Freelancing’s Fitful Rise

(Bloomberg Opinion) -- One night earlier this month, I checked into a hotel on the outskirts of Lexington, Kentucky. I wanted to have dinner downtown, but I had already driven for 11 hours that day, so I opened up the Lyft app on my phone. To my surprise, it informed me there was a car only a minute away, and to my even greater surprise, it really was just a minute away. When I sat down in the car, I realized that the driver was … the same young woman who had just checked me into the hotel. On our drive into town, she told me about her other job, as a remotely working customer service supervisor for Amazon.com Inc.

Welcome to the new American labor market! Anecdotes like this should of course be viewed with suspicion, as should journalists who cite their cabbies or Lyft drivers. But in this case, the plural of anecdote really is data — data that was just released by the Freelancers Union and the newly public Upwork Inc. in the fifth annual Freelancing in America report. I would guess that my driver/clerk/supervisor acquaintance would classify herself as either a “moonlighter” or a “diversified worker.” There are an estimated 8.7 million more such workers than there were when the first survey was conducted in 2014.

Freelancing’s Fitful Rise

Meanwhile, the biggest category of freelance worker in 2014 — independent contractors — has shrunk by an estimated 3.5 million. This goes a long way toward explaining why, amid all the excited talk about the rise of freelancing or independent work or the gig economy, the Bureau of Labor Statistics reported this summer that the percentage of U.S. workers in what it calls “alternative work arrangements” (independent contractors, on-call workers, temporary help agency workers and workers provided by contract firms) had fallen since 2005 and was at about the same level in 2017 as it was in the mid-1990s. This news was greeted with some surprise in the media, but it wasn’t news to anybody who’d been paying attention to the Freelancing in America surveys or the similar State of Independence in America surveys conducted annually for MBO Partners, which have showed a decline in the number of people doing full-time independent work (15 hours or more a week) even as the number of those doing such work occasionally rose.

The big picture here is that the U.S. labor force has always included lots of people doing paid work other than full-time wage and salary jobs (in the 18th and early 19th centuries, it was pretty much everybody), and we are not currently experiencing a sudden giant shift into freelancing or independent work. As someone who has spent the last four-plus years repeatedly shooting down claims of the spectacular growth of the gig economy, though, I do feel like I ought to call out some signs in the Freelancing in America surveys of real changes in the workplace.

One is the aforementioned rise in the number of moonlighters and of diversified workers, who are defined for the purposes of the survey as “people with multiple sources of income from a mix of traditional employers and freelance work.” To be sure, many of these people aren’t doing much non-traditional work; 42 percent of the freelancers in the survey report freelancing less than once a week, 18 percent less than once a month. That’s another key reason government employment surveys, which tend to ask people about work they’ve done in the past week, haven’t been showing a rise in alternative work arrangements or holding multiple jobs. It’s also reason to question how economically important freelancing really is to millions of the people who report doing it. But the overall rise in their numbers in the Freelancing in America surveys since 2014 — to 56.7 million from 53 million, or 35 percent of the workforce — still does seem significant.

Another interesting trend in the surveys is the share of freelancers who have found work online, which is up from 42 percent in 2014 to 64 percent in 2018 (now, as then, the most frequently mentioned source of freelance work is friends and family). Yet another is how entrenched freelance work seems to be among those ages 18 to 34, who make up 35 percent of the overall workforce but 43 percent of freelancers. These “flexible-work natives,” Upwork Chief Executive Officer Stephane Kasriel told me, “see it as something they grew up with.”

They also may be coming to see it as something that defines them politically. Freelancers in 2018 were far more likely to report being politically active than other workers (53 percent to 34 percent). They also skew Democratic, with 48 percent planning to vote for Democrats in this year’s congressional midterms to 38 percent planning to vote Republican and 14 percent undecided. But they seem more flexible in their political attachments than most Americans these days: 72 percent say they would cross party lines to vote for a candidate who supports freelancer interests, with affordable health care their No. 1 concern. “I feel like there's this large-scale political realignment happening,” said Freelancers Union Executive Director Caitlin Pierce. Tangible evidence of it is so far modest and mostly local, such as in New York City, where the City Council last year enacted legal protections for freelancers and the mayor’s office recently established a “Freelancers Hub” in Brooklyn’s Dumbo neighborhood. But these may be early days.

The overall number of freelancers estimated from the Freelancing in America survey (an online poll of 6,001 adults) actually dipped a little this year, as is apparent in the above chart. Such a decline should probably be expected this far into a long, long economic expansion. With the unemployment rate at lows not seen since the 1960s, those who prefer a full-time job with benefits are much more likely to be able to find one. This fits with the data point that 61 percent of the freelancers in this year’s survey — up from 53 percent in 2014 — said they’d started doing such work by choice, not necessity. It seems like a rational choice: If jobs aren’t as stable or as secure as they used to be, it makes sense to have more than one source of income. So there may really be a secular, generational, economically driven, technologically enabled shift toward freelancing going on. We just probably won’t be able to see the full contours of it until we’ve been through another business cycle or two. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

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