CPA_Practice_Advisor_March_2020 - 22

A YEAR IN THE LIFE: PAYROLL

ACCOUNTANT

Gig Workers "Fill Void" In Tight Labor Market
By Isaac M. O'Bannon

WHILE TECHNOLOGY AND innovation are transforming the
way we work, they are also directly impacting why, when
and where we work. In a first-of-its-kind study, the ADP
Research Institute has focused the spotlight on the gig
workforce in organizations, often described as a hidden
or 'shadow workforce.'
The research report, titled
Illuminating the Shadow Workforce:
Insights into the Gig Workforce in Businesses, reveals tenured workers and
retirees are capitalizing on the tight
U.S. labor market and the need for
skilled workers, by turning to gig
work. The report also found 1 in 6
enterprise workers are actually gig
workers paid as either 1099-MISC
(1099-M) workers or short-term
W-2 employees working one to six
months. The report takes a close
look at their compensation, varied
skill sets, and motivations.
Backed by anonymized payroll
data of 18 million workers from
75,000 companies, coupled with
16,800 direct survey responses
from traditional employees and gig
workers, and 21 C-level executive

MARCH 2020 ■

interviews, the research shows
that this changing composition of
the workforce has significant talent
management, budget and compliance implications for businesses of
all sizes.
In addition, the ADP Research
Institute identified two worlds of gig
workers in businesses. The first is
comprised of 1099-M contractors
who are independent contractors, often hired for their skillset
on a project basis. These skilled,
tenured workers tend to be older,
highly educated and choose to
work on what they enjoy. In fact,
30% of 1099-M gig workers are
aged 55 or older. For some, their
gig work is supplemental income
to their retirement savings. The
second includes short-term W-2

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employees who are younger, less
educated, have a lower income, and
are typically working on a seasonal
or on-call hire basis.
"It is clear there is a fundamental shift in the workforce as innovation continues to transform work,
increasing the demand for skilled
workers," said Ahu Yildirmaz, cohead of the ADP Research Institute.
"To bridge the talent gap in today's
tight labor market, many companies are hiring skilled workers at a
premium. Our research shows that
companies are turning to tenured,
skilled workers and retirees on
a gig-basis to meet this growing
demand."

SPOTLIGHT ON GIG
EMPLOYMENT AND KEY
FINDINGS
Following are additional takeaways
from the report:
■ Gig work is growing: From 2010
to 2019, the share of gig workers
in businesses has increased by
15%, with both short-term W-2 and
1099-M gig workers contributing
equal ly to t h i s g row t h. The
research i nd icates g ig work
will continue to grow, further
impacting workforce dynamics
and forcing companies to optimize
talent management and workforce
strategy.
■ Ever y indust r y relies on gig
workers: Recreation, construction
and business services are the top
three industries utilizing the gig
workforce.
■ Contract life is a choice: More than
70% of 1099-M gig workers say they
are working independently by their
own choice, not because they can't
find a "traditional" job. Most seem
happy with gig work and place a
premium on flexibility as a driving

motivation behind their decision,
over financial security or benefits.
In fact, 60% of 1099-M gig workers
say they will continue to gig for the
next three years.
■ Gig work is not sporadic: More than
half of the 1099-M contractors
work for the same company for 12
consecutive months just like any
traditional W-2 employee.
■ Earning potential is similar to a
traditional worker: The average
income for employees working
for 12 consecut ive months is
similar, regardless of being a
1099-M worker or a traditional
W-2 employee.
■ Millennials and Gen Z gig it their
way: Gig workers under the age of
34 view themselves as traditional
employees, perhaps reflecting the
shift in the workforce. However,
the prospect of health insurance
does not appear to change their
job behavior. In fact, 74% say
they would continue to work as a
1099-M worker, even if they lost
their current health insurance.
Added Yildirmaz, "While the
term 'gig worker' has seamlessly
integrated into our vernacular
and culture, there has been no
real data-driven insight into the
gig workforce in the enterprise
space. This 'shadow workforce' is
comprised of workers with vast
skillsets, who work across all industries and in all regions of the U.S.
Additionally, we have found that
the majority of these workers are
doing gig work out of preference."
To see the detailed report, Illuminating the Shadow Workforce:
Insights into the Gig Workforce
in Businesses, including all data
and insights, please download the
report at https://bit.ly/2IwRSDI. ■

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