Trouble hiring? Employers are trying all sorts of strategies and perks to lure new employees, but labor shortages are still a problem. Could temporary freelancers (so-called “gig workers”) be the answer for your business?
The gig economy is not new. Estimates suggest as many as 55 million people, or 34 percent of the workforce, were gig workers pre-COVID. As with all work arrangements, hiring gig workers has its upside and downside. Here are a few things to consider:
Cost: Some independent contractors charge by the hour, day, or week, while others charge by project, engagement, or assignment. While highly skilled independents might seem expensive relative to what you’re paying full-time employees, remember that you aren’t paying for their benefits, such as health insurance, retirement, paid sick leave, or unemployment benefits. The cost of benefits can add up to 40 percent to a full-time employee’s salary, saving you a substantial amount.
Expertise: Gig workers know their stuff. They can be CFOs, marketing experts, IT gurus, salespeople—you name it. You’re hiring them for their expertise, so you can be specific in your selection. Often, you’re getting the best-of-the-best who are choosy about the assignments they accept.
Plus, you’re hiring an independent worker who can hit the ground running with little to no learning curve.
Easy come, easy go: There’s no long-term commitment required for a gig worker. Most work on a contract basis. They do the job and move on to the next gig. For many types of gig jobs, hiring is managed online. Bonus: there’s no “firing” required (unless the worker is subpar) or severance due at the end of the gig.
Loyalty: Gig workers are motivated. They want to make money, learn, and grow, but by the nature of their business arrangements are not particularly loyal to your company. If a better or more interesting offer comes along after their contract is up, they will head off to the next gig.
Independence: Independent contractors are self-employed, so they are not covered by most federal employment statutes. However, because hiring an independent contractor lets employers off the hook for benefits and employment taxes, there are strict federal rules governing the classification of independent contractors versus employees.
Who’s Out There?
Not every business is well-suited to hiring gig workers. Before embarking on this approach, you should seek advice from your HR team, advisors, and business-owner contemporaries about how it could affect your operations and bottom line. But gig workers could be just what your business needs to help you through this unprecedented period in the labor market.
From proper tax planning to structuring employee benefit plans, your financial advisor can ensure you have the flexibility to keep your organization properly staffed and attractive to prospective employees. Contact Dembo Jones today to speak with one of our small business experts.