Upwork Releases ‘Freelancing in America’ Report: Will Freelancers Be the Majority by 2027?

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Here’s a quick opinion poll: Which do you consider more stable, freelancing or traditional employer-based work?

The conventional answer is, of course, the latter, but new research suggests that people are viewing freelancing as more stable than before. Or, on the flip side, the perceived stability of traditional employment arrangements may be going down.

Upwork and Freelancers Union recently released Freelancing in America: 2017, the fourth annual report in this series on the U.S. freelance workforce. The research firm Edelman Intelligence was commissioned to survey 6,000 U.S. working adults, both freelancers and non-freelancers.

A Pessimistic Bunch, or Just Realistic?

When asked about the potential of automation and AI to transform their industries, two out of three full-time freelancers said that it was “very likely” or “somewhat likely.” Fifty-five percent expressed concern over the effects of automation on their livelihood, compared with only 29% of full-time non-freelancers.

As for the possibility of robots taking our jobs altogether, only 23% of the freelancers said that none of their work will be done by machines in 20 years, compared with 38% of the non-freelancers. Perhaps more telling is that a full third of freelancers think that machines will take over all of their work, whereas just 6% of the non-freelancers thought so.

“Freelancers are much more realistic about how much of an impact this change is having on them,” says Shoshana Deutschkron, vice president of communications at Upwork. “Their eyes are wide open, whereas employees have their heads in the sand still.”

Call it pessimism or realism, these freelancers are being proactive in making sure that they’ll still be competitive on the job market as automation takes over certain tasks. Sixty-five percent of them are working to update their skills (for non-freelancers, that share is 45%).

We’re (Becoming) All Freelancers Now

For Deutschkron, the most surprising finding from the report was that based on current growth rates, freelancers are expected to overtake non-freelancers in the U.S. workforce in a mere decade, by 2027.

“This projection was eye-opening to me,” Deutschkron said. “I was surprised to see how quickly that was approaching.”

In 2014, when Upwork first started tracking the U.S. freelance workforce, there were 53 million freelancers. This year, there are around 57.3 million, an 8.1% increase. Compared with the 2.6% increase in the general U.S. workforce, the freelancing population is growing at a threefold faster rate.

In fact, more freelancers are full-timers now, at 29% of the freelance population, compared with 17% in 2014 and 26% in 2015. In 2017, only 16% were full-time employees who earned extra income from freelance work, compared to 19% in 2014.

Choice or Necessity?

Interestingly, it is not just the percentage of freelancers who do so out of necessity going down, but also the number. In 2014, 47% of the 53 million freelancers were freelancing out of necessity, or 24.9 million. This year, among the total 57.3 million freelancers, 37% were doing so due to necessity, or 21.2 million.

“People are increasingly choosing this way of working,” Deutschkron explains. “This is a respected career path now.”

More U.S. workers seem to be agreeing with that last sentiment. Sixty-nine percent of this year’s survey respondents agreed that perceptions of freelancing as a career are becoming more positive, up from 63% in 2016. A majority (67%) also agreed that professionals who are successful in their fields are increasingly opting for the freelance life, up from 56% last year. This certainly supports the wage barbell effect that Spend Matters has covered in the past.

Respect and prestige are one thing, but another important factor contributing to the freelancing trend is the perception of stability. Many freelancers work with multiple clients in order to ensure multiple sources of income, but there may also be a growing recognition that traditional employment isn’t as stable as once thought.

“Having a single employer is less secure,” Deutschkron says. “What is more secure is having a more diversified portfolio of income.”

A Predictable Unpredictability

It seems like a golden age to be a freelancer, but the report nevertheless contained a few worrying statistics. One is that full-time freelancers were more likely than full-time non-freelancers to have $5,000 or less in savings (56% compared to 45%). In addition, three in five full-time freelancers said that they do not understand their finances, compared to two in five full-time non-freelancers.

This may be partly explained by the fact that freelancers skew young. However, when asked for the main reasons they have not saved as much as the average American of their own age, 71% cited income unpredictability. Freelancers are much more likely to have to dip into savings at least once a month (63%), compared with 20% of non-freelancers.

Surely someone somewhere is holding a Personal Finances 101-type workshop, geared toward freelancers.

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