In 2019, prior to Covid-19, major employers Harvard Business Review (HBR) cited Bureau of Labor Statistics data to demonstrate that about 95% of all hiring for replacing employees who have voluntarily left the company. It makes one wonder why employees are considering leaving their secure jobs? Maybe its not to obtain another job, similar to the job they held most recently. It could for a number of reasons. Maybe you might think of joining them by opening up your own remote job freelancer shop?
Slowed economic activity lowers opportunities for traditional employment
Let’s consider a few. Job recruitment and the hiring of new workers are undertaken essentially to replace employees who are leaving or who have already left. This topples the suggestion that new hiring takes place because of a bustling economy. Vibrant economies are fluid, full of transactions between companies of various industries across the globe.
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Without this dynamism, hiring though, still occurs. Mainly to maintain the business activity that is already taking place. It may also portend to the market that companies are doing more with less. Pressuring remaining employees to work harder, be more productive, and to fill in the gaps of workers who have departed.
Stagnated opportunities for brand new vacancies
There may be stagnated opportunities for filling jobs that are newly created. One possible reason for this is, major employers don’t wish to go against the tide. How so, you might ask? When their industry colleagues are cutting back, laying off workers, they do not want to be the one company of 1000s that are still hiring.
Shari Roth writes, companies wanting to survive now in an economically challenging market will want to thrive when the economy turns around. This means they may want to operate lean and mean by reserving resources. The logic? When the economy becomes more robust, they will have the resources to thrive. Some of the strategic questions that companies consider when thinking about hiring new employees in a down economy are:
- Do we employ workers who are underperforming ?
- Can we capitalize on the abundance of top performers that are currently available ?
- Have we considered utilizing temporary workers, freelancers, or remote workers ?
Increased reports of industry wide layoffs
Finance Yahoo reported upon layoffs occurring at: 7 Eleven, Stich Fix, Amazon, Peloton, Twitter, Coinbase, Gamestop, Robinhood, iRobot, Microsoft, and Shopify. If you are worried about your permanent employee status, it might be a good idea to seek a remote job or freelance opportunity that you can work on weekends and after hours to maintain your quality of life. An added benefit?
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Experience working remotely so that when the timing is right, you have the skills, reference and demonstrated performance to obtain one of the few remote jobs with permanent employee status.
Reduced chances for obtaining job promotions
Harvard Business Review ( HBR), reported upon studies showing that less than 33% of American employers promote from within. One possible reason could be that this practice lowers the cost for training and professional development. Working as a freelancer completing remote job assignments as an independent contractor lowers one’s expectations of longevity with any one particular company. Decoupling the thought of promotions and advancement from one company increases the likelihood that financial gain can be obtained by working for a consortium of companies and not one alone.
Increased hiring costs associated with traditional employment
Back in 2017, to hire top level experts with highly skilled experience was estimated to be about 6 to 9 months of salary. So, to hire a professional with an estimated salary of $100,000, the projected cost of hiring and training would be about $60,000 to $90,000.
Today, the estimation has been drastically reduced. The cost to hire a new employee according to the Society for Human Resource Management (SHRM) averages around $4,425 per job in comparison to the 2019 estimated average cost of $4,129. What is included in the cost of hiring calculations? Upwork breaks down hiring costs in this manner:
- The recruitment process such as advertising for the job vacancy, pre-screening, interview, background checks and skills assessment
- The training and professional development programming
- The benefits, insurance, base wages, state unemployment taxes, and government compliance (payroll tax= 15% of salary; social security= 6.2% on up to $118.5k of employee’s salary; medicare= 1.45% of salary, federal unemployment insurance= 6% on up to $7,5k salary; workmen’s compensation= average 1.85% of salary)
- The miscellaneous expenses such as uniforms, ID badges, and travel allowances
So when you look at the costs associated with hiring a traditional permanent employee, you can see that adding to the head count in the traditional sense can definitely increase costs without the guarantee that the new employee will add value.
Restructuring of job market of interest to major companies
What was interesting to point out however, regardless of the cost estimate used; the $90,000, to $60,000 and even $4,425 can be dramatically reduced when employers hire freelance workers rather than permanent fulltime employees.
Unlike fulltime workers where employers pay salary, benefits, vacation, sick days, and contribute to their the retirement/pension program of their employees; freelance workers can be hired for a fraction of the cost. Why?
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Freelance workers working on specific projects, job assignments and tasks are hired as self contracted, self employed workers whereby the individual worker, and not the employee is required to pay self employment and income taxes. The independent contractor takes it upon him/herself to pay for training and professional development to keep abreast of current trends. Further, to remain credible in their field, they use their own internal resources to budget for industry credentialing to continue to remain relevant in their industry and add value to their clients.
Finally, the physical health, psychological well-being, and financial solvency for the long term are the responsibilities of the remote freelancer themselves. So the cost of insurance, sick days, vacation, and retirement are their burden alone.
Significant opportunities for remote work and independent freelancers
These reasons that are largely economical represent the best argument for the unemployed, underemployed and those lacking career advancement opportunities to seek other avenues for financial gain and life fulfillment.
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The best approach, starting out would be to seek a remote job on a part time basis while continuing to work fulltime, either at an in person setting or working remotely.
Such a strategy may involve working remotely fulfilling remote job tasks on top of and in addition to a full-time job. If you do so, to be clear of any conflict of interest and noncompete arrangements, you should consider working outside of the industry for which you are currently employed. Additionally, you should consider working after work hours and on weekends. This approach takes a lot of dedication, superb time management skills and energy.
But we have faith in you. We know if you are a frequent visitor to this site, you can do it!