MBO Partners announced Tuesday the release of its fifth annual “State of Independence in America 2015” report. MBO provides a detailed survey-based perspective on what it defines as the “independent workforce.” The report’s content ranges from estimated population size and growth rates to demographic and behavioral characteristics of the population. From a contingent workforce procurement standpoint, independent workforce represents both a new source of skills and talent to be engaged, as well as a new opportunity to bring additional spend under management.
How MBO Looks at the Independent Workforce
According to MBO, “The study paints a 3-dimensional picture of a diverse cohort. These are not just Uber drivers. Independents represent all ages, professions, educational levels and geographies, and work in a wide array of industries.”
For the purposes of this study, independents must self-identify with one of eight categories: contractors, freelancers, consultants, temps, self-employed, solopreneurs, side-giggers and on-call workers. The study also restricts the population to age 21 and over. Independents “work anywhere from a few hours per week to 60-hour weeks, and earn incomes ranging from the low five figures into the mid six figures.”
The study breaks the independent workforce into three main categories:
- Full-time: regularly work over 15 hours per week
- Part-time: regularly work 1 to 15 hours per week
- Occasional: work irregularly on an “as needed” or “as desired” basis from time to time
The study also provides other informative segmentations of the independent workforce, such as workers earning more than $100,000, millennials and their characteristics.
Key Findings From the Study
The following are some findings readers should find interesting, starting with estimated numbers and growth rates of independents in years 2011, 2014 and 2015.
Estimated Independent Workforce (in millions)
The total 42.1 million workers is about 35% of the private non-farm workforce. As to growth: Full-time independents grew 12% in 2015 over 2011, compared with 7% for the entire US workforce. However, for 2015 over 2014, growth was flat for both full-time and part-time workers, while occasional workers grew 6% over that same period.
MBO CEO Gene Zaino offered this explanation of the above data:
“We believe growth in occasional workers was associated with moonlighters and on-demand workers supplementing their income. We see this as a breeding ground for potential full-time independents. Full-time workers did not show growth because there are a percentage of reluctant independents (about 10 to 20%) that returned to the workforce as jobs recovered over the last year. We think the slack has tightened and next year we will see continued growth.”
Other notable growth rates by worker segment:
- Independents earning more than $100,000, 2.9 million in 2015, grew by 45% over 2011
- Full-time independent millennials, ages 21-33, 5.5 million in 2015, grew by 184% over 2011
Looking to 2020, the study also offers these projections:
The report cites a number of economic and demographic factors, as well as developing technological infrastructure, that underlie this forecasted growth.
The MBO study paints a picture of a large and growing independent workforce. The 32 million full-time and part-time workers equate to about 25% of the private non-farm US workforce. The study projects expansion of the number of full-time and part-time workers to from 30.2 million in 2015 to 37.9 million in 2020, total growth of about 25%.
Assuming the MBO numbers, the independent workforce represents an important pool of flexible talent to be engaged going forward. In addition, since these workers are clearly working for businesses, it would appear that the spend on most of them – except for temporary agency workers – is not controlled under program management, representing future saving opportunities. MBO estimates that in 2014 independent workers generated more than $1.15 trillion of revenue. Even if this estimate was adjusted down to $500 billion and eliminated $120 billion of staffing industry spend, there would still be $380 billion in spend – most of which is not under management.
The MBO study is available online, and is definitely worth a careful read.