Monday, December 31, 2012

Use of Contingent Workers

A firm, during the recession, laid off most of its staff and hired many of its former employees as contingent workers, having them work hourly on projects without paying benefits, providing office space, or having any long-term commitment to them. While that gave these workers the freedom to work on their own projects, it also increased their employment insecurity.

What is the utility of an employer having contingent workers instead of fulltime employees? The answer to that question has become especially relevant in today’s economy, where some observers estimate that as much as half of the workforce could be self-employed in twenty years time.

Clearly, digital and telecommunications technology has enabled a contingent workforce to be more productive, whether working in an office or at home, next door or halfway around the world. At the same time, the globalization of the economy has pushed employers to reduce the number of fulltime employees in order to adapt to the unpredictability of global demand and to adjust to the downward pressure on prices and wages because of global competition.

Hiring workers just to do particular tasks or work on specific projects with no long-term employment obligation, however, has its drawbacks as well. It can negatively affect the quality of the work, the speed with which things get done, the continuity of co-worker relationships, and even the mutual trust that makes teamwork possible. What may seem smart from an economic point of view can become anything but that from an employer or employee perspective.

The various definitions of “utility” highlight this dilemma. Most commonly equated with usefulness, utility also refers to someone who can serve as a substitute for someone else – a utility player on a baseball team, for example – or to something that is useful but of poor quality – a utility building, for instance. So, while the widespread use of a contingent workforce has usefulness, the quality of the work by these substitute employees may never equal that of those who they replaced.

In ethics, utility entails doing the greatest good for the greatest number of people. And as such, the utility of using contingent workers may rest upon the consequences of doing so for the largest number of clients or consumers. If an office produces mostly commodity work, repeating relatively standard projects over and over again, then a contingent workforce might make sense. Even if the workers themselves might prefer full employment, a strictly utilitarian calculus would weigh the number of employees affected against the number of people benefiting from the lower costs of the end product as a result of lower production costs.

If, however, a firm does mostly custom work for clients, consumers, or communities of various sorts, then quality will likely trump price in delivering the greatest good. In such cases – which constitute the largest percentage of the work that architects and designers do – contingent workers may not be worth their lower cost. What an office may gain in terms of lower wages or healthcare benefits, it can more than lose with lower quality of work and lower productivity among its workers.

The other major definition of utility has to do with businesses that perform a public service subject to special governmental regulation – an electric utility, for example. While architecture and design offices are not official utilities, they do perform a public service regulated by such things as building or zoning codes. As such, they need to focus on the public’s best interest, which almost certainly does not include the overuse of contingent workers, whose unstable employment situation also makes them a public burden.