Freelancing is growing. The freelance workforce grew from 53 million in 2014 to 55 million in 2016 and currently represents 35 percent of the U.S. workforce. This freelance workforce earned an estimated $1 trillion this past year, representing a significant share of the U.S. economy.
This information is from the third annual “Freelancing in America: 2016,” a study of the independent workforce survey commissioned by the freelance gig website Upwork and the resource and benefits provider Freelancers Union.
“The freelance workforce is the fastest-growing component of the economy. Figuring out where it is going is the most pressing question of our digital age,” said Louis Hyman, associate professor and director of the Institute for Workplace Studies, Cornell University School of Industrial and Labor Relations.
Additional trends revealed in the the study:
- People are increasingly freelancing by choice as the job market changes – Asked whether they started freelancing more by choice or necessity, 63 percent of freelancers said by choice — up 10 points since 2014. The majority of freelancers said that today, having a diversified portfolio of clients is more secure than having one employer.
- Technology is enabling freelancing – 73 percent of freelancers said that technology has made it easier to find freelance work — up four points since 2014. Additionally, 66 percent of freelancers said the amount of work they have obtained online has increased in the past year.
Upwork CEO Stephane Kasriel said independent professionals are an increasingly integral part of the U.S. workforce. “We should be addressing their interests or America will fall behind countries that are better equipping their evolving workforces,” Kasroel said. “This discussion is tricky though because there is no shortcut to understanding who a ‘freelancer’ is — the independent workforce is diverse given each individual’s freedom to create their own path.”
Other study findings reveal some of the forces behind the growth of the freelance workforce:
- Better than traditional job. More than three-quarters (79 percent) of freelancers said they view freelancing as better than working at a traditional job with an employer. Freelancers were much more likely to describe themselves as “engaged” in their work than non-freelancers (85 percent of freelancers vs. only 68 percent of non-freelancers). Half of freelancers (50 percent) said they wouldn’t go back to a traditional job, no matter how much pay they were offered.
- Freedom and flexibility. Among full-time freelancers, the top three reasons people said they freelance in rank order were: 1) To be their own boss, 2) To have work schedule flexibility and 3) To have work location flexibility. On average, full-time freelancers work 36 hours per week, and the majority (52 percent) say they have the right amount of work.
- Perceptions changing. Almost 60 percent of freelancers think the freelance job market has changed as compared to three years ago. Of these, 63 percent said perceptions of freelancing as a career are becoming more positive. Nearly half (46 percent) of full-time freelancers raised their rates in the past year.
The survey also touches on obstacles to growth of freelancing. Income predictability and related issues are most on freelancers’ minds. Among full-time freelancers, top concerns in rank order were: 1) Being paid a fair rate, 2) Unpredictable income and 3) Debt. Benefits was also a key issue, with 20 percent of full-time freelancers without health insurance and 54 percent of those who purchase health plans on their own paying more than the previous year. When it comes to benefits, two-thirds of freelancers also said they would prefer to purchase benefits on their own versus 34 percent who would prefer receiving a benefits package from an employer or client and taking home less pay.
Employees vs. Contractors
The question of whether some freelancers or on-demand workers are employees or independent contractors continues to be a challenge in insurance-related situations. The National Labor Relations Board recently issued a complaint against the on-demand home cleaning platform Handy Technologies alleging that workers who provide its cleaning services are employees despite the company’s claims to the contrary. The issue has been ongoing with Uber and Lyft and other rideshare drivers. Cities and states are grappling with how to give independent contractors access to workers’ compensation, unemployment insurance, and help paying for health insurance.
Wisconsin-based insurer Amercian Family Mutual has been caught up in the dispute. A federal jury in Cleveland this year determined that thousands of the insurer’s agents are employees, not independent contractors.
Others see opportunity in the growth of the freelance, on-demand or gig economy.
Last year, global claims management firm Crawford & Co. acquired a majority interest in WeGoLook, an online and mobile inspection firm that calls itself the “Uber of inspections.” Crawford said it agreed to pay $36.1 million for an 85 percent stake in WeGoLook, which has more than 30,000 mobile workers known as “lookers” who collect and verify information using their smartphone cameras.
In May, Bunker, a startup digital insurance broker focused on independent contractors and small businesses, raised $6 million in Series A funding that was on top of $2 million in sed finding it raised earlier. Hiscox and American Family are among the backers.
Insurtech Next’s insurance platform targets personal trainers, yoga instructors, landscapers, carpenters, janitorial services and photographers.
Another insurance startup, Slice Labs Inc., which is also targeting participants in the on-demand economy, announced last week raised that it $11.6 million and it is looking to sell its platform directly to large insurance carriers. Interested insurers will be able to integrate the turnkey Slice platform into their own operations to sell insurance products for the sharing economy.
Another insurance entrepreneur, Sharon Emek, has built Work at Home Vintage Experts (WAHVE), a national staffing firm that places “vintage” insurance professionals in agencies and brokerages. They work from home on a full-time or part-time basis.
For the the Upwork and Freelance Union study, Edelman Intelligence surveyed more than 6,000 U.S. working adults over the age of 18 online. Of those, 2,049 were freelancers and 3,953 were non-freelancers. Upwork is a global largest freelancing website. Upwork is headquartered in Mountain View, Calif. Freelancers Union, which offers benefits and other resources for independent contractors, has about 300,000 members including lawyers, nannies, and graphic designers.
A study released in 2016 by JPMorgan Chase Institute looked at a subset of the broader gig economy. The report, titled “Paychecks, Paydays and the Online Platform Economy,” found an estimated 10.3 million Americans earned income through web-based platforms like Uber and Airbnb between 2012 and 2015. That’s about 6.5 percent of the total U.S. workforce.
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