Employee cost is often looked as a sticky fixed expense. Having contract workers sounds like a solution. But, contracting might be costly for the company too.
Moreover, there is reason to believe that just as contract work is not a panacea for workers, it is also not a panacea for companies. “Contract workers have a fundamentally different relationship with the companies they work for than employees do,” says Gartenberg. “Just as companies under-invest in contractors, there are ample studies that suggest that contractors likewise under-invest in the companies. This could definitely hit the bottom line in areas like innovation and customer service.”
If we are in fact in the process of solidifying two distinct classes of workers — one employee in which firms invest, and another that is in a sense more disposable — what are we as a society losing?
“A lot,” says Gartenberg. “This is what the American Dream is built on — upward mobility. Contract work and outsourcing, among other factors, appear to be disrupting that engine, and it is not clear what the best policy response, if any, should be.”