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Risk Profiles of Freelancers Versus Non-Freelancers

Originally published by Steven King at Emergent Research

There’s lots of people criticizing independent work these days as being too unpredictable, risky and all around bad for both workers and the economy.

But a pattern we’ve noticed is almost all the criticism comes from people with traditional jobs. This got us thinking about risk profile differences between independent workers and those with traditional jobs.

In the 2013 MBO Partners State of Independence study we surveyed non-independent workers asking them about their views of independent work. The results were quite interesting.

First, non-independent workers see the advantages of independent work as, well, less advantageous than independent workers do.

Risk profiles 1

Second, non-independent workers see the disadvantages as being much greater. As the chart below shows, for every category mentioned non-independents see bigger challenges than independent workers.

Risk profiles 2

One of the more fascinating findings was that half of the non-independents considered “having to invest their own money” as a major challenge. For independent workers, so few listed this as a challenge it didn’t make the top 10 challenges list, so it was scored as “not applicable”.

It’s clear from this an other research that, on average, independent workers and non-independent workers have different risk profiles. The bottom line is:

Independent workers are more comfortable than non-independents with the risks associated with being independent and more willing to accept these risks in return for greater work autonomy, control and flexibility.

This is why the majority of independent workers are satisfied and happy as independents and prefer independent work over traditional employment.

Going forward these risk profile differences raise a very important issue.

Our work indicates most Americans fall into the more conservative risk profile category. Our work also indicates those with conservative risk profiles are less likely to be successful as independent workers.

But as the economy shifts to greater levels of contingent employment, more people with risk profiles not suited for independent work will become independent workers. This is a key reason we need new policies and programs to make independent work safer and more secure.

So when reading or hearing people talking about how bad independent work is, keep in mind risk profiles. The chances are the critic has a risk profile that biases them against independent work.

But also keep mind without making independent work safer and more secure, growing numbers of Americans will likely struggle at work going forward.

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