SPARK ADP

2020 is quickly shaping up to be the year of the “gig.” Talent composition is shifting accordingly, with some projections suggesting that 50% of the workforce will be comprised by freelancers in the next decade. As the labor economy diversifies, the gig economy itself will transform – human capital management technologies will evolve; worker classification and regulation will intensify; and the way these workers get paid will change drastically.

Freelancer. Contractor. Part-timer. These labels all describe one flavor, or another, of the gig worker – a term originally popularized by challenger brands such as Uber and Airbnb. But what first started out as a niche category of employees with limited skill sets, now proliferates across many industries, geographies and specialties.

As more and more workers — spanning multiple generations — defer to “gigging” as a way to circumvent a traditional “9-to-5” office job, employers are rethinking how to accommodate these employees altogether. This has given way to five prevailing trends and predictions that will define the gig economy in the next year.

1. Alumni labor clouds go mainstream

Nearly 10,000 baby boomers are retiring every day, creating a tidal wave of turnover. When retirees walk out the door, their in-depth corporate knowledge goes out with them, powering a corporate “brain drain” that is plaguing 21^st century companies everywhere. Adjacent to this, companies are also experiencing skills shortages everywhere, brought on by a tight labor market. As a way to solve for both “brain drain” and skills shortages concurrently, companies are turning to on-demand labor clouds. With a labor cloud model, all of the talent a company needs is managed from a single platform – empowering them to build, automate, and scale their network of skilled alumni workers.

2. Massive regulation reform at the state level

On one hand, the federal government has reduced regulations of contingent workers, making it easier for companies to engage their workforce. By contrast, states like California (AB-5), Massachusetts and Illinois take a more rigid approach to employee misclassification by modifying their independent contractor (IC) definitions, meaning more workers will be viewed as W-2 employees. In 2020, we predict there will be an increase in major court decisions at the state level, and legislative action by 14 state governments.

3. The enterprise finally embraces dynamic teams

More and more Fortune 500 companies are starting to have conversations whereby they recognize dynamic teams, and acknowledge that “teamwork” is how the majority of work happens. The “teams” of 2020 will diversify — employees, contractors, part-time workers and freelancers will all be accommodated. Moreover, enterprises will need to start demanding systems to navigate and manage these teams more seamlessly.

4. “Pay my way” emerges

To-date, ride-sharing companies like Uber and Lyft have been the most vocal advocates for getting paid immediately. As this concept shifts from “exception” to “rule,” companies will need to adapt to provide real-time payment to all employees, regardless of classification. There will be a subsequent impact on unbanked communities, who have historically turned to predatory payday loans to satisfy their dire financial needs. In 2020, expect pay sentiment to shift, as employers recognize that real-time pay, even at a small fee, is massively more effective and cheaper in the long run. Employees of the future, including across the gig economy, will demand to be paid how and when they want; employers will follow suit.

5. The birth of “50% by 2030”

For some time now, we’ve heard predictions that 50% of the workforce will be comprised of freelancers by 2030. Moreover, in another decade, it will be 50% again. To be blunt, these estimations are inaccurate and — to some degree — unfounded, as there is no centralized clarity around freelancer composition in today’s workforce…yet. Instead, expect a slow and steady rise in freelancers, with no regulatory reform, to continue to set the pace.

If it wasn’t clear before, it’s clear now: we can no longer ignore the impact the gig economy will have on the way work gets done today or in the future. HR leaders need to act now — posthaste — to ensure their staffing models and HCM strategies are purposefully designed to evolve in lockstep.