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The Downside of the Gig Economy

July 10, 2017 — With about one-quarter of the U.S. labor force — that's 40 million people — working in part-time, independent contractor or contingent positions, the lack of employee benefits has made this population financially vulnerable.

Of those employed on a part-time basis (18% of all U.S. workers, or 27 million people), three-fourths choose to work part-time to achieve a better work-life balance. Most are Millennials (ages 22 to 29) who are starting their careers and pre-retiree Baby Boomers (ages 60 and older) who are reducing their work hours.

But, in exchange for a more flexible work schedule many part-times are falling behind financially because part-timers and contractors often are ineligible for employer-sponsored insurance or retirement benefits, according to findings in "Part-Time Nation," a study released by the Guardian Life Insurance Company.

Key findings:

  • One in three part-timers have an employer-sponsored retirement plan compared to 69% of full-time workers.
  • 25% of part-timers have an employer-sponsored medical plan compared to 80% of full-timers.
  • Less than 20% of part-timers have dental, disability or life insurance benefits at work compared to more than half of full-timers.

"More Americans are seeking greater autonomy and flexibility in their career than they can find in the traditional nine-to-five model," said Peggy Maher, senior vice president and head of Guardian's direct-to-consumer business. "While pursuing a passion and achieving greater work-life balance are indeed major advantages of alternative work arrangements, the lack of important insurance and retirement benefits can negatively impact financial security for themselves and their families."

Most part-timers feel they are faring well financially, but this may be a false sense of security from a lack of understanding on how employer benefits can provide financial stability, according to the study. Two demographic groups that don't feel financially confident are Generation X and single parents, who cited money and personal finances as the primary source of stress in their lives. Employers that are anticipating an increase in part-time and contract workers can better compete for talent by providing their workforce with employer-sponsored benefits.

Contents © 2017 WorldatWork. For more information, contact the Copyright Department at WorldatWork.

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