Paul Osterman, Professor Emeritus of Human Resources and Management at the Massachusetts Institute of Technology Sloan School of Management and a member of the Department of Urban Planning at MIT, joined the America's Work Force Union Podcast to discuss his book Disposable Workers: The Transformation of Employment.
The book is based on a nationally representative survey of approximately 6,000 workers conducted in late 2022 and interviews with approximately 100 individuals. Osterman estimates that disposable workers, individuals whom employers use to get work done but have no intention of retaining, now represent approximately 35 percent of the U.S. workforce. He defined four categories: contractors doing lower-wage work such as building, cleaning and security; high-earning contractors such as travel nurses; freelancers, including gig workers and journalists; and what he called marginal workers — regular W-2 employees in roles with no career track and no employer commitment.
Osterman discussed the corporate motivations behind this shift, including benefit avoidance, wage suppression through competition from staffing companies, and a documented disrespect for frontline workers in corporate strategy. He also addressed the role of unions as one of the most important structural interventions available and said the evidence is clear that when a union is present, workers are better off.
- Osterman's nationally representative survey of approximately 6,000 workers found that disposable workers, those whose employers, at the point of hiring or contracting, have no intention of retaining them, represent approximately 35 percent of the US workforce. They are spread across four categories: lower-wage contractors such as building cleaners, security guards and landscapers; high-earning contractors such as travel nurses; freelancers, including gig workers and journalists; and marginal W-2 workers such as adjunct faculty, staff nurses and part-time low-wage service workers employed with no career track or retention expectation.
- Corporate motivations for the shift to disposable workers include benefit avoidance, wage suppression and what Osterman described as a documented disrespect for frontline workers. Benefit avoidance is largely a post-Affordable Care Act dynamic: keeping workers under 30 hours per week lets companies avoid healthcare obligations. Wages are held down by forcing staffing companies to compete for contracts. Osterman also cited a McKinsey report arguing that 95 percent of a firm's value is produced by 5 percent of its workforce. He said that view reflects a corporate culture that treats the remaining 95 percent as interchangeable and expendable.
- Unions are among the most significant structural responses to disposable work. Osterman cited UNITE HERE hotel room attendants in Boston, who earn approximately $25 an hour with benefits under union contracts, compared to $13 to $14 an hour with no benefits in non-union settings. He also noted that misclassifying workers as independent contractors is widespread in homebuilding and other industries. That practice turns what would otherwise be standard employment relationships into disposable arrangements. Osterman expects AI to accelerate the use of disposable workers as it creates uncertainty within organizations, which makes jobs that can be ended quickly more appealing.
A Career Spent on Economic Justice
Paul Osterman has spent his career studying what happens to workers when the labor market does not work in their favor. He has written about long-term care workers and the mistreatment they face. He has worked extensively with the Industrial Areas Foundation organizing. His book, Good Jobs America: Making Work Better for Everyone, addressed the quality of work available to Americans across income levels. Disposable Workers: The Transformation of Employment, published in August 2026 by Harvard University Press, is his most recent examination of the same underlying question: who is the economy actually working for?
He said this book grew from a surge in public conversation about gig work and the changing nature of employment. Osterman wanted to understand what was actually happening, using data rather than anecdote. What he found was both larger and more varied than the gig work conversation suggested.
What is a Disposable Worker?
Osterman said a disposable worker is not a worker who could be fired because, under at-will employment, almost everyone can be let go. He defined a disposable worker as someone whom the employer, at the point of hiring or contracting, has no intention of retaining. Standard employment carries an implicit expectation of continuity. Disposable employment does not.
He identified four categories of disposable workers. The first is contractors doing lower-wage service work, such as cleaning office buildings at night, providing security and doing landscaping. These workers are frequently employed by staffing companies contracted by the building or business owner, and they are typically not treated well. The second category is high-earning contractors such as travel nurses, who may earn $70, $80 or $90 an hour working in varied settings and generally report higher job satisfaction. The third category is freelancers, including gig workers such as Uber and food delivery drivers. This group is smaller than the public conversation suggests, at approximately 2 percent of the workforce. It also includes journalists, many of whom have been pushed into freelance status or have chosen it.
The fourth category is what Osterman calls marginal workers. These are regular W-2 employees who are not on a career track, and their employer has not made a retention commitment. Adjunct faculty, staff nurses, part-time retail and service workers fall into this category. They have the tax classification of standard employees, but do not have the job security or the relationship of other W-2 employees.
His nationally representative survey of approximately 6,000 workers, conducted in late 2022, found that these four categories together account for approximately 35 percent of the U.S. workforce.
Why Companies Are Doing This
Osterman outlined three corporate motivations for the increased use of disposable workers.
The first is cost, or, as he put it, greed. Contractors do not receive employer-paid benefits. Forcing staffing companies to compete for contracts pushes wages down because reducing labor costs is the primary margin on which staffing firms can underbid each other. The Affordable Care Act's 30-hour threshold for employer healthcare obligations created a direct incentive for companies to keep workers under that line. He was careful to note that this is not an argument for cutting benefits, as people need them, but it is an accurate description of how the law has been used.
The second motivation is operational flexibility. Contractors can be terminated without the friction of standard employment relationships. When a company wants to cut staff, it calls the staffing firm and cancels the contract. There is no severance negotiation, no notice period and no HR process. The ease of termination is a feature, not a side effect.
The third motivation is what Osterman described as a documented disrespect for frontline workers at the level of corporate strategy. He cited a McKinsey report that argued 95 percent of a firm's value is produced by 5 percent of its workforce. If a company internalizes that view, it implies that the other 95 percent of workers can be treated as interchangeable inputs rather than as people whose retention and development generate value.
Google, Amazon and the Contractor Economy
At the time Osterman's research was conducted, Google employed more contractors than standard employees, with a count of 100,000 or more. Amazon and Apple operate with similarly large contractor workforces. The mechanism is the same across all of them: when you want to end the relationship with a contractor, you call the staffing company. There is no individual on the other end of that call. The worker simply stops receiving assignments.
FedEx is another example Osterman cited. Many FedEx drivers are classified as independent contractors and are required to purchase their own vehicles. UPS has spent decades in contract disputes over the company's push to increase part-time employment. Both are strategies for reducing the employer's commitment to the workers who actually do the work.
AI and the Uncertainty Premium
Osterman addressed AI and its potential effects on the workforce. Nobody, he said, knows what the ultimate impact of AI will be on the total number of jobs. Anyone who claims to know is making it up. What he is confident about is the directional effect on disposable work: AI creates organizational uncertainty. Companies do not know what skills they will need, how many people or in what configurations. When a company faces that level of uncertainty, the appeal of a workforce that can be quickly assembled and quickly discarded increases. AI, he argued, will accelerate the use of disposable workers regardless of its other impacts.
The Union Answer
Osterman discussed the role of unions in addressing the disposable worker problem. He cited hotel room attendants affiliated with UNITE HERE in Boston as an example. Union members earn approximately $25 an hour with benefits, while non-union room attendants in the same city earn $13 to $14 an hour, often with no benefits. The same dynamic applies to building cleaners. In instances where the union is present and the contractor is required to meet union standards, the job changes fundamentally. Where the union is absent, the job is disposable.
He also noted the geography of union density as a factor in who gets decent work. Commercial buildings in downtown Boston are largely unionized. Suburban office buildings are not. The people cleaning those suburban buildings have the same job classification, but face a different economic reality.
When it comes to misclassification, Osterman connected the residential construction industry to the broader pattern of disposable workers. Those who spend all their time working for a single subcontractor are classified as independent contractors and treated as disposable, even when the economic reality of the relationship bears little resemblance to independent contracting.
More information on Paul Osterman and his research is available at mitsloan.mit.edu. Disposable Workers: The Transformation of Employment was published by Harvard University Press.
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