The workplace has transformed from one in which many workers had the same employer for most of their working lives, to one of much more frequent job changes, where many workers choose short-term gigs over "permanent"(long-term) employment.
Being a self-employed worker without the restrictions of having a boss has traditionally been an aspiration for many American workers. What’s better than being able to set your own hours, and to work where, when and how you want?
For every person that has chosen to work in the gig economy though, there are others who have ended up there by default. Some workers have been thrust into self-employment as employers have relied on contract workers to avoid fielding the costs of healthcare and other responsibilities and benefits associated with taking on full-time employees. Also, many older workers were displaced during the sub-prime banking crisis and have opted for self-employment as a last resort, since they were unable to regain traditional employment.
The result has been the emergence of a gig economy where workers are tapped by employers to work on a per-project basis without the status (or benefits) of being a permanent employee. Individuals like actors, musicians, film production workers, and seasonal farm hands have always migrated from gig to gig, but now the trend has expanded into many other areas, especially within service industries.
Overall Trends in Self-Employment
An analysis of the Current Population Survey by the Bureau of Labor Statistics (BLS) indicates an upward trend in self-employment. In 2013, 14,555,000 workers were categorized as self-employed with either an incorporated or unincorporated status. By December 2019, that group of workers had increased by about 10% to 16 million. This increase was particularly notable given the decrease in family-run farms during the same period. Furthermore, the BLS projects a growth rate of 7.9% for self-employed workers from 2016-2026.
The Freelancing in America 2019 survey commissioned by Upwork and the Freelancers Union indicates that 57 million Americans participated in some form of freelance work during the past year (either part-time or full-time). That figure represents an increase of 4 million freelancers since the findings of the same report in 2014.
Common Occupations for Freelance Employment
According to Upwork, a leading online network linking freelancers to employers, popular freelance occupations include: designer and creative; web, mobile and software developer; administrative support specialist; writer; translator; accounting/finance/consulting professional; IT and networking professional; sales/marketing/customer service professional; lawyer/paralegal; engineer; architect; and data science/analytics specialist.
Here are some of the highest-paying gigs.
Where the Jobs Are - and Aren’t
According to the BLS, 21 states had higher rates of self-employment than the national average of 10.1% in 2015. The states with the highest rates included:
- Montana 16.1%
- Maine 15.4%
- Vermont 14.4%
- South Dakota 14.2%
Twenty-nine state states had lower rates of self-employment. The lowest included:
- District of Columbia 7.1%
- Delaware 7.2%
- Alabama 7.5%
Self-Employment By Age
According to the BLS, in 2016 individuals of 65 years and older had the highest level of self-employment (24.1%); followed by those aged 55 to 64 (14.7%); 45-to-54-year-olds at 11.8%; 35-to-44-year-olds at 10.1%; 25-to-34-year-olds at 5.7%, and 16-to-24-year-olds at 2.2%.
The Freelancing in America Survey 2019 uncovered a different trend by generation: the younger the worker, the more likely they were to have been a freelance in the past year. Generation Z was the most likely to have worked freelance, with 53% participating in some freelance activity, followed by millennials at 40%, Generation X at 31%, and baby boomers at 29%.
Self-Employment By Gender
At 12.3%, men were much more likely to have been self-employed in 2016, while only 7.5% of women were self-employed.
Self-Employment By Educational Level
According to the BLS, levels of self-employment varied somewhat, but not dramatically, by level of educational attainment. Those workers who possessed professional or doctoral degrees were an exception and experienced much higher levels of self-employment:
- 21.3% of individuals with a professional degree, such as doctors, lawyers, and architects who maintain private practices, were self-employed.
- 16.6% of those with a doctoral degree worked independently.
- Workers with a high school degree and those with a bachelor's degree had a self-employment rate of 11.2%.
- Those with a master's degree came in at 9.3%.
Self-Employment By Country of Origin and Race
Foreign-born workers were somewhat more likely to be self-employed than their U.S.-born counterparts. The self-employment rate for foreign-born individuals was 11.2%, but only 9.8% for native-born workers.
White workers (10.9%) were more likely to be self-employed than Black/African Americans (5.2%), Asians (9.6%), or Latinos (8.3%).
Self-Employment: By Choice or Forced?
The Mckinsey Global Institute survey indicated that 70% of self-employed workers had freely chosen that status either as a primary or supplemental source of income. The remaining 30% of self-employed individuals were in that situation either as "reluctants" who would prefer traditional jobs or as "financially strapped" individuals who were forced to supplement their income through independent work.
According to The Freelancing in America 2019 survey, with a stronger labor market 60% of freelancers reported that they had started freelancing by choice, up from 53% in 2014.
Gig Economy Legal Issues
In some locations like California, for example, laws have been passed that make it harder to classify freelancers as contract workers. In these locations many workers doing project work may be reclassified as employees unless they pass strict classification tests.
This may reduce the number of employers willing to engage freelancers, since employers will be required to pay payroll taxes and abide by minimum wage laws and other protections for employees. Contact your state department of labor for any developments in your area.