The Dark Side of the 1099 Economy

Regular readers of this blog know that I’m one of the biggest boosters of the 1099 economy, the rise of independent businesses, free lancers, and consultants who work in what some observers call the “gig economy.”   Unfortunately, the story of the 1099 economy is not all good news as an excellent expose by ProPublica’s Michael Grabell makes clear.  The article, “The Expendables:  How the Temps who Power Corporate Giants are Getting Crushed,” examines the dark side of the 1099 economy.

Grabell details the boom in free lance work in the manufacturing, distribution and logistics sectors.   He shows that the massive growth in temp work (rising nearly 10x faster than overall job growth) is being driven by growth in blue collar temporary positions.   Hot beds for temp workers include major sites for manufacturing and logistics work such as Greenville-Spartanburg (SC), Pennsylvania’s Lehigh Valley, and Grand Rapids, MI.   Today, large shares of entry-level manufacturing jobs are held by temporary workers.

If these jobs are truly temporary and lead toward full-time employment, our worries should be limited.  But, there are many causes for concern.  Temp workers earn an average of 1/4 less than full time manufacturing workers, even when doing the same jobs.  These workers lack benefits and are more likely to be hurt on the job.  Finally, only 30% of these temp jobs are expected to become permanent.

Temporary work can be an important leg up, helping workers gain experience and providing employers with more flexibility to manage fluctuating work loads.  But, if temp work simply becomes a means to permanent second class employment status,  we have yet another contributor to the growing challenge of income inequality.   And, if we expect the ongoing manufacturing rebirth to have a real bottom line effect on the local economies, it can’t happen on a base of poor paying and precarious temporary jobs.

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