The year is 1983, and after a recession that lasted about three years, the U.S. economy is beginning to kick back into motion. Jimmy John’s Sandwich Shops and Costco have opened their doors for the first time, Joe Theismann led the Washington Redskins to a Super Bowl championship, and GDP growth is at 4.6%, a six-point swing from the -1.8% seen the year before.
Is the stage set in your mind? Good. Because there’s a very specific reason for this short trip back in time: to analyze employee tenure. If you were a member of the workforce in 1983, whether you were in your twenties and just starting your career or approaching your middle ages, there is one thing that is very likely true about you:
You were going to stay with your employer for a very long time, and this starkly contrasts the nature of employees in today’s growing gig economy.
Average Employee Tenure from the 1980s to Today
In 1983, more than one worker in three aged 35 to 44 had been with the same employer 10 years or longer, and almost the same ratio of workers 45 and older had worked for the same employer 20 years or more, according to BLS data. Many workers stayed with employers for decades, dedicating most of their career to only one to three companies across their lifetime.
Many workers in today’s economy will go through three employers in less than a decade, that’s if they take fulltime work at all.
In 2018, workers ages 25-34 (millennials) have an average tenure of only 2.8 years, and more than one in three workers in the U.S. are strictly freelancers. Experts predict that by 2020, this number will rise to 50 percent.
That’s less than two years away, which begs the question, is your company, particularly your innovation and R&D departments, ready for the gig economy?
Why People Freelance
This is a choice both workers and organizations are making. For workers, freelancing affords them flexibility in their work-life balance, the freedom to choose work they are passionate about, and the constant change/challenges that younger generations are looking for. For businesses and organizations, embracing the gig economy means cutting out many costs related to fulltime employees, including:
- Health insurance
- Paid time off
- Retirement plans
- Annual raises/bonuses
- Hiring and training costs
- Costs associated with low productivity (many freelances are paid per project, not hourly)
What This Means for Innovation
For companies still looking to invest in their innovation efforts (who isn’t?), it means making a shift from traditional methods to open innovation and crowdsourcing, the solutions that are driving the innovation marketplace. Not only does open innovation help organizations cut back on costs, it delivers better ROI (up to 182% in less than three months) and a greater diversity in solutions presented for any given innovation issue.
The best and brightest talent from all over the world is driving innovation by moving to the gig economy, are you ready to take the wheel?