Problem 1: Time Becomes a Worthless Asset#

The Ford Motor Company was one of the first big businesses in America to jump on the 9-to-5, 40-hour work week. Henry Ford did this strategically to make his company the most attractive place for auto workers to get a job. This helped him snag the best talent from other car makers without having to pay his workers more.

To keep up with Ford, other automakers were forced to offer the same 40-hour work week with paid overtime. Eventually, to compete with the auto guys and keep their best workers from leaving for the car assembly line, other companies across different industries started offering 9-to-5 jobs too.

Back then, these auto workers had very specific, repetitive tasks. Unless they were completely worn out, they could produce a consistent amount of work for every hour they were on the job. Every extra hour meant the same amount of extra output.

If you work in a modern office job today, you know your work is nothing like that. Sometimes you’re swamped, and sometimes there’s nothing much to do. But you’re still expected to be there 8 hours a day, trying to look busy, no matter what.

When workers’ unions were fighting for the 40-hour week, most Americans worked in manufacturing. But today, most people are in the services sector. And the service sector is way more varied than you might think. Unless you’re on a farm or in a factory, you’re probably a service worker. Your job could be anything from making big strategic decisions for a corporation to making coffee.

Clearly, these jobs are super different and probably need different schedules. But most of the corporate world has just tried to cram all jobs into the 9-to-5 mold. This doesn’t work because service jobs don’t have tasks coming in consistently like on a finely tuned production line. Work comes and goes depending on what internal and external customers need.

This means:

• When people are really busy and need more than 8 hours in a day to finish their work, they’re often expected to put in “reasonable unpaid overtime.”
• According to an ADP Research Institute study, office professionals working paid overtime averaged 9.2 hours per week in 2021 – that’s more than a full extra day! – just to keep up with what their employers needed.
• But when there’s hardly any work because a project just finished or sales are slow, workers are still expected to be there for the full 40 hours a week because that’s what the business is paying them for.
• If you’re in this kind of job, you end up trying to find something to make you look busy. If you truly have nothing to do, you’ll probably get stuck with meaningless tasks just to fill the required 8-hour day.

If this were just another story about companies treating workers poorly with old-fashioned ways, it wouldn’t be such a big deal. But the 40-hour work week isn’t even good for the companies themselves anymore. So, maybe it’s time to look at how money really works to understand why this is happening.

Problem 2: The Boom in Gig and Freelance Work#

Let’s look at some numbers from the US Census Bureau, McKenzie & Company, compiled by Statista:

• The growth in gig work and freelance jobs has outpaced traditional permanent jobs by 500% over the last decade.
• There are 8.4 million people in the US working multiple jobs.
• This isn’t because wages went up for American workers; it’s because they’re working multiple jobs, including gig work. (Original text note: Mentions 850,000 jobs, likely intended number of people over employed or similar, but stated right after 8.4 million people working multiple jobs, so keeping the 8.4M figure as the main data point for multi-job workers, as explicitly stated).
• Someone working multiple jobs might say something like “one part-time but I need both of them to pay my bills every month my rent and groceries so just working all the time” (direct quote capturing the nuance).

Gig work apps have become super popular, especially for workers without specific skills, because they’re easy to start. There’s a low barrier to entry and they offer flexible working arrangements. Someone with just a phone and a bike can start delivering food for services like Uber Eats, Postmates, DoorDash, GrubHub, or even all of them at once, sometimes in under an hour just by filling out an online form.

This is a very appealing alternative to minimum wage jobs that still make you go through the old-fashioned process of:

• Printing out a resume.
• Spending weeks doing job interviews.
• Still getting ignored (ghosted) by a fast-food place that might only offer $7.25 an hour for an unpredictable schedule.

Sure, gig work jobs often pay terribly too, but people get to work as much or as little as they want, when they want. They can even fit it around another full-time job for extra cash. Even with all the downsides of gig work, you can see why it’s become so popular.

The popularity of freelancing and private contracting has also exploded. This is more common among skilled workers who can sell their services to businesses just like a regular employee, but without a long-term agreement. They only get paid when there’s actual work to do.

• Private contracts are usually set up as an agreed price for a specific result (like $10,000 to build a company website).
• But they can also be paid hourly for roles like security, administrative assistance, or for on-demand workers.

According to a report by the management consulting firm Oliver Wyman, healthcare workers are one of the fastest-growing groups of workers leaving traditional permanent jobs for private contractor roles. Nurses, doctors, and hospital support staff who work on-call already have somewhat unpredictable hours, so they don’t lose much by working as contractors instead of direct employees.

The report also mentions that some nurses are choosing temporary staffing work specifically so they can work fewer hours, as mental health has become a major concern for workers in that field.

Generally, private contractors in all industries get paid more per hour than permanent employees. This is because the business is only paying for the hours of service they actually need. Most of the time, this means the total cost for the company ends up being lower.

With mass layoffs in the news constantly, people are also figuring out the hard way that if they live in an at-will employment state, their 9-to-5 job didn’t give them much security anyway. So, workers at all skill levels are seeing they can potentially make more money, and businesses are realizing they can cut costs by ditching the rigid 9-to-5 workday. This is the second big reason it’s slowly becoming a thing of the past.

Problem 3: Companies Using Staffing Agencies#

Unfortunately, the end of the 9-to-5 isn’t going to be great for everyone. For now, businesses are generally the ones benefiting the most from this shift, even if they have to pay their contractors and gig workers a bit more per hour.

The Biggest Loss for Workers: Benefits

If you work as a private contractor, you’re essentially becoming your own boss. This means that even if you’re making more money, you’re now responsible for overhead costs that your employer used to cover.

• Benefits like paid time off, training, retirement plans, accounting, and health insurance now come out of your pocket.
• Health insurance through a regular employer is usually much cheaper than getting it on your own.
• For gig workers, this can be incredibly tough. Health insurance premiums for someone riding a scooter through late-night traffic to deliver food are often completely unaffordable on a delivery driver’s income.
• Even if you’re a highly skilled contractor, if you don’t manage these expenses carefully, you might end up with less money overall than if you’d stayed in a regular permanent job.

Your loss on benefits is their gain. According to a survey by Forbes, small and medium businesses are hiring more contract workers because it simplifies their accounting and reduces the growing costs of managing human resources.

It’s not just small companies, either. According to CNBC, contract workers have outnumbered direct employees at Google and other large tech companies since 2018, and that gap widened even more during COVID.

Google already has huge HR and accounting departments, so they’re going for contract work for a couple of other reasons:

• The most talented engineers have realized they can earn more money by taking on one-off projects for many different companies instead of being a full-time employee at just one.
• During the good times, the demand for this top talent meant these companies just had to pay whatever these engineers asked. Some highly specialized engineers could charge up to $10,000 an hour! Even for a company as rich as Google, it was cheaper to pay them only for the hours they absolutely needed their skills, rather than paying them millions a year on a permanent salary for projects that might only come up occasionally.
• The second reason is that during tough times, like right now, letting go of contractors doesn’t count as layoffs. This allows companies to easily cut expenses without technically laying off staff. Big layoffs signal to investors and other employees that the business is in trouble and that maybe they should put their money or careers somewhere else. Companies want to avoid that signal.

The Agency Middleman

New regulations are being put in place to try and protect contractors and workers, but they can sometimes create more problems. If a contractor finishes a job and files for unemployment, they can file an SS8 form with the IRS. This form can trigger an audit to check if that contractor (and other contractors working for the company) should actually be considered permanent employees based on the rules. If the IRS decides they are employees, the company has to cover their unemployment benefits and provide other benefits to every other contractor in the business as well.

Businesses really don’t want to take that risk. So, what do they do? They use staffing agencies to handle all the tricky compliance stuff for them.

• According to data from the American Staffing Association, most contractors now work through these middleman staffing companies.
• For contractors working this way, it can end up combining all the problems of permanent employment with none of the benefits of being a private contractor.

And that’s the third reason why the 9-to-5 is disappearing – it lets companies pull off some pretty creative business moves.