Thirty-Five Percent of U.S. Workers Lack a Real Career Ladder

On August 18, 2026, MIT News published Paul Osterman’s 35% estimate, drawn from research presented in his new book, “Disposable Workers: The Transformation of Employment.” The institutional account divides the workforce into about 17% marginal employees, roughly 12% contractors and 5% organizational freelancers.

The label does not apply only to gig workers or independent contractors. Forbes’s August 11 coverage of the research, based on a national survey of more than 6,000 workers, identifies a third group: legal employees whose organizations offer them little prospect of moving up.

How the three categories produce the 35% estimate

Osterman’s author-written methodology account says the nationally representative survey was conducted in late 2022 and supplemented by nearly 100 interviews with workers, employers and policymakers. Its category shares are 13% contractors, 5% organizational freelancers and 17% marginal employees, which add to 35%.

Contractors in this classification are employed by staffing or service firms but assigned to work for client organizations. The category can include temporary office staff, cleaners, security workers and highly paid specialists; it is an employment relationship, not a synonym for low-wage work.

Organizational freelancers sell their labor to companies, agencies or other organizations without becoming employees of those clients. The definition includes some platform workers, programmers and freelance journalists, but excludes many self-employed people serving individual households. Online-platform workers account for only a little more than 1% of the workforce in the research, so the headline estimate is not principally a count of the app-based gig economy.

Marginal employees are on the payroll of the organization where they work but are not intended for a meaningful internal career path. Their jobs are structured around limited development, weak prospects for retention and high turnover rather than progression into more responsible roles.

The author-written breakdown uses 13% for contractors, while the MIT account says roughly 12%. The two public summaries do not explain the one-point difference, but both use a 35% overall estimate. That figure should therefore be understood as a survey-based classification, not a precise administrative count.

Why a W-2 does not guarantee a career ladder

Marginal employees are the overlooked part of the classification because their formal status can resemble a conventional job. They work directly for the organization and receive employee tax documentation, yet the employer may have no plan to develop, promote or retain them.

Adjunct faculty outside the tenure track and staff attorneys excluded from the partnership ladder illustrate the distinction. These workers may perform continuing, necessary work, but the position itself offers no established route to greater responsibility or a higher-level role.

A contractor can also be an employee—of the staffing or service company rather than the client directing the assignment. By contrast, an organizational freelancer generally works independently. The important distinction is therefore not simply W-2 versus 1099; it is which entity employs the person, which organization uses the work and whether either provides security, training or advancement.

MIT Sloan’s research release describes the shared pattern across the categories as limited training, few advancement opportunities, weak security and minimal benefits. Those conditions can overlap, but they are not identical legal consequences for every worker.

Pay and benefits differ across the three groups

The survey places all three groups below regular workers in average earnings. Contractors and marginal employees also show lower average job satisfaction, while organizational freelancers show higher satisfaction associated with choosing when and where they work. These are group-level findings: they do not mean every freelancer has autonomy or every contractor is poorly paid.

Benefits depend on the actual employment arrangement. Marginal employees and contractors employed by staffing companies may qualify for employer benefits, but eligibility can turn on hours, tenure and plan rules. Independent freelancers normally must arrange their own health coverage, retirement saving and paid time off, while also accounting for self-employment taxes.

A contract label does not by itself determine whether someone is legally self-employed. IRS worker-classification guidance considers behavioral control, financial control and the overall relationship between the parties.

What a job offer can reveal about marginal work

The classification suggests a practical test for an offer: identify who assumes responsibility for the worker and whether the promised career path exists in concrete terms. A permanent-looking employee position can still be marginal, while an explicitly temporary project may offer acceptable compensation and autonomy without pretending to provide advancement.

• Employer: Which entity will issue the W-2 or 1099, and is it the organization supervising the daily work?
• Duration: Is the position indefinite, tied to a project, periodically renewed or designed around expected turnover?
• Compensation: Who absorbs work expenses, unpaid downtime and gaps between assignments?
• Benefits: Which health, retirement, leave and unemployment arrangements apply, and when does eligibility begin?
• Training: Is paid instruction available, with work time or a budget allocated to it?
• Advancement: What position can follow this one, which criteria govern promotion and have employees recently made that move?
• Conversion: For a staffing-company role, is there a documented route onto the client’s payroll?
• Exit terms: What notice, severance or reassignment provisions apply when the work ends?

The research does not establish that everyone in these categories wants conventional permanent employment. Some freelancers prefer autonomy, and some contractors choose mobility or command high rates. It also cannot show how the shares have changed since the late-2022 survey.

What the newly published work establishes is narrower: Osterman’s classification places about 35% of surveyed U.S. workers outside the security and development associated with regular career-track employment, including a substantial group that remains legally employed by the organization using its labor. A newer survey would be needed to determine whether that proportion still describes the workforce in 2026.