Part 1 – a Primer on the Gig Economy

Everyone knows someone who is working as a fractional worker.  And the definition of fractional work seems to be as flexible and varied as the people working those jobs.

What is a fractional worker?

Some consider anyone working part time to be working as a fractional worker.  There are those that have a part time “side hustle” when they finish their full-time job and consider themselves fractional workers.  Some consider only fractional executives, who are working the equivalent of a full-time job but splitting the hours between multiple companies, as true fractional workers.  Largely, a fractional worker is someone that has steady work, regular hours, with multiple companies at the same time, and those combined hours amount to nearly or largely full time work.

But the truth is, no matter how you categorize these workers, the gig economy has changed the way companies do business and the way people work.

This dramatic shift occurred not that long ago, in the early 2000s.  Initially, it was corporations seeking to reduce their overall costs by hiring lower level, part-time workers at reduced salaries, which also eliminated the need to provide the benefits they were paying to their full-time employees.  With the beginning of the Great Recession in 2007, companies experimented with changes in their staffing.  If they could hire lower-level employees on a part-time basis, thereby saving money, why not do the same thing with middle management, or with executive staff?  It turned out to be such a successful option that some companies sought to reduce costs by eliminating some full-time executive positions and hiring senior executives on a part-time basis as well.

As the recession deepened, more companies laid off high earning senior executives and replaced them with part-time workers, having them work only a fraction of the 40 – 50 hours their full-time predecessors had been working every week.  These part-time executives were forced to seek opportunities with multiple companies at the same time to maintain their income stream.  The companies benefited greatly, paying significantly less to get answers to the key issues they needed, while the executives were able to work for several different companies simultaneously, and still make a reasonable wage.

Who really benefited from this fractional opportunity?

This not only helped larger companies, it also benefited the entire employment and corporate market.  It has strengthened the “bench” of start-ups and SMEs, allowing those entrepreneurs to work with executives who had more than 20 years of experience in such diverse fields as Operations, Finance, Marketing, Human Resources, Sales, IT Services and more.  It has provided a transition for skilled executives who were suddenly out of work.  It’s also created transitional employment for those workers considering retirement, but who were not quite ready for a life of leisure, whatever that means.

And, it has created a long-term opportunity for the cadre of independent workers whose compensation is measured by the multiple 1099s they receive at the end of the year.  It has provided opportunities for families to expand their income beyond their regular full-time job, by adding a part-time job to their weekly work, bringing in additional money for the family.

How big is the fractional market?

The 2024 American Opportunity Survey, from McKinsey & Company, found that over 36% of respondents surveyed identified themselves as independent workers.  If you apply that to the entire working population, that means there are potentially over 58 million workers who identify as independent or fractional workers.  That’s a surprising number, especially considering their estimate of independent workers from their 2016 survey (just 7 years earlier) was 27% of the workforce.  McKinsey’s projections “indicate that contract employees in the U.S. will surpass 90 million by 2028.”  That amounts to more than half of the employed workforce.

So, what does that mean for the average employee who feels their skills are not being appreciated by their current employer, or not being rewarded for the contribution they are making?  It provides an increasing opportunity for those workers to reach out to the marketplace and find companies that may be interested in bringing their skills onboard at a competitive wage, for less than 40 hours a week.

What else may be contributing to this shift in employment?  During the pandemic, many companies allowed employees to work from home.  Even as the fear of COVID waned, there was a continuing desire for employees to work from home for a variety of reasons.  In fact, McKinsey and Company, in their latest survey, reported that 58 percent of the current workforce in the USA, the equivalent of 92 million people, have the opportunity to work from home for at least one day a week.  And often, they find that being able to work from home helps them maintain a proper work/life balance.

Is fractional work something I should try?

Like any other work opportunity, success after moving into fractional employment is not guaranteed, but at the very least, for those with special skills, it presents an alternative employment option for an increasing number of workers.  And, at the rate this part of the employment market is growing, more than 50% of the workforce could be at least partially fractional within the next 5 years.

If you have questions,, or are interested in getting the support you need to become a fractional worker, please reach out to us at BackOffice Simplified by calling 773-839-8800, or sending an email to larry@BackOfficeSimplified.com.  I welcome the opportunity to talk to you.