Contractors vs Employees: What You Need To Know About the Contractor Economy

Experts predict that by 2020 over 40% of the U.S. workforce will be contractors. Learn why the shift is happening and how you can benefit from it.

Shifting to a Contractor Work Economy

Traditional logic and outdated workplace culture is costing companies billions of dollars per year in turnover and productivity. Many, almost without a second thought, when faced with replacing or adding human capital turn to the RECRUIT -> HIRE -> TRAIN method. However, in many cases a contractor provides more experience and skill for less money and with faster onboarding.

Experts predict that by 2020 over 40% of the U.S. workforce will be contract labor. That’s over 60 million workers. The cost of turning over employees varies based on salary but based on a $40k salary, one study estimated a cost as high as $20-$30k in recruiting and training costs alone. These costs don’t include lost productivity and benefits costs as well as paid vacation and leave. It’s clear that the costs are immense.

The change is already taking place. In a survey of 200 of the largest companies it was found that contractors represented 22% of their workforce and those numbers are growing.

What is Driving the Shift?

One often overlooked factor among the shift to a growing, high-powered economy of contractors are the members of Generation-X. These individuals are not low-skill temps but are highly skilled and experienced. They have not enjoyed the same long-term employment with retirement that their parents and grandparents did. These 30 to 40 year-olds have been slugging it out for a while and embody a true, entrepreneurial spirit.

Combine these traits with ubiquitous, high-speed Internet access and mobile tools and you have a recipe for a cheaper, more efficient and more talented employee on-demand.

Try It Before You Buy It

Among some other benefits to hiring a contractor over a traditional employee is the ability to jump right in on project-based work and discover if the person is a good fit. These risks are too high with traditional salaried employees and are one of the factors behind the often flawed recruiting process.

Because contractors aren’t tied to the in-house culture and day-to-day, they can often provide fresh insight which can be a boon to innovation. Contractors like Ceed Creative have spent years solving problems for a diverse array of clients and mediums which accelerates our skill and experience faster than a traditional in-house employee.

Other bonus aspects beyond the aforementioned benefits of working with contractors is the lower environmental footprint and boost in morale. Less commuting means less burden on highway infrastructure and less CO2 emissions. When you consider an estimated population of 60 million contractors by 2020 all working from home or a nearby coffee shop instead of clogging up the interstate, this is a significant factor and could lower daily emissions by as much as an estimated 1 million metric tons of CO2. These commutes not only have a great environmental cost but a massive health and wellness cost that is well-documented.

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