The Rise of the Permanent Temp and What It Costs American Workers

Fast Company published an extract on September 5 in which Paul Osterman, Professor Emeritus of Human Resources and Management at the MIT Sloan School of Management, argues that about 35 percent of the American workforce are now disposable workers. His case, drawn from his book Disposable Workers, is that employers increasingly want people to do the work without those people being employees. At Metaintro, we take definitional arguments like this seriously because how your role is classified determines your pay, your benefits and your legal protection. Here is what the claim means, how it squares with federal data, and what it changes for you.

What Does Disposable Work Actually Mean?

Three groups, and the third is the one that makes the number large. The first two are familiar: contractors and freelancers, people who do work for a company without being on its payroll. The third category is what the author calls marginal workers, meaning people who are technically employed by a firm but whom the firm has no intention of placing on any career ladder and would not much mind losing.

That third group is why the estimate reaches 35 percent rather than something closer to the official statistics. A marginal worker can have a payslip, a manager and a permanent contract and still be disposable in every way that matters, because the employer has made no investment in keeping them and no plan for their progression. Security in the legal sense and security in the practical sense are different things, and most workforce statistics only measure the first.

The examples in the extract are deliberately ordinary. The concierge at an apartment building works for a contracting company rather than the building. The cleaners in an office tower are contractors. A book indexer is a freelancer. An emergency room nurse may be a travelling contractor rather than a hospital employee. A defence attorney may be a staff lawyer hired for a single case rather than someone on a partner track. None of those arrangements is exotic, and that is the argument.

How Does 35 Percent Compare With Official Data?

It is roughly eight times larger, and the discrepancy is a definitional choice rather than a dispute about facts. The US Bureau of Labor Statistics measures this through its Contingent and Alternative Employment Arrangements survey, and in the most recent edition, covering July 2023 and published in November 2024, it found 6.9 million contingent workers holding such jobs as their sole or main employment. That is 4.3 percent of total employment, up from 3.8 percent in May 2017.

The same survey counts the alternative arrangements separately. Independent contractors numbered 11.9 million, or 7.4 percent of employment. On-call workers came to 2.8 million, temporary help agency workers to 945,000 and workers provided by contract firms to 862,000. Add the categories together and you are still well short of a third of the workforce.

The reason is that the federal definition of contingent is narrow and precise. It captures people whose jobs have no implicit or explicit contract for ongoing work, which is a question about the expected duration of the arrangement. It does not ask whether an employer intends to develop, promote or retain you. A permanent employee in a role with no progression path answers the survey the same way as a permanent employee on a management track, because the survey is not asking that question. That is not a flaw in the statistics so much as a limit on what they were designed to measure.

Why Are Employers Structuring Work This Way?

Because it transfers cost and risk, and the extract is direct about it. The argument is that companies want the flexibility and the savings that come from shedding responsibility for their workforce. Every obligation that attaches to employment, from benefits and payroll taxes to notice periods and unfair dismissal exposure, becomes someone else's problem when the worker sits with a contractor or on a freelance invoice.

The trend is visible in the disputes it generates. Platform drivers have filed misclassification claims in large numbers, courts have been asked to rule on whether ride-hailing drivers are employees at all, and governments have started clarifying the boundary between employee and contractor because the existing line has stopped doing its job. Those cases are the visible edge of a much larger reclassification of ordinary work.

It is worth being fair about the other side of this. Some workers genuinely prefer contracting and freelancing for the autonomy, the rate and the variety, and a labour market with no flexible arrangements at all would be worse for them. The book's argument is not that flexibility is illegitimate. It is that flexibility currently comes without guardrails, so the gains go to the firm and the risks go to the worker.

What Does This Cost the People in Those Roles?

Pay, benefits and time, in that order. Contract and freelance workers typically fund their own health coverage, their own retirement saving and their own gaps between assignments, and none of that is priced into an hourly rate that looks comparable to an employee's. The Department of Labor has been examining whether gig workers should be able to buy health insurance through associations precisely because the standard route runs through an employer that these workers do not have.

For marginal workers, the cost is subtler and compounds over a career. Someone on a payroll with no development plan accumulates years without accumulating progression. They are usually first out in a restructuring, rarely considered for internal moves, and frequently paid at whatever the role paid when they took it. Being misclassified at work quietly shrinks a paycheck, and being unclassified in the sense of having no path does something similar over a longer horizon.

There is a public cost too, which is the part employers do not carry. When a large share of the workforce has no employer-provided health coverage, no pension contribution and no notice period, the consequences of illness, retirement and redundancy land on public systems and on families. That is the case for guardrails the author makes, and whatever you think of the policy conclusion, the accounting is not really in dispute.

Which Sectors Rely on This Model Most?

The ones where the work happens on someone else's premises. Building services, cleaning, security, catering, logistics and increasingly parts of healthcare and law are structured so the person doing the work and the organisation benefiting from it have no direct employment relationship at all.

Healthcare is the example most people underestimate. Travelling nurses and locum clinicians are now a standard part of hospital staffing rather than an emergency measure, which means a significant share of frontline clinical work is delivered by people who are not employees of the hospital they work in. The same pattern appears in freelance and gig arrangements across a growing share of the economy, and it is spreading upward into professional work rather than staying in low-wage service roles.

The direction of travel matters more than any single sector. Contracting used to concentrate in functions a company considered peripheral. It is now common in functions companies describe as core, including clinical care, software engineering and legal work. When the model reaches work that a firm publicly calls essential, the argument that contracting is about non-core activity stops holding.

Is the Model Still Growing Right Now?

Yes, on every measure that exists, though the growth is steadier than dramatic. The federal contingent share moved from 3.8 percent in May 2017 to 4.3 percent in July 2023, which is a rise of roughly one eighth in six years within a narrowly drawn category. That is the conservative reading, and it still points the same direction.

The monthly payroll data offers a live signal that the annual survey cannot. The Employment Situation for August 2026 shows temporary help services adding 6,800 jobs in the month, inside a professional and business services sector that grew by 10,000 overall. Temporary help is worth watching because it is one of the few staffing categories reported monthly, and it has historically moved ahead of the wider labour market in both directions.

The legal environment is moving in the opposite direction to the commercial one, which is what makes the next few years genuinely uncertain. The National Labor Relations Board has been asked repeatedly to determine who counts as a joint employer when a worker is supplied by one company and directed by another, and the answer has shifted more than once. For a worker, that means the protections attached to your role may change without your job changing at all, which is an argument for knowing your classification now rather than discovering it during a dispute.

How Do You Protect Yourself Inside This Structure?

Start by establishing which category you are actually in, because a surprising number of people do not know. Check who issues your payslip, who your contract is with, who provides your benefits and who would make you redundant. If the answer to any of those is a company other than the one whose building you work in, you are contracted, and your pay is set in a negotiation you are not part of.

If you are contracted or freelance, price the missing pieces explicitly rather than comparing your rate to a salary. Health coverage, retirement contributions, paid leave, sick pay and the unpaid gaps between engagements are real costs, and an hourly rate that ignores them is not equivalent to an employee's package. Anyone building this into a working model should start the freelance business before they need it rather than after a layoff, when the terms are worse and the urgency is higher.

If you suspect you are a marginal worker, the test is uncomfortable but simple. Ask when your employer last invested in you, meaning training funded, a promotion discussed with a date attached, or a development conversation that produced a plan rather than a form. If nothing comes to mind over a year or more, the role is not building toward anything, and the useful response is to build it yourself through certification, internal moves or a change of employer. Learning how to format freelance and contract work on a résumé matters here, because non-linear histories are penalised far less than most people fear when they are presented as continuous work.

What Should Change and What Is Actually Likely?

The author's position is that flexibility needs guardrails so its benefits do not come entirely at the expense of workers and the public. That is a policy argument, and the mechanisms usually proposed are portable benefits that follow a worker between engagements, clearer statutory tests for employment status, and obligations that attach to the company controlling the work rather than only to the entity issuing the payslip.

Some of that is already moving. Courts and regulators have been steadily tightening classification tests, worker rights cases keep producing rulings that narrow the space for contracting, and several jurisdictions have legislated portable or association-based benefits. The direction is toward more obligation rather than less, though the pace varies enormously by country and by sector.

What is unlikely to change quickly is the underlying incentive. As long as the cost difference between employing someone and contracting for the same work remains large, firms will keep choosing the cheaper structure, and the share of the workforce in disposable arrangements will keep rising. That means the practical advice for an individual worker is not to wait for the rules to change. It is to understand which side of the line you are on, price your work accordingly, and build the security your employment arrangement does not provide.

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People Also Asked

Q: Why does the government say 4.3 percent when the book says 35 percent?

A: They are measuring different things. The Bureau of Labor Statistics defines contingent work as jobs with no implicit or explicit contract for ongoing employment, which was 4.3 percent of employment in its July 2023 survey. The wider estimate adds independent contractors, freelancers and people who are permanently employed but have no career ladder, security or employer investment. The second definition is about the quality of the relationship rather than its expected duration.

Q: Am I a contractor if I work at a company every day?

A: Possibly, and it depends on who employs you rather than where you work. Many people working full-time hours on a client site are employed by a contracting firm, which means that firm sets their pay, provides their benefits and would handle any redundancy. Check whose name is on your payslip and your contract, because that determines your rights regardless of which building you go to each day.

Q: How do I price contract work against a salaried job?

A: Add back everything the employer would otherwise fund. Health coverage, retirement contributions, paid holiday, sick pay, equipment and the unpaid time between engagements all come out of a contractor's rate. A contract rate that simply matches an hourly equivalent of a salary is a pay cut once those are accounted for, which is why the comparison has to be made on total package rather than headline rate.

Knowing which side of the employment line your job sits on changes how you negotiate, what you should be paid and what happens to you in a downturn. Metaintro tracks openings across permanent, contract and freelance arrangements so you can compare them properly rather than by headline rate alone. Join free to see what is available and on what terms.