Finding Jobs, Freelancers, Industry Research

Freelancers: Who are they

As a Business owner, hiring the right team to help you run your business is one of the most, if not the most, important steps you take.

Finding the right people can always be a challenge. Most likely, you’ve focused on hiring full-time employees. But the number of freelancers and independent contractors has been growing rapidly in the United States and represent an interesting trend in the American workforce. More and more people are venturing away from traditional full-time, 9-to-5 jobs to work as a freelancer on a project basis.

Who exactly are these freelancers?

  • There are approximately 53 million freelancers in the United States, which make up about 34 percent of the American workforce. (source)
  • Freelancers add roughly about $715 Billion into the economy.
  • Freelancers make up 5 categories (source):
    • Independent Contractors (40% of independent workforce) – Most freelancers are also called independent contractors. Independent contract do not hold traditional, full-time employment. Instead, they do freelance or temporary work on a project-to-project basis.
    • Moonlighters (27%) – Moonlighters have the best of both worlds. They had a traditional, full-time job but also freelance on the side as well.
    • Diversified Workers (18%)  – Diversified workers earn their income from multiple income streams, including part-time employment and freelance projects.
    • Temporary Workers (10%)  – A temporary worker is someone who is working on a single project or for a single client at any given time. However, this position is only temporary.
    • Freelance Business Owners (5%) – A freelance business owner is someone who is a freelancer and a small business owner at the same time.
  • 32% of freelancers said they have seen demand for their services grow. 15% said they’ve seen it decrease. (source)
  • 38% said they expect to work more hours as freelancers, while 12% expect to work fewer. However, almost all (97%) agree that additional work is a “good thing”.(source)
  • The number one reason why people choose to freelance is income. Since they are not limited to how many projects they take on, they have the potential to earn more. Roughly 77% of freelances said they make the same or more money they did before they started freelancing. (source)
  • Of the 17.7 million independents in the workforce in 2013, 1 in 5 are Gen Y (aka Millennials, 21-33 years old) (source)

What is the current state of freelancing in the US?

  • 34% of young workers work outside the office or after hours (37 percent) at least monthly, and well over half (62 percent and 55 percent, respectively) the IT decision-makers we surveyed could support that. (source)
  • The modern workforce and IT are largely in sync on communication and collaboration objectives. 42 percent of IT and 32 percent of workers cite increasing productivity as the top priority. (source)
  • The surveys suggest that the nature of management is shifting toward more egalitarian and agile models.42 percent prefers the current entrepreneurial culture, and one-third (33 percent) prefer the coming agile enterprise. (source)
  • As of July, nearly 6.8 million Americans worked more than one job or 4.6% of all employed people. This is about half a million below the average during the 2001-07 expansion. (source)
  • The percentage of people who held multiple jobs was about 4.9% from 2010 to 2013. THe average in the 1990s was about 6%.
  • 53% of moonlighters in July said that they worked full-time at their primary job and part-time at their secondary job. (source)
  • Public safety workers, education workers and healthcare workers were the most likely to work multiple jobs (19.4% of emergency medical technicians worked more than one job, 16% of firefighters, 13.2% of post-secondary teachers). (source)
  • Gross freelancer earnings have grown 50%, compounded annually over the past 5 years. (source)
  • The four highest paying skills are (according to elance) (source):
    • Patent law ($112/hour)
    • Voice acting ($72.70/hour)
    • Ruby programming ($61.00/hour)
    • Startup consulting ($54.00/hour)
  • Four out of 10 adult Americans are either currently working or have worked as a independent at one time during their careers. (source)
  • Over the past year, 26% of independent workers spent a total of $96 billion hiring the equivalent of 2.3 million full-time workers via contract.(source)

Why is freelancing a growing trend?

  • Job satisfaction is at a low in the US.Fewer than half of American works were satisfied with their jobs in 2013.
  • Workers are most satisfied with their colleagues and their interest in the work they’re doing, with 59.3% and 57.9% of workers citing satisfaction respectively.
  • Workers are least satisfied with promotion policies (23.8%) and bonus plans (24.2%)
  • The 12-month moving average for quits stood at just under 1.5% of the workforce at the end of 2013, a figure not seen since 2009
  • Digital nomads are professionals with a location-independent lifestyle that allows them to work anywhere in the world that there is a good internet connection. (source)

What are the drawbacks to freelancing?

  • Venture capitalists invested $1.6 billion in “on-demand” start-ups in 2013. (source)
  • However, critics argue that the freelance model is being abused. Workers are being treated as if they were on payroll without getting any of the benefits afforded to payroll employees. (source)
  • Workers for such companies file 1099 Independent Contractor form, not a W-2. This reduces cost for companies since they only have to pay contract workers for the time they work, and not for their lunch breaks, commutes, and vacation time. (source)
  • Contract workers aren’t eligible for health benefits, unemployment insurance, worker’s compensation, or retirement plans. (source)
  • MyClean, a NY based on demand cleaning service, switch to W-2 labor for 1099. While their labor costs was 40% higher than the competitor, they customer satisfaction increased drastically. They have grown to $8 million in annualized revenue in the past 2 years.(source)
  • Many people who can’t find stable employment feel compelled to take on ad hoc tasks. (source)
  • In July, 9.7 million Americans were unemployed, and an additional 7.5 million were working part time jobs because they could not find full time work. (source)

What is future for freelancers and independent consultants?

Data from Elance-ODesk suggests that businesses will spend $930 million on hiring remote independent workers in 2014 around the world. (source)

  • American freelancers will pull in $500 million of that figure.(source)
  • The independent workforce is expected to grow to 24 million by 2018.(source)
  • By 2020, roughly 50% of the private workforce will have spent time as independent workers at some point in their work lives. (source)
  • Close to 2.5 million independent works plan to launch larger businesses. (source)

How can you leverage freelancers in your business?

Despite the challenges that freelancers face, they are here to stay. In fact, nearly 77% of freelancers says their best days are still ahead for the freelancer job market. There are more and more websites and applications that freelancers can use to help them connect with potential clients, such as Elance and oDesk. They are also heavily involved in social media and building their network.
As a small business owner, it is important to first, leverage this trend and, figure out how freelancers can help you. While there is definitely more risk involved and higher turnover, they are a nimble and innovative group of workers that are flexible and cost-effective.

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