Freelance Economy

Statistics

Rob Wile:

"All net employment growth in the U.S. economy since 2005 appears to have occurred in alternative work arrangements.

The pair defined “alternative” as any type of temporary, gig, or contract work, including Uber drivers. Overall employment for all jobs, as measured by the Census, increased by 9.1 million (6.5%) from 140.4 million in February 2005 to 149.4 million in November 2015. As measured by Katz and Krueger, the share of workers in alternative work arrangements climbed from 10.1% in 2005 to 15.8% in 2015. This implies that the number of workers employed in alternative arrangements increased by 9.4 million (66.5%) from 14.2 million in February 2005 to 23.6 million in November 2015.

“Thus, employment in traditional jobs (standard employment arrangements) actually slightly declined by 0.4 million (0.3%) from 126.2 million in February 2005 to 125.8 million in November 2015,” they write. “The implied conclusion is that all U.S. net employment growth (for main jobs) has occurred in nonstandard work arrangement over the last decade. “As of late 2015, we had not yet quite fully recovered from the huge loss of traditional jobs from the Great Recession.” (http://fusion.net/story/285543/krueger-katz-gig-economy-forthcoming-paper/)

Discussion

1. Stowe Boyd:

Excerpted from Sara Horowitz, The Freelance Surge Is the Industrial Revolution of Our Time:

"Everywhere we look, we can see the U.S. workforce undergoing a massive change. No longer do we work at the same company for 25 years, waiting for the gold watch, expecting the benefits and security that come with full-time employment. We’re no longer simply lawyers, or photographers, or writers. Instead, we’re part-time lawyers-cum- amateur photographers who write on the side.

Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/coworking spaces. Independent workers abound. We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed.

And, perhaps most surprisingly, many of them love it.

This transition is nothing less than a revolution. We haven’t seen a shift in the workforce this significant in almost 100 years when we transitioned from an agricultural to an industrial economy. Now, employees are leaving the traditional workplace and opting to piece together a professional life on their own.

...

As of 2005, one-third of our workforce participated in this “freelance economy.” Data show that number has only increased over the past six years. Entrepreneurial activity in 2009 was at its highest level in 14 years, online freelance job postings skyrocketed in 2010, and companies are increasingly outsourcing work.

...

We don’t actually know the true composition of the new workforce. After 2005, the government stopped counting independent workers in a meaningful and accurate way. Studies have shown that the independent workforce has grown and changed significantly since then, but the government hasn’t substantiated those results with a new, official count."

Comment by Stowe Boyd:

"The term ‘free lance’ was originally coined by Walter Scott in Ivanhoe (1819), to represent a mercenary warrior not sworn to any lord’s service (and not that the warrior’s efforts would be free of charge). In the 1860s its meaning became figurative." (http://www.stoweboyd.com/post/9746463889/the-rise-of-ronin-and-the-liquid-economy)

2. Rob Wile:

"Katz said examples of the fastest-growing class of alt-worker (in orange above), contracted workers, would include janitors, cafeteria workers, and security guards, who could work directly for a private company but who are increasingly contracted out to outside firms. He also said increasing numbers of IT and even transportation occupations are being farmed out in this way.

As for online “gig” work, like Uber driving, it’s been growing at a tremendous clip in recent years. In fact, if you worked in the online gig economy, you almost certainly worked for Uber: according to their data, Uber drivers now represent up to two-thirds of all such work. But online gig worker numbers remain “swamped” by “offline” workers who find side gigs through more traditional means, they found.

Alternative work may provide more flexible arrangements for many to enhance work-life balance, the pair say. But there are real worries as well: Growth in alternative work arrangements can put downward pressure on wages and labor standards. The question, they write, is how to extend the social compact between workers and companies to nonstandard employment settings." (http://fusion.net/story/285543/krueger-katz-gig-economy-forthcoming-paper/)

Freelance work culture

'Gandia and his team surveyed more than 1,200 freelancers in almost two dozen different fields and professions.

Some of the most striking findings:

Freelancers prefer the independent lifestyle. Every second freelancer has more free time now than they did as an employee. Additionally, 59 percent are happier now than they were before going solo, and 54 percent said that they wouldn’t even consider working as a traditional employee again.

Independent professionals have weathered the economic recession better than traditional businesses. Most freelancers (52%) say they have not been impacted by the economy or that they have faced only a very minor impact. Only 19 percent said that they have been significantly affected.

In terms of future, most freelancers feel more secure than working for someone else. Displaced workers certainly understand the inherent risks of being self-employed. However, most seem to also understand that taking control of their future by going solo can bring even more security.

Writers composed the biggest independent professional category (18%), followed by copywriters (12%), designers (11%), translators (9%) and web developers (7%).

Word of mouth, referrals, and tapping their own personal and professional networks are freelancers’ most effective methods for finding clients. Online job boards (9%) such as Elance and oDesk ranked above networking (7%), social media (3%) and cold-calling (2%). However, when asked which marketing methods they were planning on spending more time and resources on over the next year, the top response was social media (46%).

Freelancers need to get out more. An overwhelming majority of respondents (90%) reported that they mostly work from home. Three percent said the work in a coworking space or shared office, while two percent work in cafes or other public locations.

It is of course this last statistic that is of most interest to the global coworking movement. Although coworking spaces are multiplying rapidly, they aren’t being utilized by the majority of the freelance community. That might help to explain why the report also found that managing time, staying productive, and maintaining motivation throughout the work week rank among the top challenges freelancers experience." (http://www.deskmag.com/en/three-in-a-hundred-freelancers-go-coworking-258)

Issues for Freelancers

Sara Horowitz:

'Although independent workers were a full one-third of the U.S. workforce at last count (which was 6 years ago), they aren’t counted by the Bureau of Labor Statistics in a consistent and ongoing way. Current statistics tend to lump workers into one of three classes: private wage and salary workers, government workers, and the self-employed. But these groupings don’t account for the nuances in how people work now and the overlap between groups. For example, on-call or contract workers might be lumped in with wage and salary workers, when really they’re independent workers. As a result, our outdated numbers have led to outdated policies that no longer meet the needs of America’s 21st century workforce.

Take, for example, the issue of nonpayment. W-2 employees know that their paycheck will be directly deposited into their checking account every two weeks, and don’t have to worry about chasing down their employer for payment. In fact, the Department of Labor could fine your employer—or send them to jail—if they don’t pay you. Independent workers, however, have no such protection from nonpayment, late payment, or partial payment, leaving freelancers with only two options: sue or walk away. According to Freelancers Union member survey data, that’s a gamble many companies are willing to make: 77% of freelancers report having trouble collecting payment at some point in their career.

In a way, we’re going back to the future. When the U.S. economy began to shift from farms to factories in the mid- to late-nineteenth century, the state of the nascent workforce was largely unknown: there was no national unemployment rate, consumer price index, or average household income. In 1884, President Chester Arthur signed a bill creating the Bureau of Labor Statistics. The BLS produced numbers, and policies soon followed, including many we take for granted today: the eight-hour workday, child labor bans, and unpaid wage claims.

Just like back then, reliable government figures on today’s workforce would make it harder to ignore the many hurdles that freelancers face. Mirabai Knight, a self-employed stenographer for the deaf, found herself drawing on emergency funds just to scrape by when one of her major clients fell four months and $9,000 behind. Without the support of the Department of Labor, she had to ask herself—was it worth the time, energy, and expense of hiring a lawyer and suing her client in court?

Freelancers are also excluded from affordable, group-rate health insurance and retirement plans. Deborah Lattimore, an author-illustrator who has published 40 books, pays an unbelievable $32,000 a year for health insurance, and still may have to sell her house after racking up over $150,000 in medical fees over the last five years. What’s worse, as a freelancer working in a slow economy, she has not been able to collect a dime of unemployment insurance despite her history of accomplishments and steady work.

With more reliable data on independent workers like Mirabai and Deborah, we’ll have a better understanding of the impact these 42 million workers have on the economy, and the extent of the challenges they face. We’ll also be able to create sound policies that meet the needs of 2011’s entrepreneurial workforce—not the 1940’s industrial workforce. There doesn’t seem to be any economic argument for not accurately counting independent workers, but rather inertia and perceived lack of urgency." (http://blogs.reuters.com/great-debate/2011/06/23/why-our-employment-figures-are-wrong/)