistics (BLS), in fact, the number of part-time workers nearly doubled from 1970 to 1994, while the number of full-timers rose only half as fast. What’s more, the number of independent contractors and temporary workers has skyrocketed. Although exact numbers are hard to pin down, some experts estimate that there are as many as 30 million alternative workers in the United States today, nearly a quarter of the entire labor force.
This trend is no fad. Rather, economists and business consultants say the rise of the flexible work force flows from a fundamental shift in how companies do business. “This all stems from the move to just-in-time manufacturing,” says David Hofrichter, vice president and managing director at compensation consultancy The Hay Group Inc., in Chicago. “You can’t have just-in-time manufacturing without just-in-time workers,” he states. Indeed, Edward Lenz, senior vice president of the National Association of Temporary and Staffing Services (NATSS), a trade group in Alexandria, Virginia, points out that 81 percent of firms surveyed by The Conference Board say they bring on contingent workers to cope with demand fluctuations. And William Halal, professor of management at George Washington University, estimates that contingent workers could make up 50 percent of the U.S. labor force by the year 2005.