Why A Slow Economy Is The Right Time To Introduce Contingent Workers

Temporary work may outlast the downturn

In times of economic uncertainty, freelance or contracted workers are often the first to go, but in this year's predicted recession, temporary work may outlast the downturn as businesses integrate more flexible labor structures.
 

In fact, job postings for contract workers have increased by 26% compared to this time last year.  Businesses are thinking more critically than ever about their labor strategy, which is not surprising as labor costs are the most expensive line item for most companies, accounting for up to 70% of total business costs.

On the fence about whether your business can utilize contingent workers? Here are some key benefits of leveraging contract workers amid a potential recession:

Provide a More Agile Labor Structure

With recession comes unpredictability – it can be nearly impossible for businesses to forecast market demand and in turn, effectively plan for their labor needs. However, businesses can put strategies in place that will enable them to stay nimble and reactive to economic shifts.

Leveraging contingent workers can take some of the guesswork out of the equation. Companies can maintain a core permanent workforce, while also tapping into freelance or contract workers for areas of the business where market demands are more unpredictable.

This means businesses run less risk of over or under-spending on labor costs and can more easily fluctuate with demand. Contingent workers can be a strategic play during a slow economy as it provides leaders with an extra layer of security when it comes to staying within the labor budget.

Tap into a Large Talent Pool

During this time of economic uncertainty, workers are also dealing with high inflation – U.S. households are paying $371 more on average per month to purchase the same goods and services they did a year ago. This could be a major reason why many workers do not feel they can comfortably cover all the necessities for their family with their current earnings, according to Wonolo’s State of Financial Health Report.

To ensure they can make ends meet, many are turning to temporary work as an additional source of income. Since 2021, the number of temporary workers has grown by 14.8% and this demand has created a large, untapped pool of talent for businesses.

While there is a growing number of workers, businesses still struggle to connect with the right workers for their jobs as over 11 million jobs remain open. Businesses faced with this problem can turn to temporary workers to both fill their immediate needs and serve as potential candidates for permanent positions as needed.

Build a Pipeline of Candidates for Long-term Hires

One trend that has emerged in the face of potential recession is the enacting of hiring freezes, as companies are hesitant to bring on long-term hires given the uncertainty of the future.  Businesses that put a pause on full-time hires, however, should be cautious about the risk of entirely stopping the development of a talent pipeline.  

Contingent workers can play a key role in helping organizations meet market demand during hiring a freeze and building a pipeline of potential candidates after the freeze is lifted.

When businesses utilize these workers during a hiring freeze, they are creating new relationships with workers who could be a fit for a full-time role down the line – this can serve as a sort of trial run for both the business and the workers. Businesses can witness first-hand how the worker completes a set of job duties and interacts with others on the worksite. The worker can get a deeper insight into how the business operates and what its culture and values are. Having this knowledge can ensure companies make better hiring decisions and can save HR departments a significant amount of time trying to find candidates through the traditional staffing process when hiring resumes.

Temporary workers not only fill companies’ immediate needs but set them up for future success. There is so much unknown during economic downturns, and having an agile labor strategy with contingent workers can help businesses navigate through the uncertainties with much more flexibility. Even when the potential recession is far behind us, temporary workers will be here to stay as they have quickly emerged as a reliable, strategic source of labor.

Author Bio

Monica Plaza is Chief Strategy Officer at Wonolo.