Let Them Eat Cake! How Policy Reform Can Improve the Future for Workers and Business

With roughly 20% of U.S. GDP and 30% of the U.S. workforce at stake, we are well overdue for driving meaningful change that would benefit talent and business alike.

By Teresa Carroll, EVP; President, Global Talent Solutions; & GM, Sales/Marketing/Human Resources & Jeff Wald  |  February 16, 2017

Millions of workers stand at the ready to help fill skill gaps in the U.S. economy. Thousands of companies struggle to find the talent they need to move their businesses forward. What’s standing between these two seemingly willing partners? Too many regulations that complicate the talent economy, and too few policies that support the independent workforce. With roughly 20% of U.S. GDP and 30% of the U.S. workforce at stake, we are well overdue for driving meaningful change that would benefit talent and business alike.

Business leaders are tasked with assembling the right skills from an increasingly fluid and dispersed talent pool, even as technological advancements and global economies change the way work gets done. Organizations seeking to innovate have to continually adapt to offer critically skilled workers the kinds of opportunities and engagements they demand – and increasingly, that talent is demanding flexible engagements that keep them open to multiple new opportunities. Driven by the talent crunch, companies will need to attract a more diverse range of these independent workers, including temporary employees, independent contractors, self-employed professionals, alumni, project-based contractors, gig workers, and others who have overwhelmingly chosen this work style for positive reasons.

The use of independent talent is no longer solely a matter of cost reduction. Companies can and do use independent workers to lower their costs in certain labor categories; but in fields where demand outpaces supply, independent workers are often more highly paid than traditional staff because their compensation is more responsive to real-time market trends.  HR used to say that all the “important” talent resided inside the company walls, with “contingent labor” pulled in to supplement less critical tasks. That’s no longer the case. Companies can’t execute their business plans without the right talent in place—and they can’t secure and retain the right talent if their hands are tied by red tape. 

As unemployment dips below 5% and the labor market tightens, businesses need to be free to develop, reward, and retain the best talent to remain competitive. Yet the current web of labor policies stifles those attempts. Managers are left fearful of violating the many rules that govern what they can and cannot do for independent workers. While they are free to offer training, retirement plans, benefits, paid time off, etc. as incentives to attract and retain traditional workers, they cannot do so for their independent workers without risking expensive claims and misclassification charges.

It’s frustrating and unfairly limiting on both sides of the equation. Independent workers contribute more than $2 trillion to the U.S. economy but lack basic benefits such as training, unemployment insurance, and workers’ compensation, leaving too many hard-working people one accident or injury away from disaster. Businesses are unable to provide them a safety net without violating complex rules that have not adapted to the new world of work. Perhaps no example illustrates these absurd and arbitrary lines more clearly than the office birthday party. In a ritual repeated in thousands of offices across America, traditional workers are invited to celebrate and eat cake in a nearby conference room, while independent workers are left behind at their desks, excluded by managers who fear co-employment claims. When birthday cakes have the power to frighten business professionals, it’s a clear sign that reform is overdue.

We need policies that support and empower independent work rather than punish it. As the business community tries to maximize innovation and productivity, its best-intentioned efforts will continue to fall short as long as policies are fixated on the outdated notion of “employees.” Businesses deserve clear and logical rules about how they can effectively engage and retain each type of talent they need without facing fines and litigation. As two economists at The Conference Board recently observed, “For executives to fully leverage the power of alternative work arrangements they need not only platforms for hiring. They also need to lead the way in ensuring that the appropriate eco-system of training, engagement, and benefits are provided to offer these workers greater stability in an uncertain world.”  Kelly Services’ upcoming Labor Policy Forum will do just that. We look forward to gathering with policy makers, business leaders, industry experts, and economists for a more inclusive conversation that acknowledges the modern nature of work and sets an actionable agenda to build a better future for free agent workers and business alike. It’s time for reform…and it's time that everyone be invited to the table for cake!

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