Final answer:
Independent contractors are self-employed individuals who operate their own businesses and work with multiple clients on a project or fee basis. They contrast with temporary workers, who are often employed through agencies and may use such positions as a pathway to more permanent employment. Independent contractors contribute to the flexibility and diversity of the workforce.
Step-by-step explanation:
Independent contractors are self-employed individuals who work on a project or fee basis with multiple customers or clients. Unlike contingent workers, who might be working temporarily or on call, or part-time workers, who typically have fewer hours with one employer, independent contractors run their own businesses and serve multiple clients. This working arrangement provides freedom and flexibility for the contractor and can often be a mutually beneficial situation for both the contractor and the clients.
For example, an independent contractor might include a freelance graphic designer who provides services to several different companies. They are not tied to a single employer and often provide their own tools and materials for the job. Conversely, temporary workers might work through agencies that connect them with short-term positions, which often serve as a stepping-stone to permanent employment, contributing to the reduction of frictional unemployment.
Small-scale businesses, some of which are operated by independent contractors, play a significant role in the economy. Businesses ranging from dentists to house cleaners can operate in this model, wherein the earnings of the business are essentially the wages or salary for the individual or partners running the business.