Unemployed Rush to Freelancing Sites, Putting Pressure on Wages

(Bloomberg) -- With millions of Americans unemployed, and full-time positions scarce, there’s a massive rush to freelancer sites -- one that could result in everyone getting paid less.

Since June, more than 24,000 people -- two-thirds of them Americans -- got on the waiting list to join Braintrust, which offers contract projects from the likes of Nestle SA and Nike Inc. On Freelancer.com, user sign-ups from the U.S. rose by more than 30% between February and July, year over year. On Upwork Inc., client and freelancer registrations have jumped 50% since mid-March, when the pandemic hit.

“It has ramped up very rapidly,” said Adam Jackson, who runs the Braintrust network. “We are seeing people who got laid off from Airbnb recently join Microsoft. It’s being driven a lot by layoffs.”

Because of this influx of users, rates that freelancers charge may be starting to slip, at least on some sites. On Freelancer.com, used by 46 million people, pay for an average job has dropped by about 20% in the past six months -- partly the result of more people competing for the available projects, according to the company.

While some skilled freelancers can still command the hourly rates of their former full-time positions, they aren’t getting benefits such as health-care coverage. Benefits add about 30% to an average salary, according to the Department of Labor.

“They are scrambling, they are hustling to find work and keep their families afloat,” said Erin Hatton, an associate professor of sociology at the University of Buffalo, who wrote a book about the temp economy. “This type of economic depression, coupled with a lack of a social safety net -- that is going to mean that more and more workers will be flooding the market and willing to take lower and lower wages.”

Remote Work

That’s driven in part by Americans competing for jobs outside of their traditional, local labor markets.

“Everyone is open to remote work, there’s so many people applying for the great positions -- because you can be anywhere in the country and still apply with this company,” said Alexandra Morgalo, who lost her job at Kimpton Hotel & Restaurant Group in June, several months after welcoming her second child. “There’s a lot of competition -- there’s a lot of times where I wasn’t getting any responses.” She applied for more than 20 full-time positions before finding a part-time project-management contract on Braintrust. It’s 20 hours a week, without benefits.

The newbie American freelancers are also competing with -- and snagging jobs away from -- people in other countries. On Freelancer.com in recent weeks, a growing number of Americans have been taking jobs that might have previously gone to India or the Philippines, said Matt Barrie, chief executive officer of Australia-based Freelancer Ltd., which runs the site.

Some of the unemployed are also using their savings -- and freelancing sites -- to try their hand at entrepreneurship. Some of those advertising for help are seeking assistance with designing e-commerce sites or video games, which have been much in demand lately.

“Freelance marketplaces thrive at the times of crisis,” Barrie said. “It gives workers a lot of freedom. It helps you transition between careers.”

©2020 Bloomberg L.P.