For decades, a good job meant stability, career development, and a long-term relationship between employers and employees. But according to MIT Sloan professor Paul Osterman, that social contract has fundamentally changed. In this episode of Career Sessions, JR Lowry sits down with Osterman to discuss the ideas behind his new book, Disposable Workers, and why more than one-third of today’s workforce now falls into employment arrangements designed for flexibility rather than long-term investment.

Together, they explore what’s driving this shift, why it extends well beyond the gig economy, how AI may accelerate the trend, and what individuals, leaders, and policymakers can do to build a future of work that benefits both organizations and employees. Whether you’re just starting your career or leading an organization through change, this conversation will challenge the way you think about job security, career development, and the future of work.

Key topics covered:
● Why Paul Osterman believes over one-third of workers are now “disposable workers”
● The difference between contractors, freelancers, marginal workers, and traditional employees
● What’s driving organizations toward more flexible—and less committed—workforces
● How AI is likely to accelerate the trend toward workforce disposability
● The costs of disposable work for employees, organizations, and society
● Practical advice for building career resilience through skills, networks, and smart career choices
● What business leaders and policymakers can do to improve the quality of work

Check out the full series of “Career Sessions, Career Lessons” podcasts here or visit pathwise.io/podcast/. A full written transcript of this episode is also available at https://pathwise.io/podcasts/paul-osterman/.

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Watch the episode here

Listen to the podcast here

The Rise Of Disposable Workers, With Paul Osterman

What does it mean to have a good job? For generations, the answer seemed pretty straightforward. A good job offers stability and opportunities to learn, a path for advancement in the sense that if you invested in your employer, they would invest in you. A lot of people don’t feel that way anymore. Whether it’s layoffs, contracting, freelancing, part-time work or simply feeling like you’re easily replaced, something fundamental seems to have changed and the relationship between organizations and the people who work for them.

The social contract doesn’t feel the same. My guest, Paul Osterman argues that the biggest shift isn’t the rise of the gig economy or even the threat of artificial intelligence in terms of job security. Instead, a lot of organizations are redesigning work around what he calls disposable workers. People who can do the work without truly ever becoming part of the organization on a long term basis. He argues that this trend extends beyond contractors and freelancers to include millions of people who technically have full-time jobs but aren’t being developed or invested in or given meaningful career paths.

Paul is a Nanyang Technological University Professor of Human Resources and Management at the MIT Sloan School of Management and one of the world’s leading experts on work employment and labor markets. His new book, Disposable Workers: The Transformation of Employment challenges many of the assumptions we’ve made about how work is changing and what it means for employees, leaders and organizations. I’m JR Lowry. This is Career Sessions. Let’s get to my discussion with Paul.

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Paul, thanks for being with me on the show. It’s great to meet you.

It’s a pleasure to be here. Thank you for having me.

Understanding the Rise Of Non-Standard Employment

You have a new book out called Disposable Workers. It starts with a provocative idea that a lot of employers want disposable workers, not employees. Tell us what you mean by that.

Let me give you just a few examples to make this more concrete. Think first about the people who clean your office building at night. Those folks are building cleaners who are almost always working for a staffing company, a contracting company. They don’t work for the building. From the building’s point of view, these people are disposable. They can stop the contract and get a new set of cleaners. They could drive down wages by forcing contracting companies to compete against each other.

Another example of a contractor that’s a good job. Think about travel nurses. They work at some local hospital but they’re not employed by that hospital. The hospital uses them for a variety of reasons, but they pay them quite well on an hourly basis. Think about a freelancer. One example of a freelancer might be an Uber driver or a food driver. Uber or DoorDash treat these people as independent contractors, as freelancers. They don’t pay benefits. They don’t pay pensions. They don’t pay anything. That’s a tough job.

Think about the person who created the index from my new book. That person is also a freelancer. He doesn’t work for Harvard University press but they’re paid a good hourly rate. Think about a staff attorney. A staff attorney works at a law firm but they have no possibility of being on a partner track. They’re hired temporarily for a particular case. When that case is over, they’re typically let go. They’re employees of the law firm but they’re not on any career path or career ladder.

The same is true for adjunct faculty in universities. No chance of job tenure. They are on short term contracts. If the demand for their courses goes down, they are gone but they are employees of the University. Think about many part-time workers. Those folks may want to be part-time workers but also have much higher turnover. Turnovers built into the jobs. You’re never going to have a career in the organization.

Defining the Three Main Categories Of Flexible Labor

Those are all examples of disposable workers. They’re different categories. I identify these categories as contractors, freelancers. The third category, like a staff attorney and so on, are called marginal workers. I have a new survey of over 6,000 people and I could put numbers on this. When you add all those categories together, it turns out that 35% of the adult workforce are in these disposable jobs. That’s what we’re talking about.

That’s a pretty striking figure of 35%. Do you have a sense as to whether this is increasing? Do you have any historical data that would help substantiate one way or another, whether the numbers are rising or falling?

There’s no historical data that has the same degree of granularity detail that my survey does but I can look for example at employment in the staffing industry. Which are temporary help workers, manpower or Kelly Services. Those are all contracting jobs. If you look over time at staffing employment, it’s gone up. That’s one indication that it’s increasing.

If you look at other indicators for example, job tenure number of years that people have been with their employer. That’s shown a decline over time, which also suggests that there’s an increase in disposability. My survey is the first survey that has the detail that enables you to extinguish all these categories. There’s evidence here and there that it’s increasing.

I think about some of the trends I’ve seen. Certainly, we’ve seen the rights of the gig economy. We’ve got platforms to match buyers and sellers of services all over the place but thinking about some of the categories that you mentioned, it’s more than that. From a corporate perspective, what’s driving this ship?

Why are firms wanting to do this? I have evidence that there’s a cost to firms who are doing this, which we can talk about later on what the consequences are. Firms pay some price for doing it, but there’s a series of reasons why they are doing it. One is crude cost. In the sense that, if you’re an employee of the firm, the firm has to pay a portion of your Social Security and all the states, into unemployment insurance.

Analyzing The Economic Drivers Behind Corporate Restructuring

It’s required to pay into workers compensation programs. There’s a set of benefit costs that firms can avoid if they don’t have employees but instead, they have people doing a job for them but are not employees. There’s also a set of management costs that managers don’t like. They don’t like to be constrained. Managers want to manage, so equal employment opportunity, sexual harassment, difficulty in laying people off just at the drop of a hat.

With a contracting firm, you just call up the firm and say, “Contracts over.” With a regular employee, there’s often complications with how you lay them off. It’s not that you can’t, but you have to jump through some hoops. There’s also managerial attitudes. In the book, I have a quote from McKenzie. McKenzie did a report they called the state of organizations in America. In that report, they assert that in firms, 95% of the value of the firm is produced by 5% of the workforce.

In other words, the rest of the workforce is not important. I have severe doubts as to the quality of McKenzie’s research, but setting that aside, think about the attitudes that underlie a statement like that. You see that in other ways. You see the failure of what we call high commitment or high-performance work systems to diffuse at us, say the Toyota systems, in which frontline workers are given a lot of responsibility for production and quality.

Those have not diffused in America, despite a lot of research showing that they are highly productive. The reason is managerial attitudes towards the workforce and then, of course, is what you could call a benign explanation when you can respect. Which is that there’s an up and down and a demand for labor and some firms feel they need to have flexibility to adjust quickly to that. Those are the reasons.

The other thing that comes to mind, for me, is what I’ll call and others, call the financialization of the economy. This idea that we are so focused on earnings and shareholder value that other constituencies, including employees, aren’t given the same weight. We’re constantly trying to squeeze as much profit out of businesses. Therefore, you want this flexibility to be able to move your costs up and down as you need them. that I’m sure factors into all of these as well.

Firms are profit maximizers and any argument otherwise is it relevant. In the book, I use an analogy which is sharks. If you think about sharks. Sharks are a good thing out there in the ocean. They’re part of the ecosystem and they keep the oceans healthy. We want sharks, but sharks have only one interest in life and that’s their next meal. We put fences around sharks and barriers.

Establishing Boundaries To Support Quality Jobs

A firm, at the end of the day, has only one interest, which is maximizing profits and they are intensely focused on this for the reasons you described. Now, that’s a good thing. Firms create jobs. Firms innovate products. We want firms, but we have to put fences and barriers around them, too, If you don’t do that, then you have this explosion of disposability and it has negative consequences for the workforce. That’s part of the story.

You talked earlier about the fact that there are some costs of doing all these things, too. Do you want to get into some of that?

Disposable Workers: Proactive skill development and strong professional networks serve as vital career parachutes.

Sure. From the point of view of the workforce, I look at earnings and I look at job satisfaction. The good thing about using jobs satisfaction is an outcome, encompasses earnings but also working conditions. I compared the job satisfaction rates of standard workers with contractors, freelancers and with marginal workers. Contractors and marginal workers are substantially less satisfied with their job than our standard workers.

Freelancers on average are more satisfied. The reason is they get flexibility. The person doing the index from my book can decide not to work today if he or she doesn’t want to. They go into that for that flexibility. In terms of earnings, all three groups, contractors, freelancers and marginal workers earn substantially less even after controlling for education, for age, and all the things you’d want to control for. They earn much less than standard workers.

There’s also a cost to the public at large and a good study of hospitals. Researchers found that the more contractors at the hospital uses for cleaning as opposed to their regular employees, the higher rate of infection in that hospital. They attribute this to communications problems between management and contractors because there’s a layer between them that staffing is from.

Measuring The True Cost Of Disposability On Performance

There’s also evidence that the more contractors there are in an industrial setting, the higher the accident rate. There’s a public consequence to that. There is a consequence for firms, which is that my data show that contractors and marginal workers are less committed to the organization for whom they work. They are less willing to put in extra effort. They told me that in the survey. Firms think that that’s a cost that they’re willing to accept and return for all the other quote benefits that they get from this.

If I’m a C-level leader in an organization and I’m reading all of this. Is the answer that you get back when you present this to corporate leaders like, “Yes, but we’ve got to maximize earnings?”

You get back two answers. One is the rhetoric, “Our workers are our most important asset.” If you look at their behavior, you see that they’re doing this. The point of my survey and the interviews I conducted was not the focus on the rhetoric, but the focus on the behavior.

For the companies that aren’t doing this, that are continuing to invest in their workers, continuing to give their frontline employees a degree of autonomy and responsibility. Do they jump in the scheme of things or are they optimizing for a different set of conditions?

That’s a very good question. There is a substantial amount of research on what’s called the high road in employment. On the high road, our firms do exactly what you described. It turns out that most examples in the advocacy literature about higher road as well as a researcher are idiosyncratic. They’re either founder-led firms in which the founder has a set of views or values that he or she wants to implement or their next generation founder run firm. Costco is a classic example.

There are firms like that, and those firms are willing to accept some diminution of their profit margin and return for treating a workforce better. It has not defused in the economy as a whole because it’s clearly more profitable to squeeze. Companies do that. As I say, this is not a book that says they’re bad people. They are what they are. They’re doing what they should be doing, but then you have to build fences and barriers or, in my case, you have to put floors on the quality jobs.

Talk about what those might look like fences, barriers, floors.

It’s very complicated because one set of issues is for freelancers like the Uber drivers and so on, defining what it means to be an employee. If you’re an employee, you do get a set of protections. That’s the debate that we’ve been seeing about Uber, but it’s extending into other services. For example, Amazon is now making a lot of the delivery drivers into freelancers. It’s a legal question and/or regulatory question.

The legal standards and the regulatory standards about who’s an employee has vacillated depending on whether we’re talking about a Republican or a Democratic administration. President Obama expanded the definition of strength and the definition of employee. Trump won and weakened it. President Biden expanded it. Trump too has weakened it. You need to try and nail this down. Now, over 30 states have passed their own definition of employee for state programs, such as unemployment insurance or workers comp.

They have a simple set of rules that are easily understood. In an ideal world, we’d adopt this with so-called ABC criteria for finding an employee. None of that is relevant for contractors and marginal workers because they are employees. The contractors are employees of a staffing firm and marginal workers. Although, there is no career ladder for the employees of that company. There, you have to create floors.

Now, the most reliable way of creating a floor under job quality is unionization. As you know, only 6% of the workforce is unionized. Unions are having a hard time growing that number. Absent unionization and what’s possible. One is work pressure, that’s non-union work pressure. You do see that. For example, the fight for fifteen and big box firms had an impact in the coastal States of New York, California, and Massachusetts.

Rideshare drivers have been able to organize in a non-union way to put pressure on the companies and to get state regulations to create that floor. A classy example for contractors is justice for janitors, which occurred in California in which building cleaners organized not in a union but with some union assistance to put pressure on building owners to insist on standards and requiring employers who use staffing firms to put standards on the quality of jobs offered by the staffing firms is the strategy. There’s no single answer to this. It’s a complicated question. You do want to do it in a way that gives firms the flexibility that they legitimately need. You’re striking a balance. I’m not trying to make disposability illegal and possible but I’m trying to put some boundaries around it.

Listening to all of this, I know you work hard in your book not to portray corporations as villains. If I’m an individual, this feels pretty awful. It feels like things are stacked against me, especially if I’m living a little bit more in the Edge from an economic perspective.

Disposable Workers: Lower commitment and communication gaps are hidden organizational costs of disposable staffing models.

Absolutely. There are negative consequences for people and young people entering the labor market. There’s a lot of fear about AI, but I should note that this is not a book about AI. AI is going to make things worse, but this trend precedes AI. People entering the labor market are mature workers who find himself in this position. They’re paying a price. It feels terrible. Except if you’re a travel nurse. When you’re making $80 or $90 an hour and you get to live in some warm place in the winter and work. It feels good. There’s heterogeneity.

We didn’t get into this yet, but you have to cross those categories contractors, freelancers, etc., to some degree of people who are doing this by design or by choice. You also have people who are doing it by necessity because other options aren’t available to them. A travel nurse is a great example of somebody who may say, “I like to move around. I want to see different parts of the world or different parts of the country. This is a way to do that. I’ll take the contractual nature of it as a trade-off.” The same might be true of an adjunct professor who wants the flexibility and doesn’t want to do research and all the things that come with being a tenured professor. You get people who are only doing this because it was the only thing available to them.

The point, though, is that the data showed that on average in these categories, it’s a bad thing for folks, even though there’s heterogeneity. You don’t have to worry about a floor under a travel nurses’ job. We don’t have to worry quite as much. There are complaints. Those folks could get standard employee jobs his nurses. They’re doing it voluntarily. On balance, it is bad news for people. We don’t want to extend and expand and we all want to put floors under it.

For somebody who’s reading who’s at the beginning of their career and thinking about how this all will affect them. A lot of Gen Z people are struggling with the work world and the work environment these days. What advice would you give them for thinking about their options and for figuring out whether they’re on a path that has longevity to it or they’re just going to become one of these disposable workers?

Navigating Career Risk In An Uncertain Market

One piece of advice is to make sure that your human capital, your skill level is as high as you can reasonably make it. That gives you power in the labor market. If you have a set of skills that employers need, but be very careful about for whom you go to work because firms do vary in their utilization of this thing. You can look at websites such as Glassdoor that will help to assess the firm that you’re looking to or talking about, to the extent possible.

Maintain your networks, so that if you are forced to leave a job or look for a better job, you have as many options as you possibly can have. Now the problem with everything I said is that they sound a little high end-ish. That is to say, it sounds like I’m talking about people with a college degree who can maintain external networks and can look at Glassdoor regularly and so on. For people with lower education, lower skill levels who find themselves in his jobs and it’s very common for them to do. These jobs are often biased towards people with less personal labor market power. There, it is going to be a question of public policy to try and create floors.

I think about the fact that if you are somebody who is more at the lower end of the economic spectrum and struggles more with all of this. Everything that surrounds it like lack of access to health care, lack of savings, all the things that you have to do if you become a freelancer from a tax perspective. It’s an incredibly complicated thing for even somebody who’s very capable and savvy about this to manage. If you’re not, it feels almost impossible for them to be able to keep up with all of these regimes.

That’s right. That’s why this rhetoric is to pack your own parachute. We’re in a brave new world and isn’t it wonderful? That’s rhetoric. That’s not a day-to-day reality that most people face.

You talked a little bit a minute ago about AI. To what degree do you think AI is going to make this a more prominent factor?

There’s two issues about AI. One issue is, what’s it going to do to employment levels? Are people going to lose their jobs and so on? There’s a lot of debate about that and no one has any idea. My interest in the context of this book is what’s going to do to this trend towards disposability. There, I’m pretty confident that it’s going to increase.

Evaluating The Impact Of Automation On Staffing Decisions

The reason is that because no one has any idea and firms don’t have any idea either, they’re going to be even more leery about hiring more standard employees because standard employees are costly and create bureaucratic issues for them. They’re going to be more interested in having a more flexible workforce via having more disposable workers. AI will intensify what we’re talking about here because of the uncertainty it creates for companies about their staffing needs.

If you go back, we had the Microsoft case that created a framework of sorts for how to think about contract workers and the fact that over time, they crew the status of an employee. As you said, I went back and forth a little bit on that. Do you see companies rethinking the mix of employees versus these contract workers? I have not experienced that. I’m just curious what your research shows.

If you look at the examples of Amazon or FedEx, you do see a push even away from contractors, and towards freelancers to the extent that they can. They run up against lawsuits regarding employees data, space on the Microsoft case, and other. Firms are seeking to have as much flexibility and as few regular employees as they can. They’re following the number of strategies. The rhetoric of all becoming gig workers is wrong. The rhetoric that we should care about is Uber drivers, not just because of Uber, but also because other companies are pushing the boundaries as much as they can is right.

Now, there’s another thing that’s going on which is weird misclassification in which companies simply cheat. They don’t pay benefits. They don’t pay unemployment insurance. They don’t pay workers comp and so on. I talked about that in the book. It’s a phenomenon. It’s real, but I don’t think that’s the main story. For certain, it’s occupational categories, but it’s not the main story.

It’s always hard to separate the anecdotes from the macro reality. We hear the stories of Uber and Amazon. Certainly, they are both big employers, if you want to think of them that way even though a lot of their workers are contract people. They’re big employers of people but they’re only a few companies in the scheme of things. You hear the limited examples of people who are outrageously cheating when you’ve got the whole rest of the economy. It’s always hard to know how prominent all of these things are in the scheme of things.

Misclassification is real, but the way it works is people are put into independent contractor or freelancer status. On average, my data show freelancers are happy campers. There are exceptions. It’s true in the case of Uber. It is true that roughly 2/3 of Uber drivers want to be part-time. They want flexibility. It’s not important to them that they be employees.

Disposable Workers: Disposable work extends far beyond gig drivers to include corporate attorneys and university faculty.

There’s nothing in the law that prevents Uber to make people employees and then give people the flexibility to be part-time if they want to. The law doesn’t block part-time employment. Uber’s argument that if you make people or ease, they can’t have the flexibility that they want. They could be employees and have that flexibility if Uber wanted to do it. It’s a complicated story. That’s why policy is complicated. It’s not all a piece of one or the other.

We’ve talked a little bit about some of the policy angles. What are some of the other things that we ought to be thinking about from a public policy perspective?

This is stepping outside my area of expertise. The big issue is developing a political constituency for improving the quality of work. A lot of people are suffering from low quality jobs. Not just these disposable jobs, but other jobs which are regular standard jobs, but have poor quality. If there was a constituency about addressing job quality and workplace fairness, then it would be much easier to talk about what policies and how to implement them.

It’s one thing for you and me to have talked in the abstract about this law or that regulation, but making it happen and developing support for it. That’s a problem. That’s not just an issue with Republicans. It’s also an issue with Democrats. If you look at a support for Uber or the opposition to improving labor law, a lot of it come from democratic politicians, as well as from Republican politicians. That’s the big question, is, can job quality become a salient political issue?

Beyond policy changes, what can leaders and organizations do to change the dynamics? Do you think that will happen?

I don’t think it will happen without outside constraints. Look at what’s happened with DEI, equal employment opportunity or environment. A few years ago, every CEO in the country, particularly after George Floyd, was talking about how DEI, equal employment opportunity is a high value, important value for the company, central to their mission, ditto on the environment and now, it’s silent on it. They are about what we’ve talked about earlier. They’re about maximizing profits. End of the story. Now, as I’ve said, that’s not a bad thing. I support that. You need to put barriers and fences. I’m not looking for corporate leadership to push on this.

Where does that leave you overall about the next 5 to 10 years in terms of the economy and the world of work?

That question is not an economics question. That question is a political question. Does the political environment shift in a way that makes these issues important to politicians to do something about? If it does, we have ideas. I have ideas. Other people have ideas. We could have a discussion about what to do. If the environment political environment doesn’t shift and the stuff does have become salient, then we’re all talking abstractly.

Any last advice for an individual reading about things that they ought to be thinking?

To the extent, you can maximize your human capital and your external networks.

It’s an advice that I give a lot to people. Thank you for the conversation. It’s certainly is a thought-provoking one given everything that’s going on. As we’ve talked a little bit about a lot in the markets, and the news about but AI, but as you said, all of these things precede that and this is a longer term trend. It will be interesting to see how this plays out to say the least.

Thank you. I’ve enjoyed the conversations. It’s a good conversation.

I appreciate your time as well and I wish you luck with the book. When’s the book coming out?

The publication date is August 11th, 2026, but you can order it on Amazon now and get it.

Thank you for your time.

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What do I want you to take away from my discussion with Paul, first is this idea that job security isn’t just about having a full-time job. Interestingly, when he looked at this idea of disposable workers, it isn’t a discussion of freelancers and contractors, the gig economy, so to speak. Also, between people and an organization who are being invested in, have a future and a career path and the people in an organization who don’t and are there for more disposable.

Second is an idea that flexibility has value, at least for some people. It does come at the expense of feeling like you truly belong in an organization. Some people genuinely prefer contractor freelance work. Organizations are always going to have a need for flexible talent. They’ll certainly exploit the opportunities to hire people in a more flexible arrangement. The challenge is seeing the trade-offs career development, mentorship, organizational knowledge and advancement often come from being part of a system that’s committed to your long-term success. Not just your current assignment.

Third is if you are an individual, you need to be taking ownership for your career. It’s something I talk about a lot both within the podcasts and more generally. That means having a network, continuing to learn, building your skills, making sure that you’re making good career choices as best you can and having savings. All of those things that give you the ability to take ownership have agency in your professional life and not have it being done to you.

Fourth, this gets to the policy points of what Paul talked about. We have to make the future of the work world what we want to be. We talked about the Fact that there doesn’t feel like there’s a strong political constituency now to shape the future of work in a way that feels a bit more employee oriented. That doesn’t mean we need to go back to the days of having a huge union workforce in the United States. We probably do need to use his words different guardrails, fences and floors.

If this matters to you, look for ways to make your voice heard. Whether that’s talking to your Congressional Representatives, or advocating at the state level, or even advocating within the organization you’re in. It was a very thought-provoking conversation. Much to think about from this. Again, I appreciate the Paul was able to join and I appreciate the opportunity to have read his book as well. As always, I invite you to subscribe to the show on Apple Podcasts, Spotify, and YouTube. If you found this discussion enlightening, you can join by membership Community, which is called PathWise or you can sign up for our newsletter PathWisdom. Thanks.

Important Links

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• Disposable Workers: The Transformation of Employment
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About Paul Osterman

Paul Osterman is a Professor Emeritus of Human Resources and Management at the MIT Sloan School of Management as well as a member of the Department of Urban Planning at MIT. From July 2003 to June 2007 he also served as Deputy Dean at the MIT Sloan School.

His research concerns changes in work organization within companies, career patterns and processes within firms, economic development, urban poverty, and public policy surrounding skills training and employment programs.

Osterman has been a senior administrator of job training programs for the Commonwealth of Massachusetts and has consulted widely for government agencies, foundations, community groups, firms, and public interest organizations.

His most recent book is Disposable Workers: The Transformation of Employment (Harvard, 2026). Other recent books include Who Will Care For Us: Long Term Care and the Long Term Workforce (Russell Sage,2017); Good Jobs America: Making Work Better for Everyone (Russell Sage, 2011); The Truth About Middle Managers: Who They Are, How They Work, How They Matter (Harvard Business School Press, 2009); Gathering Power: The Future of Progressive Politics in America (Beacon Press, 2003),; Securing Prosperity: The American Labor Market: How It Has Changed and What to Do About It (Princeton University Press, 1999), and Working In America: A Blueprint for the New Labor Market (MIT Press, 2001).

Osterman is also the author of Employment Futures: Reorganization, Dislocation, and Public Policy; Getting Started: The Youth Labor Market; The Mutual Gains Enterprise: Forging a Winning Partnership Among Labor, Management, and Government; and Change At Work. He is the editor of two books, Internal Labor Markets and Broken Ladders: Managerial Careers in the New Economy. In addition, he has written numerous academic journal articles and policy issue papers on topics such as labor market policy, the organization of work within firms, careers, job training programs, economic development, and anti-poverty programs.