What is Contingent Workforce in HRM? With Examples & Benefits

In recent years, workforce trends have shifted, with businesses turning to flexible staffing solutions. In 2017, contingent workers made up 3.8 percent of the US workforce. The rise of the contingent workforce allows employers to stay agile by using temporary, freelance, or contract workers for specific roles or projects.

In 2022, 78% of business leaders said they prefer hiring freelancers or contingent workers over full-time employees during uncertain economic times. This strategy offers benefits, and many organizations find it a practical solution for short-term projects or specialized roles.

This article explains what a contingent workforce is, how contingent workers work, provides examples, and addresses common questions about it.

Contingent workforce meaning

A contingent workforce refers to a talent pool or group of workers hired on a temporary, project-based, or freelance basis, meaning they are not on the regular payroll.

Unlike permanent employees, contingent staff work under contracts that vary in length or type of work. When a contingent worker's contract ends, their employment typically ends, and they are not guaranteed further work or benefits.

Companies often use contingent staff to meet short-term needs, adjust quickly to demand, cut labor costs, access specialized skills for specific projects, or maintain a flexible workforce. It is common in industries or jobs such as:

• Information technology, with tech skills needed for short-term projects.

• Healthcare, filling short-term gaps.

• Warehousing and logistics, with staff hired during busy seasons.

• Event management, using flexible teams for different event sizes and needs.

• Creative and design fields, with expertise needed for specific campaigns or projects.

Even a contingent workforce needs to be paid right. Salary.com's Real-time Job Posting Salary Data solution provides real-time compensation insights to stay ahead in the job market.

Estimates of contingent work

The Bureau of Labor Statistics (BLS) divides contingent work into three different groups or "estimates," based on how broadly or narrowly they define contingent work.

Contingent work	Definition	Example
Estimate 1 (narrowest)	Wage and salary workers only, not self-employed or independent contractors. Have worked at their current job for 1 year or less. Do not plan to stay at their current job for another year or more. For temporary or contract workers, these conditions apply to the company they work for.	Alex was hired by a tech firm as a temporary software developer. He has been there for 8 months and doesn’t plan to stay for more than a year. According to Estimate 1, Alex is considered a contingent worker because he is temporary, has worked less than a year, and doesn't plan to stay long-term.
Estimate 2	All workers, including self-employed and independent contractors. Have worked at their current job for 1 year or less. Do not plan to stay at their current job for another year or more. For temporary or contract workers, these conditions apply to the client they are assigned to.	John is a self-employed real estate agent. Due to the major employer in town relocating and people moving out, he doesn’t plan to continue as a real estate agent for a year. Under Estimate 2, John is considered a contingent worker because he is self-employed, has been in his role for less than a year, and doesn’t intend to stay in the job for more than a year.
Estimate 3 (broadest)	Wage and salary workers who do not expect their job to last, even if they have been in the job for over 1 year and plan to stay longer. Self-employed workers and independent contractors who: Have been self-employed for up to one year. Do not plan to stay self-employed for another year or more.	Maybelle has been a marketing manager at a retail company for 4 years. She expects to leave the company in the next 6 months because the company is downsizing and her department is being eliminated. Maybelle is not contingent under Estimates 1 or 2 because she has been with the company for more than a year and plans to work there for more than another year. She is contingent under Estimate 3 because she does not expect her job to continue.

Contingent worker meaning

A contingent worker is someone who holds a temporary, part-time, or non-permanent job. The Bureau of Labor Statistics defines them as "people who do not expect their jobs to last or who report that their jobs are temporary." Hiring contingent workers offers flexibility as they also do not have a contract for long-term employment.

BLS clarified that people who leave their jobs for personal reasons, like retirement or going back to school, are not considered employees contingent workers. For example, Sarah was hired to assist with a special project at a marketing firm. Once the project is completed in three months, Sarah’s role will end. This makes Sarah a contingent worker, as she does not expect her job to last after the project ends.

The following are some examples of contingent workers:

• Contract workers

• Temp or temporary workers

• Part-timers

• Freelancers

• Interns

• Consultants

• Gig workers

• Platform drivers

• On-call workers

• Seasonal workers

Whether hiring permanent or contingent workers, finding the right talent for your business is critical. Use the Real-time Job Posting Salary Data solution to improve job matching, access millions of postings, and view detailed skill sets for better hiring decisions.

Contingent workforce benefits

Companies hire contingent workers for many reasons, and these reasons can bring benefits to the organization. Here are some of those benefits.

1. Easily adjust workforce size

   A contingent workforce gives companies flexibility to hire as needed, managing workloads efficiently without committing to permanent staff.

2. Lower expenses due to fewer benefits

   Since they are not full-time employees, companies save money by not providing benefits like health insurance, retirement contributions, or paid leave.

3. Hire experts for short-term needs

   Contingent workers are brought in for particular tasks on a short-term basis. This enables companies to tap into specialized skills without committing to long-term agreements.

4. Easier to cut costs if needed

   During downturns or tight budgets, companies can reduce a contingent workforce more easily than full-time staff. This makes it a simpler, more flexible way to cut costs.

5. Access workers from various locations

   Contingent workers can be hired by a staffing agency from various locations, expanding the talent pool and providing specialized expertise, even when local talent is limited.

Achieving these benefits depends on making better hiring decisions. Study competitors’ pay practices in your industry and location to stay competitive and attract top talent with Real-time Job Posting Salary Data solution.

FAQs

Here are some common questions about contingent workforce:

Are part-time workers contingent workers?

According to the BLS, not necessarily. Part-time workers typically work fewer than 35 hours per week and are only considered contingent workers if their roles are temporary and not expected to be permanent.

Are all self-employed workers independent contractors?

Not always, as per BLS. For example, restaurant owners are self-employed but not independent contractors, as they run their own business and hire employees.

What word best describes the contingent workforce?

The best word to describe the contingent workforce is flexible. Contingent workers are hired for short-term or project-based roles, allowing companies to adjust their workforce and access specialized skills without long-term commitments.

Contingent workforce management is challenging without the right plan in place. The Real-time Job Posting Salary Data solution helps predict staffing needs and allocate resources effectively to meet your goals.

What is the meaning of contingent job?

A contingent labor or job is a temporary or project-based position where the worker is not a permanent employee of the company.