There is a discernible silver lining in the otherwise ominously dark cloud of Covid-19: A whole new category of employment will emerge soon that will be both better for employees and employers.
I call it the interim economy.
The word “interim” literally translates from its Latin origins as “the time in between,” and for businesses the next two years will be a time in which they either adapt or disappear.
First, let’s lay our cards on the table: There’s no guarantee that a vaccine will be created, ever; 40 years on, an AIDS vaccine has yet to be found. Likewise, the probability of the U.S. reaching so-called herd immunity in a country the expanse and size of ours seems unlikely.
With the sudden, massive shift to remote work to stop the spread of the pandemic over the past few months, companies have found that working from home actually works: A recent study concluded that up to 40% of all jobs can be performed at home, while before the pandemic, it’s estimated that only 3% actually could be done remotely.
This trend was already afoot before the pandemic, but it was largely an opt-in lifestyle choice or confined mainly to the blue-collar service industry. When it came to white-collar and professional jobs, it was still the rare exception rather than the rule.
Now individuals and companies have found they no longer have to be held hostage by geography. Large but nimble tech companies, like Google, Twitter, Facebook and Square, have already announced that many of their employees will be allowed to work from home at least through the end of the year.
Some companies may even choose to continue remote work on a permanent basis: According to a March 30 survey conducted by Gartner Research of 317 CFOs and finance leaders, 74% say they will move at least 5% of their previously on-site workforce to permanently remote positions post-Covid-19. That synchronizes with a recent Gallup poll that found nearly 60% of employees would like to keep working remotely after access to businesses and schools have been restored.
This alignment between employee desire and employer needs is a once-in-a-lifetime opportunity to change the moribund employment landscape. The next step: transitioning these workers into independent contractors.
The pandemic was just the tipping point
Of the 160 million people employed in the U.S. in February, 65% had a full-time job and 33% had a contract job with a predetermined end. The average length of stay for full-time employment was 3.5 years and decreasing. The average assignment length for the contract category was 2-plus years and increasing. The new economy already was in place, waiting in the wings.
The pandemic was just the tipping point.
Even after stay-at-home restrictions are eased, and even if somehow we dodge the second wave of the virus that is widely predicted to emerge this fall, there are so many people unemployed that a V or even a U bounce-back of the job market is nearly impossible.
According to Heidi Shierholz, the former chief economist at the U.S. Department of Labor and current director of policy at the Economic Policy Institute, if we succeed in restoring “a million jobs a month — which would be absolutely unheard of — it would still take almost two years to get back to where we were.”
Faced with bleak balance sheets, businesses will be forced to cut labor costs. But how? Now that the pandemic has shown that many companies can function pretty much as usual with remote employment, businesses will strike a deal with their full-time employees: Allow them the lifestyle of working from home in return for becoming a contract worker. Given that up to 25% of labor costs are besides earned wages — paid personal time off, health-care benefits, retirement plans and other additional costs — the potential savings are enormous.
Given that up to 25% of labor costs are besides earned wages — paid personal time off, health-care benefits, retirement plans and other additional costs — the potential savings are enormous.
Another huge cost savings potential is not having to pay for workers who are tied to a particular locale. If an employee can live in Flagstaff, Arizona, or Kennebunkport, Maine, a company would no longer need to pay for San Francisco or New York costs of living. If a person is able to work as an interim employee and perform remotely from essentially anywhere, the salary requirement may differ by as much as 30%. That could have a tremendous macroeconomic impact on business.
What the interim economy will look like
How exactly will the Brave New World of Work look like for the formerly full-time, salaried employee?
Employees will thrive as independent contractors. Think, for example, entertainment and sports. In the not too distant past, virtually all film actors were salaried employees of the major Hollywood studios. That changed dramatically with a 1949 U.S. Supreme Court ruling that ended the vertically integrated studio system of producing, distributing and exhibiting movies. A decade later the biggest and brightest stars were independent contractors, represented by talent agents. Similarly, most professional athletes in the U.S. before the 1990s didn’t have agents.
Sought-after employees across many industries will have agents representing their careers. Newer players will be able to ride on the established stars’ coattails, a process that will set industry-standard contract work fees and perks.
Contract workers with similar backgrounds will form trade organizations. This may be in the form of professional unions, if you will, to represent themselves collectively, much as film and TV actors have with the Screen Actors Guild, and professional athletes have with various players’ unions. (Facebook employees’ very public disagreement with Mark Zuckerberg over President Donald Trump’s questionable messaging may be a sign of bigger things to come in terms of employee self-empowerment.)
Home will become a mini metropolis for each worker. Virtually any service will be efficiently delivered to an individual’s home, including health care. In fact, health care will help drive the new interim economy as big tech streamlines the delivery of state-of-the-art medicine through telehealth and big data innovations.
Professional branding will make resumes obsolete. The No. 1 activity that every worker in the interim economy should get comfortable with is professional branding and reputation building in their respective areas of expertise. The days of sending out resumes, answering job postings and hoping to tap into analog networks of exclusively “people you know” will no longer create the best opportunities for employment. Actively networking, proper positioning of work experience and personal web pages for careers will all be critical assets for career building.
Pros and cons
Each age group of current full-time employees will have their own advantages and disadvantages in the interim economy.
Workers ages 50 plus, who will represent 35% of the labor market in 2022 (a combination of late baby boomers and early Gen Xers), will be targeted first for dis-employment because they tend to have the highest salaries. On the other hand, they have the most experience and institutional knowledge, which will become critically important in a world of on-demand workers.
Millennials will have to compete both with younger and older workers for income but will have the advantages of enough experience and a generational tech savviness to make themselves unique assets. Gen Zers will be handicapped by their lack of experience but will succeed by their willingness to occupy initially the lower end of the pay scale and through their sheer toughness born out of experiencing the Great Recession as children and now the pandemic as young adults.
We’re about to embark on a new employment revolution. Both companies and individuals who embrace the new interim economy will thrive. As humans, we tend to process changes through our existing reality or self-imposed limitation. This is one of those times when we really need to look at things as they are, not as we see them.
Joe Mullings is a career expert with 30 years advising companies and individuals. He is the founder and CEO of The Mullings Group, a firm specializing in medtech talent acquisition. Recently, he was appointed the chief visionary officer of MRI, the 3rd-ranked executive recruitment firm, with 400 offices worldwide.