Entry-level jobs Slowly fade into Contract work

By Alexander Fernandez

Reporter

Jobs labeled entry-level might not offer the security that once came with a first job. Across industries, companies now post contract and 1099 roles mirroring traditional starter positions, requiring the same work while excluding benefits, payroll protections, and long-term stability. Recent graduates and early-career workers begin to feel the brunt as the offer arrives. One recent graduate on Reddit described accepting a full-time contract role with “no benefits” and “no PTO,” saying the job looked like a standard first position until the paperwork made clear the worker would be responsible for paying their own taxes and health insurance.

Over the past decade, contract and short-term work have shifted from a niche employment model marketed as flexible or supplemental to a widespread form of labor used across employers, industries and positions. The Pandemic accelerated 1099 and contractual work when companies began laying off staff, cutting costs, and implemented temporary and contract labor rather than permanent staff.

According to the U.S. Bureau of Labor Statistics (BLS), 11.9 million workers were independent contractors on their main job in July 2023, representing 7.4 % of total U.S. employment, up from 6.9 % in 2017. While not all those contract roles replace former staff jobs, workforce analysts say many now perform the same operational functions once filled by entry-level employees.

BLS also found that workers aged 16 to 24 were about four times more likely than older workers to hold a contingent job. BLS defines contingent jobs as work that is temporary, contract-based, or lacks an expectation of long-term employment, highlighting how non-traditional work arrangements are more common among younger generations entering the workforce.

“Independent contracting is becoming a permanent feature of the modern labor market,” wrote Łukasz Below in an analysis for the ADP Research Institute, noting that companies increasingly rely on contract labor across skill levels. That shift carries clear legal consequences.

Federal labor statutes, including the Fair Labor Standards Act, limit employee benefits and protections to workers classified as employees, while state unemployment insurance systems and workers’ compensation programs similarly exclude independent contractors. The Internal Revenue Service (IRS) also requires contractors to pay self-employment taxes and, in many cases, quarterly estimated tax payments, obligations many first-time workers do not anticipate.

Postings from employers for contract-based roles emphasize remote work, adjustable schedules, or project-based assignments. For workers trying to enter competitive fields, those postings may represent the only option in getting into the workforce. Workforce researchers note that younger workers often accept contract roles to gain experience, hoping they lead to permanent positions that may never materialize.

“For many young workers, contract jobs have become the default entry point rather than a steppingstone,” said Kathiynne Mamula, a labor economist at the ADP Research Institute, in a 2023 workforce analysis. “The expectation that these roles automatically lead to permanent employment is often not supported by the data.”

Media organizations increasingly rely on contract writers, editors, and producers for core coverage, reflecting a broader reliance on nontraditional staffing categories. Pew Research Center has found that newsroom employment has declined by more than 25% since 2008, even as news output has continued, a dynamic labor analysts say has contributed to the expanded use of freelance, contract, and temporary workers in reporting and production roles.

Research from the ADP Research Institute found that in about 40% of companies, one in four workers is a gig or contract worker, illustrating how widespread contract labor has become across industries including technology, healthcare support services, and logistics, where companies turn to flexible staffing to meet fluctuating demand.

Companies benefit from part-time, contract-based labor which allows firms to scale staffing up or down without long-term commitments. It reduces exposure to benefit costs, severance obligations, and labor disputes. Legal risk also shifts, as misclassification disputes can take years to resolve and often affect only a subset of workers. In practice, this usually means only the workers who speak up or are directly investigated are affected, because misclassification cases start with individual complaints and move slowly through reviews and appeals instead of automatically changing how an entire company classifies its workers.

For workers, the trade-offs are immediate. Income can vary month to month, and contracts may end with little notice. Employer-provided benefits often disappear, including health insurance, paid vacation, and retirement contributions such as 401(k) plans. Career progression becomes less clear without formal titles or promotion paths. Access to credit and housing can also suffer, as lenders and landlords often view contract income as less reliable.

The trend has drawn attention from regulators and policymakers, though enforcement of laws governing worker classification and misclassification remains uneven across industries and jurisdictions. Federal and state agencies periodically update guidance on worker classification, emphasizing that job titles alone do not determine employment status, since classification determines what labor protections and benefits workers receive and what obligations employers must meet. The actual duties, level of control, and economic dependence matter. Still, enforcement actions typically follow complaints, leaving many workers to navigate classification issues on their own.

Economists caution that contract work itself is not new, nor inherently exploitative. Freelancing has long played a role in creative and professional fields. What has changed is the use of contractor status for roles that function as standard entry points into an organization, with fixed schedules, ongoing responsibilities, and direct supervision.

As more early-career workers encounter contract roles as their first step into the labor market, the long-term effects remain uncertain. Researchers continue to study whether prolonged contract work delays wage growth, retirement savings, and job mobility. What is clear is that the definition of an entry-level job has shifted, often without explicit acknowledgment.

For many workers, the change becomes visible only after accepting a position once expected to provide stability. By then, the risks and costs have already moved from the employer’s balance sheet to the individual, reshaping how a generation begins its working lives.