A new analysis indicates contract workers are not sharing in the success of the technology industry in the same way as regular employees. Contingent workers on average make less than their regularly employed counterparts, the analysis shows.
The report, from workplace equity technology firm Trusaic and released Oct. 5, also reveals that men dominate the contingent workforce and earn more than women working in science and engineering roles, mirroring the tech workforce overall. Trusaic partnered with workplace intelligence firm Revelio Labs to create the new report. Their analysis builds on the work of the Contract Disparity Worker Project from California’s Tech Equity Collaborative (TEC).
“The tech industry has relied heavily on contract workers for more than 40 years,” Trusaic CEO Robert Sheen said in a release that accompanied the new report. “As the demand for pay equity has intensified across all industries and is considered a critical measure of DEI progress, it was only a matter of time before this same scrutiny was applied to pay practices surrounding the contingent workforce.”
The analysis sample includes both contingent and noncontingent workers in the U.S. working for a list of 2,052 tech companies based on sector information. Revelio Labs uses the latest mathematical and machine learning techniques to provide insights that would otherwise be unavailable.
States trying to remedy the imbalance with laws
States are beginning to recognize the importance of the so-called “shadow workforce” and seeking ways to remedy inequities, according to the Trusaic release.
California, for example, enacted a pay transparency law earlier this year that extends pay data reporting requirements to include employers who employ 100 or more contract workers to report pay data on those workers. Groundbreaking employment legislation for contract worker rights in New Jersey is now law, making it the first state to mandate equal pay for temporary workers, followed closely by Illinois.
Research group McKinsey reports that 36% of the workforce self-identifies as contingent workers. HR technology vendor Eightfold projects U.S. contingent workforce participation will increase by 26% in 2023. Trusaic’s study focuses on the estimated pay levels of science and engineering roles in the technology industry, one portion of the contingent workforce that is critical for the economy.
Other key findings from Trusaic’s analysis include:
- Contingent workers in science and engineering roles in the tech industry make on average $102,650, which is 10% lower than the $114,514 regular employees in those roles are paid.
- Women working in contingent science and engineering roles make on average $93,618, which is 11.6% lower than the $105,129 men make.
- Science and engineering roles remain male-dominated in both the contingent and regular employee workforces; nearly three-quarters (71%) are men.
- Some racial and ethnic groups tend to be in higher-paid roles than others. Asian-Pacific islanders have the highest average pay, followed by whites, then Hispanics and Blacks or African-Americans.
- Compositional differences exist in the employee and contingent workforces: Regular workers are more likely to be in senior roles than contingent workers; they generally have higher degrees of education; and they are not evenly distributed across all states.
- The highest-paying states for contingent tech workers are Washington state, California, Massachusetts, and New York—generally the same as for regular workers.
The uneven treatment contractors face is not limited to pay.
According to TEC, contractor workers who are often performing the same or similar duties as directly employed peers also receive fewer benefits, experience greater job insecurity and have fewer clear-cut opportunities for upward career mobility.
As many third-party agencies help tech companies augment their staff, a lack of transparency can leave contract workers vulnerable, TEC notes. Tech companies may also open themselves up to legal, financial, and reputational risks if they are not practicing responsible contracting.