If freelance work dried up in my segment, I'd look for other entrepreneurial opportunities, which could very well mean not working in software development or IT anymore, but I certainly wouldn't settle for working as an employee. It just isn't for me.
Besides, the high level of job security is a fallacy. As an employee you're working for only one client: Your employer. If that employer suddenly decides you're redundant you're out of a steady income at once with no other clients or leads to compensate for that.
You can't exactly always be on the lookout for another position while on a job because your current employer will get suspicious and ask you what you think you're doing. For an entrepreneur always to be looking for new leads is the default mode so losing a deal - while unfortunate - isn't an end-of-the-line scenario in most cases.
I have 25 fully paid MDs per year, another 9 public holiday ones, 2 weeks of fully paid sick days. I can have a month with few MDs of work done and still get full salary. While consulting, when thinking about vacation, by far the biggest costs were not of actual vacation, but time lost not consulting. Which made the price explode 4-5x and effectively prevented me to have much better life.
I might get back later, for a while, but realistically, it ain't worth it. This might be different in other locations, where consulting vs perm job difference is much bigger, but here, taken all into account is less than 10%.
Creatives thrive on variety; imagine if you had to implement a JSON parser everyday and weren't allowed to fundamentally change your approach after the very first one you make.
Perhaps the most insightful comment of the thread.
The bubble will burst, and while it could be the .com bust all over again, it will mean the freelance market is a) massive and b) popular again.