Workforce Development

New Study: 36% of workers engaged in independent work over the last year

October 20, 2017  • Shelly Steward & Ethan Pollack

In recent years, the economy has changed in substantial ways that have altered how people work. For many, work is increasingly short-term, project-based work without a stable, traditional employer-employee relationship.

According to the 2017 Freelancing in America (FIA) report, released Tuesday by The Freelancers Union and Upwork, there are currently 57.3 million independent workers in America. This number equates to 36 percent of the employed workforce, up from 35 percent in last year’s report. Based on data from the past four years, FIA projects that more than half of the US workforce will engage in independent work by 2027. This report, based on a survey of 6,000 workers, uses a broad definition of independent work, including any worker that has engaged in supplemental, temporary, or project-based work over the last year, regardless of whether they also have a traditional, stable job.

Perceptions are positive

According to this year’s survey, experiences of independent workers are increasingly positive. More respondents said they work independently out of choice rather than necessity, up from 53 percent in 2014 to 63 percent this year. Half say that no amount of money would convince them to take a traditional job. When asked what about independent work they like, respondents most commonly selected freedom and flexibility.

FIA also indicates that the characteristics of independent work are changing. Independent workers are increasingly embracing a portfolio of clients, rather than just one, and are finding more of their work online than ever before. These trends suggest that independent work is resembling traditional employment less and less.

Income unpredictability a major concern

Although expressing significant satisfaction, independents did report challenges. The biggest concern reported was an unpredictable income. 63 percent of full-time independent workers said they dipped into savings at least monthly, more than three times the rate of traditional full-time workers. Income unpredictability was also the biggest factor holding back occasional freelancers from pursuing independent work full-time.

Whereas the unpredictability of income was a challenge unique to freelancers, other top concerns were shared by traditional employees: affordable health care, debt, and the ability to save were challenges for all workers.

AI and automation on independents’ minds

In addition to the annual questions about participation and satisfaction, this year’s FIA survey inquired about artificial intelligence (AI) and automation as it relates to the future of work. Overall, independent workers were more likely than traditional workers to feel as though automation was affecting their jobs.

  • 49 percent of full-time independent workers said their work has already been affected by automation or robots, compared with only 18 percent of full-time traditional workers.
  • 66 percent of independents predict their industries are likely to be transformed by AI and robotics, compared with 34 percent of traditional workers.
  • 77 percent of independents believe at least some of their work will be done by robots or machines in 20 years, compared with 62 percent of traditional workers.

Perhaps related to their concerns over automation, independent workers were also more likely than traditional workers to report actively developing new job skills. 65 percent said they were updating their skills to remain competitive in a changing job market, with 55 percent participating in skill-related education in the past month. In contrast, 45 percent of traditional workers reported updating their skills and only 30 had recently participated in education or training.

Parallels with existing data

At first glance, as in past years, the FIA estimate appears larger as compared with other data on independent workforce participation. However, a closer look at the findings reveals some striking similarities. For example, a survey recently conducted by Emergent Research on behalf of MBO Partners estimated that 31 percent of the workforce engaged in independent work in the last month. While FIA’s headline finding considers workers who have freelanced in the last year, it reports that 89 percent of that total freelances monthly, or 32 percent of the workforce.

Breaking down the number differently (and using a different survey), economists Lawrence Katz and Alan Krueger report 15.8 percent of workers have an alternative work arrangement as their main job. According to FIA, independent contractors, temporary workers, and freelance business owners make up 16 percent of the workforce. The remaining portion consists of those with multiple income streams, many of whom would be excluded from Katz and Krueger’s definition.

Some of the lowest estimates of independent workers focus specifically on online platforms. JPMorgan Chase Institute, for example, estimated last year that 4.3 percent of adults had participated in online income-earning platforms over the past three and a half years. Similarly, FIA found in 2016 that 4.2 percent of American workers reported using “sharing economy websites or apps” to arrange independent work in the last year. The use of online platforms is up this year, to 4.7 percent.

Although slight differences in definitions and methods between surveys mean these are not perfect comparisons, the numbers are generally consistent when the same population is addressed. Different sources of data paint comparable pictures of the state of independent work, with their similarities being more significant than their differences.

Looking forward

This year’s FIA report highlights that independent workers are both a unique and a sizable segment of the workforce. As a group, they face distinct challenges and share particular outlooks on the flexibility, technology, and the future.

However, the report also suggests that the trends in independent work are mirrored among all workers. Four out of the five top job-related challenges were shared among independent and traditional workers. Although independent workers expressed higher levels of apprehension about automation, traditional workers were not unconcerned. Independent workers may feel the stress of unpredictable incomes particularly acutely, but income volatility is on the rise across the board. We need to pay attention to the specific challenges faced by independent workers, but addressing them is likely to benefit all. FIA contributes to understanding these challenges and adds to our knowledge of this growing slice of the workforce.