Recession Proof Your Career: Direct Hire vs. Contract Trends

Recession Proof Your Career: Direct Hire vs. Contract Trends

In times of recession, what’s better to pursue — being a direct hire or a contract employee?   

But wait, hold on. This blog is not about the recession because we are not in one just yet. Instead, it aims to give you an overview first of what’s happening in the economy and vital insights into making the most out of a potentially bleak situation. 


The State of the US Economy

Talks about the US economy being in a recession have been rife in the last few weeks. By definition, an economy is considered to be in recession after two consecutive quarters of negative growth. However, while the US economy has shrunk in the last two quarters, many economists have refused to categorize the world’s largest economy as already in recession due to several factors. 

For one, according to US Treasury Secretary Janet Yellen, the US economy recorded a robust 5.5 percent growth in 2021. More importantly, the labor market remains to be highly buoyant. Data shows that 400,000 jobs are still being created monthly, a sharp contrast to the high unemployment rate, which is a classic attribute of an economy already in recession.  

Other experts have also argued that the economy is facing considerable uncertainty due to a protracted pandemic and the Russian invasion of Ukraine. However, the same experts also point out that the other characteristics leading to an economic recession are simply absent. These characteristics include consumers spending less, massive job layoffs, hiring freezes, a decline in investments and corporate expansions, and a drop in industrial production. 

Nevertheless, despite these still encouraging signs, many experts say there is wisdom in keeping yourself vigilant. For example, former federal reserve economist Claudia Sahm reminds everyone that what makes a recession terrible is that people lose their jobs and livelihoods. If this happens, there are long-term consequences. 

Though the economy cannot be categorized as already in full recession, Sahm reminds everyone that there is also no guarantee that it will remain that way. 


Uncertainty: The Best of Times, The Worst of Times 

Given the analysis and warnings from the US economists, do you already need to push the panic button? 

A recent survey jointly conducted by the Financial Times and the Initiative on Global Markets of 49 American macroeconomists revealed that more than two-thirds of those surveyed forecast that the US economy will be in recession in 2023. You have also probably heard of Meta announcing a hiring freeze recently, while Netflix likewise had a series of layoffs in the last three months. 

Truly, the outlook is not all that rosy.  

Perhaps, you may have started preparing for a possible recession by saving money and spending less. While these are good and practical steps to manage and prepare your finances for times that will require you to do some belt-tightening, these steps will only be sustainable as long as you have a steady source of income. 

So how do you recession-proof your career if and when a recession hits? Should you get a contract job or strive to be a direct hire? Let’s dissect these options. 


Recession-Proofing Your Career 

You are a direct hire if you work permanently for one person or company. You are expected to work for your employer based on a signed agreement and get paid regularly. 

On the other hand, you are hired as a contractor if you render your services to an organization. More often than not, contract workers are hired for a fixed amount of time and with a specific task or project to complete. As a contract hire, you are expected to work independently and must be able to display excellent self-management skills. 

Whether you are working as a direct hire or contract employee, or if you are currently looking for a new job in these tough times, you have to know that both direct hires and contract employees have their unique advantages and disadvantages during challenging times. 

It is high time to flesh out these advantages and disadvantages as you recession-proof your career. 


1. Considering to Have More Than One Revenue Stream

The advantage of a contract placement is that it is not as restrictive as a direct hire placement. Contract jobs allow you to pursue more than one job at a time. Depending on your time management skills, it opens up the possibility of you having more than one revenue stream. 

Though not impossible, having more than one source of income or revenue stream when you are a direct hire could be more challenging. However, you can also look for a company that will allow you to work on not just one but multiple projects simultaneously. Though this may make you way busier than handling just one project or task, it also minimizes the risk of being laid off because your involvement in the company is deeper than being a contract employee. 


2. Exploring the Gig Economy

Fiverr’s recent Freelance Economic Impact Report revealed that the freelance workforce employed more than six million individuals in 2021 and has generated $247 billion worth of revenue in the said year. The increased demand for freelancers has considerably disrupted the corporate world, which is especially true nowadays when many employees look for greater flexibility and freedom in their work.  

If you are a contract employee, this is something that you can actually pursue with more ease compared to a direct hire. However, if you are direct hire, getting your feet in the gig economy may be a little more challenging – but again – not impossible. Many direct hire employees also get to take some freelance work on weekends or in their spare time during weekdays. You only need to be more skilled in juggling your daily tasks. 


3. Doing More Research About Your Company or Job Sector

It surely pays to perform a little research on the state of your company or job sector and how it is doing financially. It will let you know if there are dark clouds ahead or if you have nothing to worry about. 

Direct hires are usually protected against such random shocks because, as direct placements, their contracts typically ensure job security, especially if they are tenured. Moreover, should direct hires be ultimately laid off, they normally receive backpay and other claims from their company. Unfortunately, this is not the case for contract placements. 


4. Honing Your Skills and Learning New Ones

Whether you are a direct hire or contract employee, you still need to work on certain skills that remain in demand despite the threat of recession. To find out what these skills are, you can work with a recruiter or staffing agency that better understands the job market. Find out what new skills complement those that you already have or discover companies that are looking for your particular skill set. 



At the end of the day, choosing between being a contract or direct hire will still boil down to what your priorities are and what risks you are willing to take amid the market situation. Let us help you assess what will be suitable for you.  

We have a deep and comprehensive understanding of the job market during the best and worst times. The resources available to you through the Davis Companies will enable you to find a company that can work with your skill set and where you can potentially thrive – recession or no recession. Contact us today to learn more about how to deal with recession-proofing your career, the Davis way. 

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