The so-called 'gig economy' is growing rapidly according to the latest industry statistics with more than 50 million independent workers creating up to $1.56 trillion for the US economy (1)(7). But while 80% of businesses plan to increase their use of independent workers (3) there are still plenty that have reservations.
Before we look at the benefits independent workers bring to businesses, we will summarize what the gig economy is and look at some of the key statistics that support the widespread feeling that the way we work is changing.
Who are America's independent workers?
Before we begin, it's worth noting that the preferred term amongst independent workers for their working niche is the freelance economy (6). It is difficult to precisely define those who work in the freelance economy due to the different working circumstances that come under that umbrella.
For the purposes of this article, we are using the definition of an independent worker as someone who is free to accept work from a number of different businesses rather than a contingent worker who is committed to one specific business.
Independent workers include a wide range of circumstances from those 'moonlighters' who work for a traditional employer, but do a 'side hustle' for extra income, right through to full-time freelancers who make a living (on average $68,300 per year (7)) from one or more clients.
Companies that are associated with the freelance economy include Uber, Lyft, Turo, Fiverr, TaskRabbit, Etsy, eBay, Freelancer.com and Amazon Mechanical Turk.
64% of independent workers (5) source their work online through platforms such as Upwork, Fiverr and Toptal with Upwork boasting the largest user base (over 15 million). Some independent workers join organizations such as the SBA or the Freelancers Union to help protect their workers' rights (7).
Most independent workers are drawn to the freelance economy for more autonomy, more freedom or the chance to earn an additional income. In fact, 81% of independent workers (3) cited being their own boss as the main reason they chose that line of work. In addition, 84% of freelancers say they are living their preferred lifestyle compared with 54% of those under traditional employment contracts (5).
In terms of US demographics, more men enter the freelance economy than women (54% versus 36%) (7) while the ethnic make up of independent workers tends to mirror that of the country as a whole with 62% white and 17% Hispanic or Latino (7).
61% consciously chose to become independent workers (as opposed to those who were driven to it by a lack of traditional job prospects) with 51% saying they would never go back into traditional employment, even for more money (5).
How businesses are benefiting from independent workers
It seems clear enough that independent workers are enjoying benefits from severing their ties with the mainstream working world but how about employers? How could businesses benefit from taking on more freelancers?
One powerful reason is that employers do not need to provide regular contracted working hours. Some may work with a freelancer regularly over many years while others will be brought in during a time-limited project. The flexibility works both ways.
Rather than paying out for training and skills education, companies can bring in the talent they need whenever they need it. Many freelancers are highly trained in in-demand skills because they tend to be keenly aware of what the market wants. 55% of independent workers enrol in skills-related education compared with only 30% of employed workers (6).
Independent workers do not receive the same labor protection rights or benefits such as medical insurance. Although this is a controversial area, 70% of freelancers prefer to focus on maximizing their earnings and funding their own benefits (6).
Finally, those businesses who turn their back on freelancers are potentially missing out on the cream of young talent. The largest proportion of the more than 50 million strong independent workforce are millennials (1)(6) and this cohort is due to make up three quarters of the workforce by 2025. This could mean that the freelance economy overtakes the so-called W-2 economy even before the 2027 date predicted by following current trends (3).
To attract and retain freelance candidates, businesses need to offer flexible working patterns and embrace the 'fourth industrial revolution' by investing in technology that enables remote working and collaboration. This will help them to stay competitive and adapt to changing market conditions.
References
1. https://www.gallup.com/workplace/240929/workplace-leaders-learn-real-gig-economy.aspx
2. https://phys.org/news/2019-06-gig-economy-impact-american-workforce.html
3. https://www.smallbizgenius.net/by-the-numbers/gig-economy-statistics/
4. https://www.brookings.edu/blog/up-front/2018/06/07/independent-workers-and-the-modern-labor-market/
5. https://freetrain.co/freelance-statistics/
6. https://www.upwork.com/i/freelancing-in-america/2017/
7. ipse Factsheet on the Independent Workforce, 2019