Source: Upwork; Edelman
Freelancers are a vital part of the American workforce. Hundreds of companies are continuously hiring gig workers both in short-term and long-term contracts. A huge portion of the US population are also considering freelance work.
This article will explore the gig economy, primarily the number of freelancers in the US and will go into the main categories below:
The median rate of freelancers in the US is $28 per hour. This rate is higher than 70% of workers in the overall US economy. This fact alone is expected to convince more Americans to leave their office jobs for remote work.
But how attractive is freelance work, really? How many freelancers will join the American workforce in the next 8 years?
Source: Upwork; Edelman
In a survey conducted by Upwork and Edelman, the majority of the American workforce will be freelancing in the future. In fact, basing estimates on the annual growth rates of 4.2% in 2016 and 0.6% in 2017—if the growth rate is close to constant (it’s actually increasing)—projections forecast that 90 million Americans will be freelancing by 2028.
With the continuous rise of Internet users in the US, people between the age of 18 and 29 are 53% more likely to find a job using their smartphones. For American adults, that figure is 28%. This is according to the research by the Federal Reserve Bank of St. Louis. In another study conducted by Payoneer, they gathered that more than 70% of freelancers find jobs through online markets and gig economy websites, as well as freelance platforms.
Working as a freelancer is a choice among 60% of US adults, up from 53% in 2014. Research by Prudential Financial and Harris Poll stated the top reasons why people per generation chose to start doing gig work:
Generation X and Boomers agreed that their top answer is that they need to generate more money to make ends meet with 59% and 46%, respectively. On the other hand, Millennials’ top reason is that they wanted more time for other things that they deem are important to them with 40%. As previously mentioned, freelancers get more income than traditional American workers, and freelancing provides more flexibility to their schedule.
In another study by MBO Partners, freelancers are asked the same question but segregated their answers by gender. Men love being their boss more than anything—67% of the male respondents found this as their common answer. On the other hand, 76% of women freelancers said that they prioritize flexibility over anything.
Living expenses are also a major factor in why people shift from traditional office desk jobs to freelance work. As housing and food cost continues to skyrocket among top cities in the US, remote work is becoming a more practical option for average Americans. With remote work, freelancers can choose to move out of their cities without sacrificing their jobs. However, not all cities are freelancer-friendly. Neighborhoods.com’s report listed the best cities for freelancers, determining their ranking by analyzing data across five metrics: average internet speed, median rent, income taxes, number of coffee shops per capita, and ease of getting around that is based on the average of combined walkability, transit, and biking score. According to the list, Spokane, Washington ranked as the best city for freelancers.
|City | State||Median Rent||Internet Speed||Income Tax||Coffee Shops||Getting Around|
|Ft. Lauderdale, FL||$1,516||59.35||$8,739||12.4||51|
|Las Vegas, NV||$977||37.50||$8,739||25.3||40|
|San Antonio, TX||$911||61.82||$8,739||5.6||39|
Most freelancers in the US are young. More than half of their population or 63.6% are under the age of 34. Moreover, 39% of freelancers are under the age of 24. Only 20.9% of them said that they are over 45 years old.
Males dominate the number of American freelance workers. They take up 53.8% of the total number of freelancers while women sit at 46.3%. Men tend to occupy a large portion of the freelance workforce between ages 18 and 34, but as the age grows, women freelancers take the lead.
Freelancers contribute to about $1 trillion in the US economy, which is equal to 4.8% in the country’s total GDP, putting the gig economy toe to toe with other major industries. In our previous article, we listed the best freelance platforms where companies can hire freelancers best suited for your companies’ needs:
Freelance platforms also provide easier payment methods for freelancers. Companies can utilize these websites’ payment support systems for safe and secure transactions. Other than these freelance platforms, there is a wide array of payment methods both employers and freelancers can use. According to Statista’s research, here are the top payment methods preferred by freelancers:
Transfer into bank account
Via a freelancer platform
Other online payment
Bitcoin or other cryptocurrency
I don't have this type of client
PayPal leads the pack with 70% of the respondents saying that they have used the site to receive their payment. This is followed by credit or debit card with 40% and bank transfer at 39%. Surprisingly enough, even though freelance platforms have built-in payment support systems, only 23% of the respondents said that they prefer being paid through these sites.
Freelancing provides a diverse set of activities for people who want to be a remote worker, with the largest type of freelance work being skilled services. Categories like computer programming, writing, and marketing comprise about 45% of freelancers. Other types of freelancing include unskilled services at 30%, like ridesharing and personal tasks, selling goods at 26% and other activities at 29%. According to FlexJobs, these are the industries with the most number of freelancers:
Also, a new quarterly series called Upwork 100 released the 100 hottest skills demanded by employers in the current freelance market in the US. This list is updated quarterly and here are the top 10 skills included:
According to Adam Ozimek, Ph.D., and chief economist at Upwork, the top 100 list is culled from within to rank the top 100 fastest-growing skills based on year-over-year growth rates in freelancer billings for Q3 2019 versus Q3 2018.
Employment status among freelancers vary. This is evident in the survey conducted by Morning Consult.
More than half or 58% of the respondents said that they only work for 30 hours or less per week. This could mean that these freelancers are only working part-time. 7% of the respondents said that they work for more than 50 hours per week. We can also assume that these freelancers are working on multiple projects at the same time. In the same study, 56% of the freelancers answered that they are currently working on 2 projects or more.
In 2019, the freelance economy in the US was valued at approximately $1 trillion, and the average hourly rate of a freelancer is much higher than 70% of the American workforce. In another study by Morning Consult, they found out that 55% of freelance workers earn under $50,000 per year. Meanwhile, 42% percent said that they earn $50,000 or more.
Freelancing may be a lucrative job, but not everyone gets paid. PayPal reported that a staggering 50% of freelancers experienced not getting paid. In the same report, the top reason why freelancers aren’t getting paid is that they are not taken seriously by their employers.
Freelancers are not taken seriously%
There were disputes about the payment terms%
Customers were unhappy%
The client couldn't use the payment methods I accept%
The payment took too long to arrive%
The payment got lost%
So do these statistics show any significant insights when it comes to the future? We’ve looked into some of the future trends in freelancing that show a much higher staying power compared to the others.
AI and automation will play a major role in the industry. As the number of IoT grows and cloud technologies become more relevant, we can see that more freelancing processes may become automated. Processes like billing, invoice management, and project management can be heavily influenced by automation.
Co-working spaces will also become a major part of the lives of freelancers. In the age of digital nomads, people leaning into starting a career as a freelancer will continue to increase. A major problem that greenhorns in the industry will face is the lack of social interaction. According to Buffer, 21% of freelancers said that the number one struggle of working remotely is dealing with loneliness. This is one of the reasons why the demand for co-working spaces continues to gain traction.
With the current state of the relationship between freelancers and employers, trends such as flexibility in work schedules and the ability to work remotely are expected to continue. And with the continuous growth in the number of freelancers in the US, it is expected that more trends will arise in the years to come. For anyone interested in starting freelancing, our list of the 20 best freelance sites for beginners is a good starting point.
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