I’ve spent the previous two posts in this three part series explaining how we got here. How we will eventually “all be contractors.” I was very conscious to lay it all out for you, so you wouldn’t think I was regurgitating the “work from home” mantra, we’ve heard over the last ten years. In fact, being a contractor, has nothing to do with working from home. These posts were not intended as a doom and gloom warning or a fight to reduce commuting and increase telecommuting. The intention was to illustrate how this evolved. It didn’t just happen overnight and it will continue it’s slow and fascinating progression for years to come. What I’ve been seeing over the last several years is a change to how we work and how long we stay working at the same place. I believe it’s a good thing for individuals and companies. Whether we like it or not, work will never be like it was, but if done right, this will be a change for the better.
It’s all about money
Employee’s are expensive. What companies pay out, compared to what they get, may surprise you. Employer’s can pay in upwards of 43% more per employee. This means that every day that employee comes into work, they are starting behind. At the minimum, that employee has to earn that business, what they are being paid, plus another 43% more, just so the business breaks even. This is the cost of doing business. If you are wondering where these costs come from think, health insurance, disability, social security, medicare, unemployment and workman’s comp. Don’t forget, paid leave, vacation, sick days and personal leave. You might as well throw on top of that retirement, overtime and bonuses. It almost seems that getting into business, can put you out of business.
If that same employee was a contractor, the costs significantly decrease, by up to 30%. This means that the contractor is responsible for paying their own costs, such as healthcare, social security and income taxes. Managing that takes a little more time for the contractor, but the contractor has the ability to write off all of their business expenses as well, thus lowering their taxable income. With us all spending so much of our personal time doing work, this is a big factor to take advantage of. The biggest benefit that doesn’t have anything to do with money is flexibility. With contractors having more control over their schedules, this equates to a happier worker. Employers are now learning that providing flexible hours to contractors, provides them with higher productivity and stronger loyalty. Who knew that by letting go, we’d get more?
What this change will look like
There are still many companies that don’t like having contractors, prefer having employees and everyone working on site. These companies are typically managed by older people, literally discarding technology in favor of old management techniques, instead of trying to keep up or learn something new. It’s a lazy approach. Again, this isn’t slamming the office, it has a function and importance, but it needs to be utilized and leveraged in a different way. Some people really like working in an office and for them, there are options. Coworking spaces are much more attractive than a morning commute. These now popular alcoves have grown out of coffee shops to offer a more formal working environment with perks such as meeting rooms, pay by the day and even tailored to your industry.
The biggest fear that people have is that we will fall into a deep chasm where employers will take advantage of contractors. With no obligation to keep them around and no laws to protect them, employees will find themselves subject to all of the labor atrocities that so many people have fought for decades to protect us against. The truth is that contractors have already been working in this capacity for decades and because of situations that I have described in this series, becoming a contractor evolved. The laws that guarantee payment for services still apply. What’s really going to happen is that for employers, performance is high priority. If contractors don’t perform, they are gone. This is a big boost for companies that have been plagued with the lazy employee. For employee’s, the job environment, payment and treatment is priority, if it isn’t healthy and sustainable, they are gone.
The obvious cost savings can’t be ignored here. Companies can reduce office space, locations and resources. Just think of all of the overhead that companies have to employ, just to manage employees. The role of HR will clearly change. In addition, those that have to work on site will see their situations improve. With more flexibility to leave, there will be an incentive for employers to retain good talent. Any task that can be managed off-site will be subject to scrutiny of even the smallest business.
This is a major shift
Most days I bring my daughter to school in the morning and pick her up in the afternoon. She has Tennis practice a couple of days a week and about 2 to 3 hours of homework every night. My late afternoons and evenings consist of helping her with her homework and making her dinner. I often think about how other’s are able to hold a full time commuter job and provide the necessary attention to their kids. The reality is, they can’t. One of the reasons I wrote this series is I am consistently approached by people wanting a new life. Their old life of going into the office, commuting day in and day out, missing their kids and families lives, isn’t working. This isn’t just an evolutional change, it’s a movement.
We are seeing a shift where the company will not be the social services support hub that it has been in the past. These services have been broken off into pieces and spread around online, in homes and in communities. With more flexible time, we will see a positive impact in our neighborhoods and schools, with more volunteers and more outreach. Our social engagement will now fall back on our communities as it was in the past and possibly that neighbor that you never talked to for the last tens years, may end up being your friend.
We will all be contractors is a three part series that examines how the rise of the Web Professional Contractor came to be and how it is flourishing in this unique and special time.