In 2007, when the housing bubble burst and the US economy began its steep slide into recession, many people had their balanced lives disrupted as employers shed jobs in a desperate attempt to keep their businesses afloat. Some of those who went through this breakdown of the status quo were the victims of layoffs and downsizing initiatives, others saw their employers go out of business, and still others got stuck in a spiraling debt cycle with an underwater mortgage and more credit card debt than they could afford. In response to market pressures to cut costs just to stay solvent, employers increasingly transitioned work to contractors, believing that this system would make their companies more resilient. If they had more work to do, they could bring on more contractors or ramp up the number of hours that their existing consultants were working, but they were not tied into the costs and inflexibility of full time employees.
Jeff Wald is one of the founders of Work Market – a company that helps big businesses leverage what he refers to as the contingent workforce. As someone who spends all of his time facilitating the relationship between companies and contract workers, he is very close to the process and has some great insights on how people and companies relate to each other outside of the typical employer/employee model.
Traditionally, when the economy is great, the number of freelancers and free agents drops. Jobs are plentiful, unemployment is low, and most people choose a job over a freelance career. When the economy is bad, employers cut jobs, and we generally see in increase in the number of contractors, consultants, and other independent workers. However Jeff and his partners have observed a shift in this pattern in recent years. Despite the improving economy, the number of independent professionals has increased. Work Market’s growth is a testament to this decoupling of the relationship between the state of the economy and the number of people freelancing.
Work Market is Jeff’s third startup so he is no stranger to employment, self-employment, and how businesses operate. Like many successful entrepreneurs, Jeff is an observer. He watches the process of business, the way that companies work, and the things that they struggle with. The very best opportunity for a successful venture is one where a specific type of organization has a problem that keeps them from doing something they want to do. In this case the problem that Jeff and his partners saw was around how big companies engage with individual people outside of the boundaries of traditional employment.
Full-time employees come with administrative overhead. You have to manage them, find places for them to sit, give them benefits, and pay a portion of their employment tax. But contract labor can be much more flexible – workers can be engaged to pick up specific tasks, and need to be paid for only the time they work. Smaller companies were taking advantage of this nimble, cost-effective workforce but bigger companies weren’t. They had a problem.
For Jeff, that problem was a great opportunity. By creating a structure which allowed large companies to engage with the contingent workforce, Work Market became a key player in the evolving landscape of the labor market. It’s important to understand that big companies often do things for very different reasons and in very different ways than small companies do. Because of the scale of their operations, they can’t afford to assume that an unlikely thing won’t happen. If you have ten employees, an event that happens one time in a thousand is not all that likely to happen to anyone at your firm. If you have ten thousand employees, it’s likely to happen to about ten of them.
Further, beyond the simple issue of scale, large companies are often more heavily regulated than small ones. Most of the provisions of the Affordable Care Act only apply (as of right now) to companies with over fifty full time employees. So big companies have to spend more time and resources on understanding and complying with these new regulations. The reason Work Market is appealing to large companies is because they get all the benefits of working with a flexible workforce, while reducing some of the paperwork and the risk.