Fiverr Delivers A New Slant on Independent, Specialized Knowledge Workers

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Fiverr, a marketplace for creative and digital services, recently published a unique study focused on independent, specialized knowledge workers (ISKWs). These workers constitute a segment of the contingent workforce increasingly important for businesses striving to adapt and succeed in a dynamic, digital and knowledge-based economy. The study, conducted in collaboration with the market research firm Rockbridge Associates, seeks to provide a better understanding of ISKWs — “where [they] live, what kind of work they do and how much they’re growing as a population and in terms of revenue earned.”

From our perspective, the study is unique in its sharp focus on ISKWs and its sophisticated, transparent methodology.

Who Cares About Methodology?

Ordinarily, we would tuck our nerdy comments on the study methodology toward the end our article. But in this case, we move it to the fore, because we think the methodology is particularly important in the current environment where various terms — like gig worker, freelancer, contract worker, independent worker, temporary worker, consulting or outsourcing firm workers — can get mixed up in many different ways. (Note: If you just aren’t into this sort of thing, just skip to the next section.)

It appears to us that various studies have focused on the freelance/independent workforce, but they have tended to have less category specificity with respect to ISKWs. Those studies have also based their findings on survey data, different sampling ranges and imputations to larger populations. The Fiverr-Rockridge study’s estimating methodology is unique, in that it relies on large Census Bureau databases, further segmented by NAICS (type of work) codes, tax filing types and metropolitan statistical areas (MSAs).

The study uses 26 NAICS (type of work categories) to determine workers that qualified as specialized knowledge workers. These were divided into three main groups: creative arts/performances, technical services and professional services (a category encompassing legal, accounting/bookkeeping, management consulting, marketing and business support). Lastly, in order to arrive at independent, specialized knowledge workers (ISKWs), the previously described worker subpopulations were then further delimited based on type of tax filing forms of businesses without employees (in other words, self-employed individuals).

While some might question the precision of government statistical data, the Fiverr-Rockridge study does provide a clear, systematic definition of ISKW category and an analytical method that is transparent and systematic. The approach is not perfect (being conditioned by government statistical categories and measurement) but it does a provide a welcome alternative to survey-based studies.

Key Findings

The study, which focused exclusively on ISKWs in the U.S., presents a broad range of findings — more than we can cover here. Therefore, we focus on a subset of those findings that we found particularly interesting:

  • There were 2.5 million specialized independent workers in 2015 in 15 metropolitan areas. The 2.5 million broke down to 1.2 million in professional services, 0.8 million in technology services, 0.5 million in creative arts/performance:
    • Across the 15 MSAs, the aggregate number of specialized independent workers grew 7% from 2013 to 2017.
    • The top MSAs in terms of number of independent specialized knowledge workers were, by size, New York; Los Angeles; Chicago; Miami; Washington, D.C.; and San Francisco. While the numbers of these workers range from 533,139 to 162,077, the per capita ratios are about the same. Also, MSAs do not always reflect the true metropolitan areas.
  • Specialized independent workers earned more than $110 billion in 2015 in the 15 MSAs, a miniscule fraction of U.S. personal income ($15,000 billion in 2015).
    • Across the 15 MSAs, aggregate earnings within the ISKW segment grew 11% from 2013 to 2015. (Note: The number of ISKWs grew only 7% over the same period, suggesting that worker earnings were increasing or higher earning workers were entering the segment.)
    • The top MSAs in terms of annual earnings were, by size, Miami; Los Angeles; San Francisco; San Diego; Washington, D.C.; and New York. Aggregate earnings in MSAs ranged from $391 million (Miami) to $168 million (Chicago). Average earnings per worker varied significantly, with Miami at the top, followed by Los Angeles and San Francisco. Miami is definitely a surprising outlier.
  • Variations in aggregate earnings across MSAs can be related to a number of factors, including the number of ISKWs, different distributions worker categories, local economy and pay rates. For example:
    • Miami:  ISKW population breaks down as follows: professional services 59%, technical services 33%, creative art/performance 13%
    • New York:  the ISKW population breaks down as follows: professional services 45%, technical services 30%, creative art/performance 24%
  • Admittedly, some aspects of the data for individual MSAs do raise some questions and beg for a deeper analysis to determine if there are explanations for the variations (versus statistical anomalies). Nonetheless, the study lays the MSA-specific findings out there for us to consider and try to understand (e.g., number of workers and growth by MSA and work category, amount of earnings and growth by MSA and work category).

Conclusion

The recent Fiverr-Rockridge study breaks some new ground, contributing to our ongoing efforts to understand new categories of contingent workforce, in particular independent, specialized knowledge workers. It distinguishes itself by its methodology for segmentation of ISKWs and estimating ISKW counts, earnings and growth rates. It also breaks down the ISKW segment into new slices (by 15 MSAs and three work types). The approach is not perfect (none are), but it does provide a new slant.

It is crucial for enterprises to get a firm grip on the dimensions of new important categories of contingent workforce. The Fiverr-Rockridge study provides rich insights from one perspective and it should be consumed in its entirety. (The study can be obtained here.)

While the increasing number of studies is a positive, it is difficult to see how they compare and where there might be a convergence of findings. The time for developing an analytical perspective across these studies has probably arrived and doing so is something that we should tackle in the not-so-distant future.

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