A Faustian Contract

CNBC reports that the fastest growing-segment of the employed are contract workers: freelancers with few if any benefits and no real hope of getting anywhere. If you want to see what Wall Street wants the American workplace to look like, take a peek behind the curtain.

Friday's employment report showed that the number of people forced to work part-time for "economic reasons" rose by 423,000 in March, to 9 million. And a new study by the Human Capital Institute showed that one third of the US workforce is now comprised of non-traditional "contract" workers. The study says the pool of part time workers is growing at more than twice the rate of the regular workforce.

Cash-strapped American companies are taking advantage of the situation. More than 90 percent of US firms use contract talent, with spending on them doubling in the past six years, to more than $120 billion.

It's a trend that experts in the field say will continue even as the economy recovers.

"It's a paradigm shift," says Dennis Nason, CEO of Nason and Nason, an executive search firm based in Coral Gables, Florida. "Contractors have been used by companies successfully, and it's changed the relationship between worker and management."

If you want to know why the U-6 is growing so quickly, there you go. Fire your staff, replace them with contract workers with no bennies.

But there are some obvious drawbacks for temporary workers. They have to look for another position if their part time job ends. And if they are feelancing, they have to be searching for new clients.

Workers are also not part of a pension plan or matching 401k and they might need to buy health insurance, if say there's no working relative that can put them on their policy.

However, Nason points out that today's benefits are transportable. "With 401ks, people are not trapped as before in companies," says Nason. "Being a portable professional has become an intregal part of the economy."

And as for health care, the COBRA plan allows laid off workers to buy coverage for up to a year after being leaving their full time job help make the transition from full time to part time. And the Obama stimulus plan allows government coverage of up to 65 percent of COBRA costs.

"Portable professionals" is a polite term for "migrant worker with an iPhone". American businesses would love nothing more than to have a sea of contract workers they can fire with almost no notice, don't have to pay benefits for, and don't have to promote or show any loyalty to. Meanwhile, contract workers get paid less, have to pay for health care and retirement themselves, and can't make any long term plans due to the mercurial position they are in. If you're a banker, are you going to give a mortgage loan to a contract worker? If you're a contract worker, are you going to buy a home? How is that going to help stabilize the economy? It won't, of course...but it'll sure fatten the bottom lines of the Masters of the Universe.

The just-in-time delivery world of work is now being stretched to the logical endpoint: just-in-time employment. By taking away long-term stability and loyalty, we'll have even less influence over the path of our lives, reduced instead to digital nomads wandering the country at the whim of employers. Benefits? Health care? You're lucky to have a job, wage slave.

No sense of community, no property, no stability, Cincinnati is as good as Newark is as good as Minneapolis is as good as Denver. Imagine trying to raise a family like that. Migrant workers of the 21st century...that's where we're all headed. Maybe you work this month. Maybe you don't. Maybe you're in another company this month. Maybe you're in another state. This is why home prices will continue to fall for a long, long time.

Traditional employment is dead and gone, folks. Our standard of living is going with it. Your employer would love to do nothing more than to replace you with a contract worker with no benefits. More than ever we need the Employee Free Choice Act, universal health care, and true progressive legislation.

It's a Faustian contract, for sure.