Trusaic’s Analysis of “Shadow Workforce” Reveals Uneven Treatment Between Regular and Contingent Workers
Los Angeles, Calif., October 5, 2023 – New analysis from workplace equity technology firm Trusaic indicates contract workers are not sharing in the success of the technology industry the same way regular employees are. Contingent workers on average make less than their regularly employed counterparts, the analysis finds. In addition, 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, (available for download here) and their analysis builds on the work of the Contract Disparity Worker Project from California’s Tech Equity Collaborative (TEC).
States are beginning to recognize the critical importance of the so-called “shadow workforce” and seeking ways to remedy inequities. California, for instance, enacted a landmark 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.
McKinsey reports that 36 percent of the workforce self-identifies as contingent workers. HR technology vendor Eightfold projects U.S. contingent workforce participation will increase by 26 percent 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.
“The tech industry has relied heavily on contract workers for more than 40 years,” says Robert Sheen, CEO, Trusaic. “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.”
Key findings from Trusaic’s analysis include:
- Contingent workers in science and engineering roles in the technology industry make on average $102,650, which is 10% lower than the $114,514 regular employees in science and engineering roles are paid.
- The science and engineering field remains male dominated in both the contingent and regular employee workforces; nearly three- quarters of this category (71%) are men.
- Some race/ethnicity groups tend to be in higher-paid roles than others. Asian/Pacific Islanders (API) have the highest average pay, followed by Whites, then Hispanics and Blacks or African Americans.
- Women working in contingent science and engineering roles make on average $93,618 which is 11.6% lower than the $105,129 men make.
- 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.
- Perhaps unsurprisingly, the highest-paying states for contingent tech workers are Washington, California, Massachusetts, and New York – generally the same as for regular workers.
The uneven treatment contractors face is not limited to pay. According to the TEC, contractor workers who are often performing the same or similar duties as their directly employed peers, make less money, 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.
The analysis sample includes both contingent and non-contingent 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.
About Revelio Labs
Revelio Labs is an industry leader in workforce intelligence. Our team of Data Scientists, Economists, and Engineers have the unique expertise to deliver valuable workforce analytics that empower our partners to make actionable, data driven decisions.
About Trusaic
At Trusaic, we believe the workplace should work for everyone. We are a workplace equity technology company committed to advancing social good by helping organizations achieve pay equity, foster a more diverse and inclusive workforce, assist economically disadvantaged individuals with finding work, and ensure employee access to affordable healthcare. With data-driven, people-centered solutions designed to solve HR’s most complex workforce challenges, our mission is to create a better working world.