Freelancers Now Make Up 35% of U.S. Workforce | Hacker News Reader

Freelancers Now Make Up 35% of U.S. Workforce

forbes.com

215 pointsuptown91 comments

A large chunk of the 'new freelancers' are actually people who would love to have a normal job but that have been kicked out from their former position and are now forced to take work that normally would have been done by salaried employees. No unemployment, no benefits, a more complicated financial situation and no security whatsoever when it comes to being guaranteed some income next month. Coupled with limited financial planning skills this is a disaster waiting to happen, and all that to make it even easier to get rid of people when the economy hiccups.

Many decades of progress lost in a few short years.

> kicked out from their former position and are now forced to take work that normally would have been done by salaried employees.

Based on what data?

The article.

> Among respondents, 63% said they were freelancing voluntarily

So 37% have been forced into freelancing. That's a large chunk.

Where in the article is that quote? The one I see is slightly different (in important ways), and in addition to that ,the 37% unaccounted for in that statistic may be "no response" or something other than "I was forced into it because I lost my job and had to take a job that normally would have been done by a salaried employee".

Top of the second page. They don't identify the 37%. The interesting thing they cite is that that percentage has moved up from 53% in 2014 representing a growth of willing free lancers.

>For part-time freelancers, it is to make additional income. Those surveyed tend to be happy with their work, with 79% saying freelancing is better than a traditional job.

I'm getting the feeling there is some selective quoting going on here. I understand that the source is biased, but at least they have statistics.

EDIT: Okay, see my comment below, there is a link to the actual slides. Slide 14 says 37% do it by neccesity, but yes, 79% feel it is better than traditional work. Also see slide 15, describes how people feel about their work.

> So 37% have been forced into freelancing. That's a large chunk.

I don't think it is clear enough to infer that. Forced into it doesn't mean they would prefer a full-time job. It might be they live in a city without those type of roles. They might need to take care of children or another family member. They might be studying part-time.

There's no data on this because no company discloses how many contract workers they use. The DOLabor last studied this in 2005. The best data is from the software companies that manage these programs for Fortune 1000 companies and they say it is 35% -distributed among agency temps, ICs, consulting companies and part time. The report is behind a signup requiring business email http://www.fieldglass.com/resources/reports/2015_2016_state_...

I'd think income tax returns data should be some indication of this. 1099 vs. 1040 income.

From the article, doesn't seem anything like what you are describing ---

> A key factor driving the recent uptick in the number of freelancers is young adults’ affinity for independent work, according Stephane Kasriel, CEO of Upwork

> Many freelancers like the lifestyle. The average full-time freelancer in the survey works 36 hours a week, less than the standard 40-hour workweek–and most say they have the right amount of work.

> Technology, such as the proliferating number of freelance platforms and apps like Uber, is also improving access to freelance gigs. Among respondents, 73% said technology has made finding freelance work easier.

> Freelancers are also earning more, the survey found. Among respondents, 46% raised rates in the past year. Among those who quit a traditional job to freelance, more than half are earning more than they did getting a steady paycheck. And, perhaps reflecting their improved financial situations, 53% of freelancers believe that having a diverse portfolio of clients is more economically secure than having one employer.

> Most freelancers surveyed were not forced into it by circumstance. Among respondents, 63% said they were freelancing voluntarily, up from 53% in 2014. “That is a pretty massive shift in two years,” says Kasriel.

The sponsor of the "study" is a freelancer contract agency whose interests lie in swelling the applicant pool by showing them the streets are paved with gold and rivers flow with milk and honey.

Please consider the source.

I'm sure that's quite unrelated. :|

I third the sentiment to look at the source --Upwork. Also, not being "forced into [freelance work] by circumstances" is kind of a dubious characterization. If corporations are only offering part time work and positions without benefits or positions with low pay, then freelancing looks better, even if you aren't "forced into it."

> according Stephane Kasriel, CEO of Upwork

Not exactly an independent authority on the subject.

But going back to the old corporate model is not necessarily better. In large part it's because freelancers are not really accounted for by politicians. Instead frelancers should unite to require the same rights .

I don't want benefits from my employer, only a paycheck. I like being as disconnected as possible, really. Why do we feel the need to be so tightly coupled to our employers? Employers only started offering these benefits to avoid taxes from what I understand.

I think freedom and pay are a lot more fungible than people realize. Instead of doing the math themselves, lots of people just assume that the risk must be too high and try to jam the lever all the way towards low risk. (though there are also people making the considered decision that the stability is worth the trade-off).

What bugs me is people on both sides who act like any given choice isn't valid (like presumably all the people downvoting you).

I agree with half of that idea. Benefits should be part of the social contract of society. You should get them as part of paying taxes.

Also, if you want to shift the tax burden for these benefits from employers to employees that should be reflected in a raise of both income and taxes for employees.

I agree immensely as a remote contractor, my wife gets good benefits but if she lost her job it'd be a struggle. I think it'd make more sense, if we can't get a single-payer all paid insurance plan going, why can't the government have a democratized benefit pool where you'd pay employee prices for the same benefits as a freelancer? It would just make more sense to me.. Or at least some sort of freelance union that negotiates fair rates for things like medical/dental/vision/401k and has group purchase power.

>why can't the government have a democratized benefit pool where you'd pay employee prices for the same benefits as a freelancer?

For that to work for things like disability insurance, you'd need the same sort of mandate that's so controversial with the US ACA. The system doesn't really work if you buy benefits like disability only if you see a particular need for them. The 20-somethings need to buy them too whether they want to or not--or the system doesn't work.

I'm not sure why 401-Ks are so tied to individual employers.

The social contract of society? Sounds religious to me and also a rationalization for State power. I only believe in real contracts that I actually sign and agree to. Moving benefits to the State just gives them a monopoly on those benefits and that doesn't seem like a good solution, either.

> I only believe in real contracts that I actually sign and agree to.

I think this position is a bit idealistic, since some level of State power is unavoidable and taxes will be levied whether or not we agree with them. (Unless you escape to a desert island)

So if the tax money is real and the consequences of not paying are real, then I expect something from the government in return!

(I do agree that State power needs to be kept in check.)

"Social contracts", or regulations, solve coordination and transactional frictions problems:

http://www.raikoth.net/libertarian.html#coordination_problem...

http://world.std.com/~mhuben/faq.html#contract

The phrase "social contract" dates back to a 1762 treatise of the same name by philosopher Jean-Jacques Rousseau. The stated aim of the treatise to determine whether a political authority is legitimate, i.e. the monarchies of the time period.

https://en.wikipedia.org/wiki/The_Social_Contract

Article 3, section 4 of my copy of social contract disagrees completely!

>Employers only started offering these benefits to avoid taxes from what I understand.

It's almost always going to be cheaper for an employer to simply not offer the benefit. What is true is that, for better or worse, there are certain benefits that employers can offer that, for tax and other reasons such as group purchasing power, the employee often can't purchase themselves at the same after-tax cost as their employer.

Health benefits are (controversially) often like this. So are many types of disability, life insurance, etc. plans, in part because with individual buyers there's an adverse selection effect. (You're more likely to want disability insurance if you know you have a high possibility of becoming disabled--and may not even be able to buy it as an individual in many cases.)

So are 401-K plans.

Long term disability insurance specifically is very expensive on the individual level but very cheap on the group level.

> Health benefits are (controversially) often like this.

To elaborate, in the US, money spent on employer-provided health insurance is not taxed, but those who pay health insurance premiums out-of-pocket must pay with after-tax dollars.

This is an improvement over the pre-ACA state of affairs in which many (perhaps most) individuals would not be able to buy insurance at all, but still it's a pretty bad deal for anyone who doesn't work for a big company.

As someone with a "pre-existing condition", health insurance is much easier to get with a group, like an employer, than it is on my own.

I heard that Obamacare outlawed discrimination based on preexisting conditions. What country are you in/what insurance difficulties are you having related to pre-existing conditions?

It's still expensive. Although it is now easier to get, it's still easier to simply join a group plan at work.

This is a bit exaggerated. As the results deck [1] shows, fully 25% (13.5 million) of those listed as Freelancers are, in fact, Moonlighters. Moonlighters are explicitly described as having stable, full-time employment in addition to their freelancing gig(s). It also lists another 28% (15.2 million) as people with a traditional job who then additionally gain income from sources like Uber.

What this adds up to is over 50% of those surveyed do not rely on freelance work for all of their income. In fact, it is likely that freelance income only accounts for a minority fraction of the income earned by half the respondents.

1. http://www.slideshare.net/upwork/freelancing-in-america-2016... (slide 10)

This survey seems to consider someone a freelancer if they "have engaged in supplemental, temporary, project or contract-based work, within the past 12 months". I'd love to see the actual questions asked (if someone has a link, please share), because it seems to me like the answers may vary widely based on the wording of the question. I work a full time job as a developer; but for example, a few months ago, I charged a former employer a trivial amount to fix a bug in a system that I was familiar with from when I worked there. My wife is a PhD student. But she took a few babysitting jobs over the summer before her program started. Does that make us both freelancers? We certainly don't consider ourselves to be, but depending on how the question is framed, we might be categorized as such.

As they say, there's three kinds of lies in this world: lies, damned lies, and statistics.

This, unless it excludes people that also have a full-time job during that entire period. Despite being employed full-time, I have a non-trivial amount of income that comes from "freelance" work for reasons having little to do with trying to make a rent payment or similar. I know many people in the software business in the same position.

First off, their sample size (6,000) is pretty small to be generalizing to all Americans. Second, if 63% of these freelancers (which is pretty loosely defined in their survey) say they are freelancing voluntarily, that means 37% would rather have a normal full-time job. So 13% of total people in the "workforce" are forced to freelance and are likely underemployed as a result. That's not exactly indicative of the healthy job market the BLS likes to claim we have.

Sample sizes determining the proportion of voters supporting a presidential candidate in a US election are generally even smaller ( < 3000 ). But that's still large enough to predict an election with decent accuracy.

http://stats.stackexchange.com/questions/166/how-do-you-deci...

http://www.pollingreport.com/ncpp.htm

> their sample size (6,000) is pretty small to be generalizing to all Americans

Not really. It has been a while since I took a statistics class, but a sample size of around 4,00 will give you a 99% confidence rating for the entire US population with a 2% margin of error [1]. Of course, you need to pick the participants correctly, but the size alone is more than enough to generalize to the entire population.

I would be more suspicious of the fact the survey was run by the Freelancers Union and Upwork, two organizations who directly benefit from more freelancers. So it's somewhat in their best interests to get a high result.

[1]: https://en.wikipedia.org/wiki/Sample_size_determination and https://www.surveymonkey.com/mp/sample-size-calculator/

I'm aware of sample size determination, but minimum sample sizes typically assume random sampling over the target population. All their sampling methodology slide says is that it was an online survey of adults who have done some paid work in the last 12 months, and they did some weighting to match BLS stats. We have no idea how they found the participants or controlled for bias in the selection process.

This is a very important aspect of the study. They did not do a true randomized survey as participants were self-selecting (online surveys have this inherently -- well, mostly).

It's not clear that this was or wasn't a self-selecting sample. The article does state that the surveying was conducted online:

In the research, more than 6,000 U.S. working adults over the age of 18 were surveyed online by independent research firm Edelman Intelligence between July 29 — August 24, 2016. Among them, 2,049 were freelancers and 3,953 were non-freelancers. The survey defined freelancers as individuals who have engaged in supplemental, temporary, project- or contract-based work within the past 12 months.

Sampling error or bias is a hugely more significant factor than sample size.

Once you're over 60 - 300 survey participants, you're well within large-number stats territory. If you're trying to estimate multiple points of freedom, you might have to increase your sample size.

Simply drawing a larger sample of a biased sampling methodology isn't going to solve any problems. You'd have to aggressively correct for errors.

The survey here was conducted by a firm dedicated to such work (a positive sign), but it's attached to a large public-relations firm (Edelman), which I consider a very strong negative. It isn't a disinterested research organisation or dedicated polling firm such as Pew or Harris.

Edelman's other clients include Microsoft, Johnson & Johnson, Pfizer, HP, and Samsung. Quite the list of rusted stars.

https://en.wikipedia.org/wiki/Edelman_(firm)

The sample size is just fine, actually, it's very large.

The issue is randomness. If it's a random sample, it's very large. If it's not a random sample, it's worthless.

"We have no idea how they found the participants or controlled for bias in the selection process."

A) This has nothing to do with sample size

B) If they have any credibility whatsoever, they hopefully know what they are doing. Adjusting is a statistically legit thing to do, they do it in political polling (and in hindsight) it works.

But yes - with 'online surveys', it's hard.

> I'm aware of sample size determination, but minimum sample sizes typically assume random sampling over the target population.

If you were aware of sample size determination, why would you suggest that a 6000 person sample is "pretty small"? It's pretty big for a national study, actually.

Whether or not the sample selection was properly done with attention paid to bias is difficult to say, but has little to do with the sample size since a non-randomly-selected sample is likely worthless whether it's 6000 or 60,000.

I have some significant concerns about this study, but sample size is not among them.

Specifically because their methodology for sample selection is entirely hidden. If you do a generic online survey with self-selected respondents then 6k is not very many people from which to be drawing sweeping conclusions.

Edit: also, I disagree that sample size is entirely worthless in non-random sample selection. If your sample size is a big enough percentage of the target population you are studying, you can draw some conclusions regardless of randomness. You just end up having to use absurdly large samples to get meaningful data.

Seriously. I wouldn't freelance if I could support my home and my family on a 40 hour salary.

But would you get a salary if you could support your home and family on a 36h freelance?

The survey included 'supplemental' work as freelancing, so it's not a binary choice here...

The average worker in the survey worked 36 hours...

An article that mentions a study. Comment claiming the sample size is too small. A horde of Statistics 101 graduates get in a tizzy and have to explain why the sample size isn't actually too small in reality. People argue back and forth about sample sizes. Discussion about the article itself gets massively derailed. Rinse, wash, repeat.

Sorry, it's just become so common I expect it every time there's an article about semi-controversial study and I almost always see it.

Downvoting the sample-size critics would help somewhat. This thread's at least moved down off the top of the discussion.

> many of these taxpayers do not have access to the traditional social safety net, such as unemployment insurance, or access to health care they can afford.

1) Doesn't the availability of freelance work act as a safety rope for people who lose their full-time work or find it hard to get due to schedule constraints and/or criminal convictions?

2) The ACA was supposed to make health care affordable for freelancers. Is it in fact failing to achieve that for most people? I remember feeling like the cost of procedures was on a silver plan too far uncertain and moved to the UK partly for that reason.

Healthcare is still incredibly expensive for freelancers. ACA hasn't lowered costs the way it was intended to, but it has required that people who previously went without insurance (because they couldn't afford it) purchase it.

Depending on your political persuasion, this is either because 1) ACA didn't go far enough and was de-fanged before birth or 2) it was a bad idea and we should have gone in a different direction.

Healthcare is getting more expensive faster than inflation. ACA did lower costs when you account for this long term trend. But, not if you compare costs now vs 5 years ago.

ACA addresses healthcare INSURANCE costs, not actual healthcare costs.

Since the probability that a person will need healthcare and thus utilize their health insurance, is basically 100%, increasing healthcare costs will necessitate increasing health insurance costs.

ACA was simply a way to get healthcare costs to be spread out among more people by forcing them into the insurance pool, which was more politically viable than the option where all taxpayers pay for each other's healthcare (taxpayer funded healthcare).

The majority of the ACA addresses healthcare insurance costs. But the ACA is a very large piece of legislation and some pieces were intended to reduce healthcare costs.

Then they should have called it the Affordable insurance act.

What the ACA did and was intended to do (as a first order effect) was provide reliable provision of insurance for those not tied to an employer. The pre-Aca system was riven with stories of people with (eg) diabetes losing their jobs under completely ordinary circumstances, and then finding themselves unable to get insurance anywhere. The ACA closed this gap, and most of its most famous provisions are based entirely around this. I don't even necessarily think it's a great law, I just hate misinformation.

For young, healthy freelancers it raised costs even relative to trend, because prices had to flatten and accommodate the higher cost folks who would've been excluded due to existing health conditions. But afaict this isn't true in general.

I'm not sure you're even disagreeing with the parent. Personally, I think that pre-existing conditions/inability to be insured as an individual could have been handled in a much less painful and politically fraught way.

But the parent is basically complaining that health insurance is still expensive for someone on a limited budget who isn't covered by a company. And it is. Because healthcare is expensive for the population average. (As, for comparable levels of care, it is everywhere even if it's arguably more expensive than it should be in the US for various reasons.)

The big difference for me at the time I was freelance was that there was actually a point to getting insurance. Pre-ACA if I got a serious mid to long term illness my insurance company would just drop me anyway. Although once ACA was enacted it was still kind of pointless in that the deductible put me in a position where unless I got a mid to long term illness I'd never use it. So in reality I just went without and planned to just declare bankruptcy if anything bad happened. Bonus of the new ACA era is that I could just wait for open enrollment(hopefully I would get really sick at the right time of year) and pick up a gold/platinum plan if I did end up with something that required long term care.

I took a sabbatical for the last ~year and a half and the only reason I wanted insurance was on the off chance I got hit by a car and ended up with some catastrophically high bill. My deductible is something like 8000 dollars but I'd rather pay that than have to absorb 100,000 after an accident.

If it raises mandatory costs for all freelancers, doesn't it effectively equalize freelancer rates across the market? So insured freelancers don't have to compete with other freelancers that save costs by going without health insurance.

> Freelancing in America: 2016 October 6, 2016 Edelman Intelligence (Commissioned by Upwork and Freelancers Union)

That's all you need to know.

For those hoping to cut through Forbes BS landing pages, autoplay video, PR crud, and the rest of it, the survey slide deck is the closest thing I've found to actual study meat with minimal spin:

http://www.slideshare.net/upwork/freelancing-in-america-2016...

I'd recommend the article be replaced with this link.

For those questioning methodology, which is never mentioned in the slide deck with any specificity either, note that the study is conducted by a major PR firm for:

No, no conflicts of interest at all here. Nothing to see folks. Keep moving right along. </p>

Self employed / business ownership was always a large part of the US workforce, there was a consolidation period which is now in decline and things are getting back closer to their older state.

"Freelancer" is just a different name for that simply because you don't need to own a business front property to be a tradesman today for many professions.

Ever see what happens when you apply for a loan or credit card when you write freelance or self employed? A big red flag that says unsteady income!

If that much of the workforce was shut out of the credit markets that would suggest a big adjustment in spending patterns in this country.

There is no red flag. They ask for two years of tax returns in most cases.

In a lot of cases (most?) a freelancer is an FTE, just for a single person company.

In which case they shouldn't write freelancer, they should write Creative Director at Visual Consulting Company LLC with a salary of $XYZ,ABC

unless its a mortgage application.

I believe when I applied for a mortgage my income from sources other than my salary was discounted by about 1/3 by the mortgage broker as it wasn't considered "steady" despite being steady over the tax returns I handed over. Might depend from broker to broker, I don't know what the federal rules are.

It's also much easier to do freelancing work now than it was 5 years ago. With the rise in SaaS like Roninapp, Elance, Reamaze, Upwork, Basecamp etc that enable freelancers to be more productive, seek and get paid, plus the freelancer lifestyle of being able to work anywhere they want and being your own boss, it's not a surprise people are moving towards freelancing instead of a typical 9-5 job

The ACA is the largest reason I can contract. Without it I would be forced to be an employee.

Might be helpful here is the actual results from upwork[0].

[0] https://www.upwork.com/i/freelancing-in-america/2016/

Quite the quote on slide 7, surprised it didn't make the article or I missed it:

   Half of freelancers (50%) say there is no amount of money 
   that would get them to take a traditional job and stop
   freelancing.

I find it hard to believe that 35% of the US workforce is comprised of self-employed white-collar workers doing contract work.

I'd easily believe "35% of the workforce is self-employed", but freelancers? I guess I'm an old fuddy-duddy that likes words to actually mean something; get off my lawn &c.

The term freelancer does refer to a business owner, generally a sole proprietorship who does not have employees. As someone who has been in business for 30 years, the difference I keep seeing now is that many contemporary freelancers do not view thwnselves as ownwrs of a business. I have been noticing the uptick in that perception for the past 4 or 5 years. The one positive ourcome imho is that more people now understand the risk,challenges and struggle associated with running a business. But that will only truly happen when the roses realize they are roses and begin to think like one. Much of the conflict I see today is because we have people who think like employees working as sole proprietors.

I freelance because I can't find traditional employment. Most of my income comes from Upwork - they take 20 percent of most gigs, a huge chunk by any standard. This article is just sponsored content - an ad piece for Upwork. I can't even imagine how much they are making by shaving 20 percent off of every gig... I'd go back to 9-5 any day for stability, benefits and a sane work schedule. In case you are wondering, I'm one of the higher priced users in my area of expertise so I have to be selective on projects I take. Even with some of the highest rates on Upwork I still struggle to make a decent living. Don't get me wrong, some days it feels awesome but others I feel like I'm putting in double time over the 9-5 guy.

Freelancers aka people being ripped off and paid via 1099 without any health insurance

Source: https://www.upwork.com/press/2016/10/06/freelancing-in-ameri...

> The freelance workforce grew from 53 million in 2014 to 55 million in 2016 and currently represents 35% of the U.S. workforce. The freelance workforce earned an estimated $1 trillion this past year, representing a significant share of the U.S. economy.

After working in agencies/consultancies, I realized I could cut out the middle man and let clients use me directly. So, yes, I freelance or consult because I found a need.

Can someone provide an archive.org or some sort of mirror for me to read the article? Forbes now require you to disable ad blockers, but then auto play video with audio :(

http://archive.is/jhVvS

Thank you :)

I don't understand why they do this. Is there a way to stop videos from auto playing in Chrome?

It's annoying. One thing I do know is that there is an experimental flag for turning on a "mute" option when you right-click a tab.

I doubt these no.s are really true. I feel these numbers are extrapolated after a survey over a small no. of people in a locality.

H1b workers are not allowed to do freelancing. They need to have a regular office job. Major chunk of technology workers are people working on H1b visas. if not H1b, there are many people who are waiting for green-card approval. This takes a long time and I don't think they can work as freelancers as well.

Not surprised. I freelanced for something like 5 years before finally getting a 9–5 job (not that it pays much more but it's a stable income).

> according to the “Freelancing in America: 2016″ survey released this morning by the Freelancers Union, based in New York City, and the giant freelancing platform Upwork, headquartered in Silicon Valley

Well I'm sure these parties have nothing to gain by releasing junk data.

Warning: Autoplay video.

Read that as freeloaders.

So the unemployment rate is actually higher than we thought...

Reply on news.ycombinator.com