Thirty-five percent. That is the share of the American workforce MIT’s Paul Osterman puts in contract, freelance, or what he calls marginal employment in Disposable Workers, published by Harvard University Press last month and reported by Fortune on Tuesday. The estimate draws on an original survey of more than 6,000 adults and about 100 interviews with workers, employers, and staffing agencies. Marginal workers are W-2 employees hired with the understanding that they will neither stay nor advance: adjunct faculty, staff attorneys brought on for a single case, contractors embedded for years inside technology companies with no path to a badge. Gig work, the category that gets the headlines, is about 2 percent of the workforce. The other 33 percent is the story.
Osterman is careful about AI. The shift predates it by decades. What AI adds is uncertainty, and uncertain employers default to arrangements they can unwind.
Now put Tuesday’s JOLTS release next to that. Job openings were little changed at 7.3 million, after June was revised down by 177,000. Hires were 5.1 million and the hires rate fell back to 3.2 percent, where it bottomed late last year. The one industry move the Bureau flagged as significant was a drop of 188,000 hires in professional and business services. That sector is where staffing firms, consultancies, and technical services live. It is the plumbing of the flexible workforce, and the hires rate also slipped at establishments with 5,000 or more employees, the companies that run the largest contingent programs. ADP followed on Wednesday with 38,000 private-sector jobs added in August, the slowest month since January, with professional services among the sectors shedding jobs.
When a third of the labor force works on terms that can be ended without a meeting, the people holding the leash pulling back is the macro story.
Employers are paying to move specific people while holding total headcount flat. ADP’s Pay Insights data, released Wednesday alongside the jobs number, puts gross pay growth for job-changers at 7.3 percent year over year against 4.4 percent for people who stayed put. Base pay shows the same gap: 4.7 percent for changers, 3.0 percent for stayers. The volume of hiring is falling and the premium for the right hire is holding. That is a targeted market. Companies are buying particular capabilities one requisition at a time, and the requisition increasingly reads contract, interim, or fractional.
I have sat through enough workforce program reviews to know what a professional-services hiring drop looks like at the client level: the contract requisitions freeze first, weeks before anyone inside the company uses the word layoff. The July JOLTS number is that freeze showing up in federal data.
For experienced professionals the changer premium is the market stating its terms plainly. Mobility gets paid. Tenure gets a 3 percent raise. If you have been quoting a rate anchored to your last salary, the data says the anchor is wrong.
Friday’s August jobs report lands at 8:30 a.m. Eastern. July’s payrolls fell 23,000, and a second negative month is on the table. The August JOLTS, which will show whether the professional-services drop was one month or the start of a trend, does not publish until September 29, two weeks after the Federal Reserve votes.
Osterman dates the disposable era to August 1981, when the air traffic controllers were fired and corporate America learned it could. Gen X walked into its first jobs a few years later. Nobody handed us the memo. We worked it out around the second layoff, somewhere between the pension disappearing and the 401(k) match getting suspended, and then we did the sensible thing and stopped expecting the building to love us back.
So a book-length study arrives to say a third of the workforce is held at arm’s length, and the reaction from the people who have been at arm’s length since the Reagan administration is a nod. He calls it disposable. We call it the day rate, net 30, and a scope clause.
Here is the part the word misses. What do you call someone who has been disposable for thirty years and is still getting hired? Experienced. Nobody calls the recycling back. These people get called every time the thing they built breaks, at a rate that reflects the inconvenience, by the same company that filed them under overhead. That is not a sad story. It is an invoice.