Talent

Freelance Workers Could Make Up Your Entire Workforce Soon

A recent article on LinkedIn highlights the growing trend of using telecommuting as an employee benefit. More and more job candidates are negotiating the opportunity to work from home at least 1 day (or more) a week. As remote work continues to rise in popularity, it makes you wonder: Will these digital nomads make up your entire workplace one day?

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To make things clear, remote work and freelance work are two different things, but they both have one thing in common: technology. Remote and freelance workers are both able to utilize technology to get their jobs done. And while remote workers are typically employed full-time, freelance workers are able to hop from job to job, filling the void when needed.

However, there may come a time when your entire workforce consists of freelance workers, as it appears more and more full-time employees are jumping ship to become their own bosses in the gig economy.

According to a new report released by Upwork and Freelancers Union, more people than before see freelancing as a long-term career path. The sixth annual “Freelancing in America: 2019” (FIA) study—which surveyed more than 6,000 U.S. workers over the age of 18—estimates that 57 million Americans freelance.

The 5 Most Notable Findings

  1. Freelancing income exceeds the gross domestic product (GDP) of some major industries. At nearly $1 trillion (approaching 5% of U.S. GDP), freelance income contributes more to the economy than industries such as construction and transportation and is on par with the information sector. Freelancers doing skilled services earn a median rate of $28 an hour, which is more per hour than 70% of workers in the overall U.S. economy.
  2. Freelancing is becoming more of a long-term career choice. For the first time, freelancers said they view this way of working as a long-term career choice as much as they view it as a temporary way to make money. In addition, the share of those who freelance full-time increased from 17% in 2014 to 28% in 2019.
  3. Freelancers are most likely to be skilled professionals. Skilled services are the most common type of freelance work, with 45% of freelancers providing skills such as programming, marketing, IT, and business consulting.
  4. Freelancing enables opportunities for those who otherwise might not be able to work. Forty-six percent of freelancers agree freelancing gives them the flexibility they need because they’re unable to work for a traditional employer due to personal circumstances.
  5. The younger the worker, the more likely he or she is to freelance. Every generation had more than one in four workers who freelanced in the past year. The ascent of freelancing is clear in generational results: 29% of Baby Boomer workers (aged 55+) freelanced, 31% of Gen X workers (aged 39 to 54) freelanced, 40% of Millennial workers (aged 23 to 38) freelanced, and 53% of Gen Z workers (aged 18 to 22) freelanced—the highest independent workforce participation of any age bracket since FIA’s 2014 launch.

Expert Insight

“Freelancing is a respected, long-term career path,” says Stephane Kasriel, President and CEO of Upwork. “It’s remarkable to see this way of working empowering the youngest generation more than any prior generation and also to see the ways freelancing is opening up opportunities for inclusion in the workforce. Companies that want access to skilled professionals who are proactively training themselves and incredibly self-motivated should turn to independent professionals. The future of work is now, and they are leading the way.”

“With a strengthening labor market, we will increasingly see people work on the terms that they prefer, and for many that means freelancing,” says Adam Ozimek, Upwork’s Chief Economist. “The stronger economy provides more optionality and opportunity, and as a result, more people are seeing freelancing as a long-term choice, and fewer are doing it on a temporary basis. Freelancing already has an economically significant impact on the U.S. economy, and these compositional shifts will be important to understand as we near full employment.”

“The 2019 Freelancing in America report shows that freelancing has become a long-term career choice for an increasingly diverse group,” says Caitlin Pearce, Executive Director of Freelancers Union. “More than one in three Americans are freelancing. But this workforce continues to face significant challenges in being able to access affordable healthcare and fundamental protections so they can get paid fairly and on time for the work they do. As freelancers are 18 percentage points more politically active than the general population, policymakers are advised to listen to their voices ahead of next year’s Presidential election.”

Freelance Workforce Composition

The FIA report finds that the 57 million Americans who freelanced this year represent 35% of the U.S. workforce and an increase of 4 million freelancers since 2014. Additional insights include:

  • With a stronger labor market, 60% of freelancers say they started freelancing by choice—up from 53% in 2014.
  • For the first time, the percentage of individuals who view freelancing as a long-term career choice is the same as the percentage who view it as a temporary way to make money, at 50% each. Since 2014, the number of those saying they’re freelancing long term increased from 18.5 million to 28.5 million, up 10 million in only 6 years.
  • The share of freelancers who are full-time has increased 11 percentage points since 2014 (from 17% in 2014 to 28% in 2019).
  • Freelancing is not one way of working but is rather a diverse set of potential activities. It therefore fits the needs of many types of people and circumstances.
  • The largest type of freelance work is skilled services (like computer programming, marketing, IT, business consulting, etc.), at 45% of freelancers.
  • Other types of freelancing include unskilled services (like dog walking, ridesharing, and personal tasks), at 30%; selling goods (like on eBay or Airbnb), at 26%; and other activities, at 29%.

Looking Ahead

So, what does the future have in store for freelance workers? According to the FIA study, 91% of freelancers say the best days are ahead for freelancing, a 14-percentage-point increase since 2014.

Nearly all (96%) freelancers say the freelance job market has changed in the past 3 years. Among those who have seen change:

  • 77% say technology has made it easier to find freelance work.
  • 71% say perceptions of freelancing as a career are becoming more positive.
  • 64% say that professionals who are at the top in their industry are increasingly choosing to work independently.

If you haven’t already figured it out, freelancing is here to stay! Just consider these additional findings:

  • A 51% majority of freelancers say no amount of money would entice them to definitely take a traditional job.
  • 59% of nonfreelancers say it is likely that they will do freelance work in the future.

The Impacts of Freelancing: Economic, Lifestyle, Geographic

The FIA study also includes insights into how freelancing impacts the U.S. economy, freelancer lifestyles, and more. Freelancers contribute nearly $1 trillion in freelancing income to the economy—or nearly 5% of U.S. GDP. In terms of compensation, freelance workers receive a median rate of $20 per hour, compared with a median of $18.80 for the U.S. overall.

Freelancers doing skilled services have a median rate of $28 an hour. This means the median skilled freelancer earns more per hour than 70% of workers in the overall economy.

The top reason full-time freelancers choose to freelance is schedule flexibility. In fact, 46% of freelancers agree freelancing gives them the flexibility they need because they’re unable to work for a traditional employer. Among those, 43% have health issues. This means that one out of five freelancers faces health challenges that would prevent him or her from working if it weren’t for freelancing.

Additionally, 71% of freelancers agree freelancing gives them the opportunity to do their work from anywhere they choose. Many freelancers would consider moving, with 7 in 10 interested in options other than a large city if opportunities were the same. So where do freelancers work?

A different study—”America’s Best Cities for Freelancers 2019”—highlights which locations are the best for freelance workers. The top five locations include:

  1. Spokane, Washington;
  2. Vancouver, Washington;
  3. Lauderdale, Florida;
  4. Tempe, Arizona; and
  5. Scottsdale, Arizona.

The top five locations that are the worst for freelance workers include:

  1. Lexington, Kentucky;
  2. Palmdale, California;
  3. Port St. Lucie, Florida;
  4. Jackson, Mississippi; and
  5. Memphis, Tennessee.

To determine these rankings, Neighbors.com—which released this particular study—analyzed data from more than 150 cities and compared those cities across five metrics: median rent; average Internet speed; number of coffee shops per capita; income taxes (based on the median freelancer income of $52,074); and ease of getting around that is based on the average of a combined walkability, transit, and biking score.

What’s interesting to note is the “coffee shops” metric that was used to gather data. This emphasizes the fact that remote work can be done anywhere and almost everywhere there is an Internet connection!

Freelancers’ Challenges

Freelancers and nonfreelancers share most of the same top concerns, including access to affordable health care, a healthy savings account, retirement funds, and being paid fairly.

Freelancers are more likely to have college loans or other debt to pay off (46% of freelancers compared with 36% of nonfreelancers), and they are more likely to say they feel like they live “paycheck to paycheck” (59% of freelancers compared with 53% of nonfreelancers).​

With next year’s presidential election looming, freelancers are 18 percentage points more politically active than nonfreelancers (51% of freelancers self-identified as politically active compared with 33% of nonfreelancers). Freelancers are most interested in politicians focusing on making health care more affordable and available.

Freelancers’ Perspectives on Skills and Training

One perk about hiring freelancers to fill vacant positions is that you don’t have to include them in your company’s professional development programs, as these workers are meant to be temporary, not permanent.

However, FIA finds that 89% of freelancers wish their education better prepared them for freelance work. If they could go back, 52% of freelancers say they would replace their college education entirely with training tailored to their current work.

Additionally, 81% of freelancers find freelance business skills are important to their work and would like additional training. The top three areas they would like additional training on are:

  • Networking,
  • New skills in their field, and
  • How to start and grow a freelance career.

One thing freelancers and employers have in common is the type of skills needed to perform the job—78% of freelancers agree that soft skills are at least equally as important as technical skills to succeed in their work.

Freelancers are more likely to participate in training, with 54% ​having done so in the last 6 months versus only 40% of nonfreelancers. Skilled freelancers are even more likely to train themselves, with 65% having done so in the last 6 months.

About the Report

The study is conducted by independent research firm Edelman Intelligence. Between June 7, 2019, and July 3, 2019, 6,001 U.S. working adults over the age of 18 were surveyed for it online. Of those, 2,117 were freelancers and 3,884 were nonfreelancers. Results are weighted to ensure demographic representation in line with the U.S. Bureau of Labor Statistics’ 2018 “Labor Force Statistics from the Current Population Survey” and the “American Community Survey.” The study has an overall margin of error of ±1.2% at the 95% level of confidence. To see further insights, please click here for access to the full results deck and other materials.