Business owners who responded to SCORE’s Megaphone of Mainstreet Small Business Jobs Report noted an increase in hiring in all categories of work over the past six months, including full-time employees, part-time employees, part-time independent contractors and temporary help provided by agencies or contract firms. The area of largest hiring growth, however, was in one-time project or gig workers at 37 percent.
Our latest infographic, “The Megaphone of Main Street: The Gig Economy” highlights why gig workers have become so prevalent in recent years.
Why small businesses hire gig workers
Eighteen percent of businesses reported replacing employees of any type with contractors over the past six months.
Of those business owners, 50.8 percent reported choosing a contractor or temporary worker for the benefit of their specialized expertise. Forty-one percent reported only having seasonal or temporary needs; 35.1 percent said they preferred hiring a contractor over needing ongoing cash reserves for payroll. The costs and complexities of offering employee benefits like healthcare and retirements plans also drove the decision to hire a contractor.
Forty-seven percent of solopreneurs reported hiring other people for part-time help running their businesses. Their firms had an average of 3.2 workers, including the owner.
Contractors are most likely to be called in to complete technical, accounting, bookkeeping and marketing tasks. Other important roles for contractors include manufacturing, sales, business planning, and logistics.
The need for specialized skills echoes part one of The Megaphone of Main Street Small Business Jobs Report, in which business owners shared challenges to finding small business employees.
When respondents noted their reasons for hiring an employee over a contractor, consistency of work and commitment to the company were primary. Having the same person in a position rather than a rotating contractor was another major factor, as was the ability to direct work tasks and schedule work hours.
Some business owners commented that their concerns about correctly following IRS regulations — and dealing with related paperwork — guided their decisions whether to hire a contractor or an employee.
Which type of worker is best for your small business?
View SCORE’s recorded webinar, “Hire with Confidence,” to learn about trending hiring laws you may face when choosing to hire an employee or contractor. Not sure if you’re following all the hiring rules? Check this list of clues that your independent contractor might actually be an employee under the law.
If you’re not sure what type of worker is right for your small business, meet with a SCORE mentor. These experienced business professionals can guide you as you make the best decision for your growing company.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.