Work “works” differently than it used to. More and more people are working as freelancers in the gig economy, and today 40 percent of the workforce does freelancing, contract work and part-time work. That means many more organizations have blended workforces with a variety of employees, including full-time, permanent employees, contractors and freelancers.
Multiple factors are enabling the disruption of the traditional employer-employee model and the rise of the blended workforce. Technology enables people to work from wherever they are, societal attitudes towards work have changed, and competitive demands place more pressure on organizations to be agile. More than 30 percent of workers for nearly 40 percent of top-performing firms are already contract or freelance workers. In fact, these firms intend to hire even more freelancers in the future.
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Along with the rise of professional freelancing and the uncoupling of benefits from traditional employment, the Affordable Care Act (ACA) has also played a significant role in facilitating the rise of the blended workforce. The ACA is driving companies to look for ways to contain costs and rethink workforce structures. It is also making it easier for people to become freelancers without sacrificing income or benefits.
How do we know this? People have told us.
Together with Future Workplace, Field Nation surveyed more than 1,500 human resources professionals and freelancers. Both groups indicated the ACA has had a significant impact on how they do work. Nearly three-fourths of HR professionals said they will contract more freelancers as a result of the ACA, and 60 percent of freelancers said the ACA has affected their workload in various ways, such as by reducing their expenses or leading them to find more clients or work more hours.
Why organizations turn to freelancers
Our survey revealed interesting findings in the way organizations view and offer healthcare benefits. Because of the ACA, nearly one-third of organizations surveyed intend to eliminate healthcare benefits even though 90 percent agree healthcare benefits are key to attracting and retaining talent.
It appears these organizations have decided the benefits of retaining talent in-house do not outweigh the costs in part because 2016 is when the tax penalty for individual uninsured workers is the highest ($695 per employee) and the Employer Mandate/Shared Responsibility calculations peak.
Given these costs, it’s easier for many organizations to hire freelancers, which also has the advantage of saving costs in other benefits such as vacation and paid time off.
HR professionals said they appreciate the flexibility of freelancers and how freelancers allow them access to an on-demand talent pool of specialized expertise. This enables teams to increase their quality by growing, shrinking or reformulating at different times based on the needs of specific projects. Combined with the fact that freelancers are easier to engage and can often start immediately, unlike regular staff, many organizations find freelancers help them be more agile and more effective.
Additionally, relying on freelancers reduces organizations’ operational costs and reduces stress on managers. More than 40 percent of the HR professionals surveyed said managing freelancers was easier than managing employees. In fact, studies show that freelancers can be more engaged than their full-time counterparts. A Gallup poll estimates that employee disengagement costs the U.S. economy between $450 billion and $500 billion in lost productivity. Freelancers are more likely to be engaged with their work—97% of freelancers surveyed in a 2014 study said they were satisfied with what they do.
When it comes to the blended workforce, the best organizations are conducting an orchestra of expertise made up of freelance and traditional employees. They deftly synchronize different talent clouds of focused and passionate professionals while delivering high-quality results to their clients. They have discovered strategic freelancing drives corporate growth, so it’s no wonder they intend to hire more freelancers in the future.
How the ACA affects freelancers
While the ACA is making it more attractive for organizations to hire more freelancers, it is also providing Americans with insurance coverage unattached to traditional employment.
In 2014, the Congressional Budget Office predicted “the ACA could influence labor productivity indirectly by making it easier for some employees to obtain health insurance outside the workplace and thereby prompting those workers to take jobs that better match their skills, regardless of whether those jobs offered employment-based insurance.”
This is true—in some cases. Nearly 60 percent of freelancers who responded to our survey said the ACA didn’t affect them for reasons such as pre-existing coverage through their spouse’s insurance plan. For workers who have insurance through their spouse or the military, the ACA does not make them more or less likely to pursue freelance or other forms of work.
For the 40 percent of freelancers who were affected by the ACA, the ways in which they were affected varied widely. Some shared how the new tax and mandatory premiums impact their business, either by cutting into their profits or by forcing them to watch their hours so they didn’t “make too much” and lose assistance.
Many others, though, said they finally were able to afford a healthcare coverage plan and keep their business.
“It made healthcare affordable,” said one freelancer.
Another quantified a specific benefit, saying, “It cut my health insurance cost from $17,000-plus a year to $8,000 a year.”
These professional freelancers demonstrate how the ACA separates healthcare benefits from traditional employment to enable and empower freelancers to pursue their passion.
This bodes well for organizations looking to find more efficient ways to do business. Increasingly, and in part because of the ACA, there are more and more qualified freelancers excited to put their skills to use for businesses.
As a result, nearly all companies (93 percent) have seen freelancers team up with traditional employees to work on projects together. The blended workforce is here, and it is driving more effective execution and better organizational efficiency.
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