May 7, 2020

COVID-19: Your contingent workforce may be changing forever

How to build a more sustainable independent workforce, even during a global crisis.

As COVID-19 spreads across the U.S., its impacts become more obvious and dire every day. From the strain placed on healthcare resources to the physical and mental toll of quarantine measures, we’re all experiencing this outbreak firsthand. But, despite the tragedy and uncertainty of the present, most of us also can’t help looking forward. How is COVID-19 going to change our world? What will society look like after?

These questions have troubling answers, especially for the economy. The stock market continues to fluctuate as governments scramble to provide relief. Entire workforces have transitioned from the office to the home; consumer demand for certain goods has either skyrocketed or plummeted; and unemployment numbers have reached all-time highs.

What this means for your business depends on numerous factors, including the product or service you’re selling and the workforce model that keeps it all running. Only one thing is certain: During times of economic instability, some companies will fail, and others will thrive.

The key difference between the two is adaptability. That’s why business models designed to enable flexibility—such as those using independent contractor workforces—may be uniquely positioned to emerge from this crisis stronger than before.

How crisis creates opportunity

Every emergency produces creative responses to rising demand. This shift toward agile and responsive business practices will have the biggest impacts on the biggest industries, but it will have a significant impact on gig work as well.

In logistics and delivery, for example, there is huge potential for change. Big-ticket delivery items like appliances may suffer as customers shun showrooms and in-home installations. Other transportation services, however, are experiencing a surge. Many bars and restaurants in the U.S. temporarily closed, forcing establishments to expand their takeout and delivery options. In some cases, states are allowing pickup and drop-off of alcoholic beverages—a service previously prohibited by law. In addition, more people are shopping online for products traditionally purchased in stores, such as medical supplies and prescriptions, groceries and meal kits, and more.

Demand exists, and these modern business models are meeting it. High-tech shopping and delivery options are already flourishing, and once a door opens on a more convenient way of doing things, consumers will usually pay to keep that door from closing. As a result, companies that can adapt quickly—by, say, empowering delivery service providers to serve multiple businesses—will not only be poised to address demand related to COVID-19 but also gain a strong foothold in a changing economic landscape.

Can’t we just go back to the way things were?

It is best to accept this now: The world will never go back to the way it was before. Take the last major global crisis, 2008’s “Great Recession,” which had huge, lasting impacts on banking and real estate, corporate employment structures, and international spending habits.

Now, hundreds of thousands are suddenly working from home (or in the field under strict quarantine conditions), and the resulting domino effect will be felt throughout the economy as office space, fuel consumption and other related expenses decline. For industries affected by these fundamental shifts, adaptability in the face of economic stressors will be a key indicator of survival.

Transportation, for example, is an industry uniquely situated to weather this storm. Not only because it comprises many services deemed “essential”—goods need to keep moving, after all—but also thanks to one key advantage: It already relies on the flexibility of a largely independent workforce.

The value of a model based on independence

Independent contractors have played a significant role in the U.S. economy for years. But, until now, they were seldom afforded the benefits or protections enjoyed by traditional employees. As discussed above, however, crisis causes change.

With the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Families First Coronavirus Response Act (FFCRA), the U.S. government has extended many new programs to self-employed individuals like independent contractors. These include paid sick leave tax credits, small business loans, and even federally funded unemployment benefits without the need to name an “employer”—programs that previously excluded this group of workers.

Since reversing significant change is easier said than done, let’s assume our society continues to offer support to the self-employed after COVID-19. This could be a boon for the gig economy, allowing this dynamic workforce model to grow within industries where its utilization was previously thought impossible. Providing more financial security for these types of workers means drawing more skilled individuals to these types of roles, which could ultimately lead to new designations for workers and redefine the ways we think about misclassification.

But there is a major hurdle when using independent workforces, one that often results in a misalignment between the number of workers and the amount of work available. This issue, which we must overcome before we can enact positive change, is a lack of portable qualifications among independent workers.

Portability and the future of gig

Gig work allows for greater flexibility than any other employment model, which benefits workers and businesses alike. Companies can issue contracts as needed, and workers can nurture multiple sources of income.

Unfortunately, cumbersome restrictions surround current contracting processes in industries that require independent contractors to meet a variety of qualifications. Even basic requirements like background screening and drug testing can significantly delay the contracting process and compromise the efficiency of the model. In the logistics and delivery industries, onboarding new drivers can take up to 20 days as companies perform the requisite background screens, drug tests, MVR checks and a host of more specialized qualification checks.

Combine the slow qualifications times with the ever-present problem of driver shortages, or scenarios where one company has too many drivers but not enough work, and you start to uncover longstanding problems only exacerbated by COVID-19. Suddenly, this business model with potential for extreme flexibility slows down as companies struggle to keep drivers active during periods of fluctuating demand. And afterward, when the economy starts to recover, lengthy screening times will make it difficult to respond with qualified workers.

But what if we could eliminate this part of the process? Companies should never forego checks designed to ensure safety and reduce risk, of course—but imagine a future where every driver can function as their own portable business, carrying their qualifications with them. Imagine if, in six months to a year from now, companies could pull from a pool of vetted contractors as needed. Only with this kind of contractor portability can we hope to achieve true flexibility. And only with that flexibility can we respond to the next crisis quickly and decisively.

COVID-19 is reshaping our political, social and business landscapes, but the outbreak will eventually come to an end. When it does, you’ll face a decision: Which path forward will you take? Will you continue to struggle with overlong processes or embrace a more portable model for service providers?

As the crisis goes on, Openforce will continue to develop solutions to help businesses traverse this shifting landscape. We’re keeping our eyes on the horizon, and we advise you to do the same.

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About Openforce

Openforce® is the leader in technology-driven services that reduce operating costs and mitigate risk for companies using independent contractors. Our cloud-based applications help companies and contractors alike achieve more sustainable, profitable growth by removing financial, operational, and compliance barriers to getting business done.