While there is widespread belief that independent contracting is growing rapidly as a work option, there is little hard data to support that yet, not because it is not true, but because very little data has been collected on this as a work option. The Bureau of Labor Statistics (BLS) just started tracking the number of independent contractors in 1995. From that limited data, it is estimated that 6.7 percent of the total working population makes a living in full time independent contracting and at least 60 percent of all businesses use independent contractors. Additionally, about 20 percent of the work force is working part-time (less than 35 hours per week) and about two percent are employed by temp agencies. According to BLS reports, independent contractors have more stable employment arrangements than wage and salary workers, have higher median weekly earnings when working full time ($523 compared to $510 for traditional workers), and are older and more highly educated than the traditional work force.
Consulting has become one of the fastest growing professions in the 90's because of the reengineering and downsizing occurring in large corporations, increases in small business startups who frequently use consultants for particular functional areas of expertise or as "temps", and particular industries which are experiencing significant growth. The growth industries where consulting jobs are most in demand are: health care which is outsourcing benefits administration, outplacement, recruiting, and patient care functions; telecommunications which is looking for software development for security and billing products, setup and installation of microwave and satellite links, and network consulting for corporate local and wide area networks; the Internet which has opportunities in design and implementation of websites for small corporations, technical consulting in communications software, operating systems, graphical user interfaces and systems design; finance/banking which needs management and staff training and development including computer and software training and installation; environmental firms and agencies which need site testing and evaluation of toxins and other harmful chemicals and expert testimony for legal conflicts; government which needs experts in privatizing government functions and for defense-related projects; and not-for-profit which needs management development, financial consulting, marketing and sales consulting, as well as consulting for fund-raising.
The United States is not the only place where independent contracting is becoming more popular. Both Japan and Canada employ independent professionals in growing numbers. For Canadians the tax rates on independent consulting have been close to prohibitive, but in response many independent contractors are incorporating their businesses, allowing them to pay the 20 percent corporate tax rate rather than the 50 percent tax charged individual taxpayers. In Japan, the "job for life" mentality is changing slowly, but independent contracting jobs exist, many with 2-3 year contracts, reflecting the longer term commitment in the work community there. Additionally, many American companies are hiring foreign nationals as independent contractors to represent them around the world. According to Labor Department projections, demand for foreign workers is at an all-time high. The market for foreign contractors to enter the U.S. and work for American firms locally is also on the increase.
