One of the greatest challenges of the 21st century is reversing the decades-long decline in the quality of jobs—an issue that the pandemic laid bare. Millions of frontline workers endure health and financial risks daily to keep the economy afloat while CEOs and shareholders collect the profits. Though the job quality crisis is a structural problem, it is reflected not only in individual jobs and companies, but also in the way that work is arranged.
One of the work arrangements that has been most detrimental to the quality of jobs is the contracting out of core work by large companies to smaller companies—what David Weil has described as the “fissured workplace.” When a company adopts a fissured workplace, some workers report directly to that company, while others report to a different company. As a result, two people can work virtually the exact same job, providing the same value to the company, but have drastically different pay, benefits, and protections on the job. Also known as domestic outsourcing, subcontracted work tends to offer lower pay and fewer benefits than direct-hire work. Workers of color are disproportionately hired into these roles which accelerates occupational segregation or the crowding of workers of color into low-wage jobs. Occupational segregation is powerfully explored in a recent report from Anne Price and Jhumpa Bhattacharya using Mississippi as a case study.
Despite its rapid rise in recent decades, subcontracted work has often been overlooked in future of work conversations. Some of this oversight is rooted in the difficulty of tracking and measuring subcontracting. In addition, it has lacked clear policy levers, unlike worker classification, which has come to dominate conversations in the tech sector, where subcontracting is common. The reality is that many who work in tech—the temporary, contract, and contingent workers who report to different bosses than their directly employed counterparts despite performing critical roles for the companies—have been largely locked out of tech’s prosperity. For years this practice has been difficult to scrutinize, in part due to contracting’s murky nature.
Last month, TechEquity Collaborative, where I serve as an advisor, released the Contract Worker Disparity Project, a report that provides one of the first comprehensive looks at inequities in tech contract work. Synthesizing public datasets, independent research, legal and regulatory landscapes, conversations with industry insiders, and hundreds of firsthand worker accounts, the report makes the case that although subcontracted workers value the opportunity to work in a desirable industry, corporate and policy changes are needed to ensure that the workers directly powering tech benefit from the industry’s growth.
TechEquity’s work illustrates the impact of subcontracting on job quality and occupational segregation. Among its findings:
- Contract workers receive fewer benefits than direct tech workers.
- People of color are overrepresented in contract roles compared to the overall tech workforce.
- Contract workers of color are more likely to be paid hourly than annually, and to receive lower pay than white contract workers.
- Contract workers of color are less likely to be converted to direct employment than white contract workers.
Job quality has gained increasing attention from leaders across sectors, leading to an overdue and urgent conversation. While characteristics of individual jobs are an important component of this conversation, we must also consider the structure of work—how workers are hired, placed into jobs, and provided career pathways, and how these structures can vary even within single firms. The solutions are cross-sector: policies that raise the floor to advance good jobs for workers in all arrangements, employer practices that promote parity between contract and direct-hire work, and mechanisms for workers to exercise power and voice on the job.
Tweet Though the #jobquality crisis is a structural problem, it is also reflected in the way that work is arranged. @AspenFutureWork Fellow @nataliefoster highlights results of @TECollab’s Contract Worker Disparity Project.
Tweet The reality is that many who work in tech—temporary, contract, and contingent workers—have been largely locked out of tech’s prosperity despite performing critical roles for the companies. Read more from @nataliefoster of @AspenFutureWork.
Tweet Findings by @TECollab show contract workers receive fewer benefits. POC are overrepresented in contract roles, are more likely to be paid hourly, receive lower pay, and are less likely to gain direct employment than white contract workers.
Tweet #JobQuality must consider the structure of work—how workers are hired, placed into jobs, and provided career pathways—and how these structures can vary even within single firms. Read more from @nataliefoster of @AspenFutureWork.
Tweet The #FutureofWork must include policies that advance good jobs for workers in all arrangements, employer practices that promote parity between contract and direct-hire work, and mechanisms for workers to exercise power and voice on the job.