September 15, 2017
In recent months, there has been a great deal of news coverage that contrasts the nation’s low unemployment figures with the “hidden unemployed” population — individuals who are working part-time but would really like to be employed full time.
In June, the New York Times published a story that highlighted low unemployment, but warned the “economy’s weak spots remain.” Huffington Post headlined “The Unemployment Rate — what the numbers do and don’t tell us.” This is just a couple of examples; many more exist.
The issue involves the Bureau of Labor Statistics’ well-reported unemployment rate that only tracks people who don’t have a job and have actively looked for work in the last four weeks, and are currently available for work. The argument goes, as the nation’s unemployment rate drops as it has from January’s 4.8 percent to August’s 4.4 percent, is it a result of people finding jobs and therefore advancing out of unemployment or is it because many Americans just stopped looking for work?
Complicating the matter is that workers are classified as employed if they performed any work at all for pay, whether part-time or full-time, during the week when the government conducts its Current Population Survey. Even further clouding the picture is that the labor force participation rate has cratered to its lowest rates since the late 1970s, according to a March 2017 Pew Research study.
Interestingly, the total number of Americans who were not counted in the U.S. BLS labor numbers rose to 94.7 million in June, up more than 660,000 people from the previous month. Some of them are retired or going to school. However, many of them have simply stopped looking for a job.
Fact is, many economists and industry analysts believe the lowered unemployment rate is the result of hundreds of thousands of Americans exiting the labor force rather than finding employment.
There may be another explanation that is less about dropping out of the labor force and more about transitioning to a new, fast-emerging category of employment that traditional tracking methods may not capture.
Freelancing, also called free agency or gig work, among U.S. workers has been steadily growing in numbers over the last eight to 10 years. Several market factors have contributed to this growth: the impact of the economic downturn that occurred in the 2008-2010 timeframe, an aging workforce, and changing attitudes about the personal freedom that freelancing enables.
The important point is that this growth has had and will continue to have a long-term, likely permanent, effect on the nation’s workforce.
The benefits of freelancing are well-documented, especially setting your own schedule and reducing sick or down time. The best talent in the market wants greater control and ownership over how they integrate work with their personal lives. In many cases, they also want to maximize their earning potential.
This new way to work will be felt by employers who currently have difficulty finding workers to fill jobs. On one hand, many more workers are opting toward gig work as a means of making a living. On the other, if an employer doesn’t know how to tap into this quickly growing workforce to fill labor shortages, their business will stagnate and lose ground to competitors.
Free agents are the workers of the future, according to 62 percent of global talent managers who use free agents in their departments.
There is a percentage of workers who — for varying reasons — have left the labor force in the wake of the Great Recession, and a portion of that population could indeed comprise the “hidden unemployed.” However, a much larger percentage of workers, ranging from tech-savvy millennials to Boomers staying in the workforce longer, now represent a shift in the U.S. economy.
Gig work is here to stay and may play a definitive “behind-the-scenes” role in the decline of the nation’s unemployment rate. It’s time for employers and workers to determine where their opportunities lie in the fast-evolving new workforce reality and act quickly.
Genine Wilson is the Southern California territory vice president for Kelly Services, a global leader in providing workforce solutions. She oversees the staffing and business solutions operations for Kelly throughout Southern California, with a focus on engineering, information technology, light industrial, office clerical, science, and finance and accounting staffing. For additional information, visit www.kellyservices.us.