Outlook for the gig economy: Freelancers could grow to 50% by 2030
Social spaces are productive places. For fast-emerging coworking spaces like Petaluma's Keller Street CoWork, the increasing number of workers choosing to freelance or supplement incomes with “gig” work is fueling opportunities.
“Freelancers and creative professionals need to work in an environment filled with energy and conversations with others just as they would if they worked in one office every day,” said Danielle Stroble, director for Keller Street CoWork. “By networking, sharing ideas and simply being around other productive people unlocks that ‘stuck' creative flow. They build new job networks and are more motivated to hustle.”
Since opening its doors in May, Keller Street has served an increasingly diverse array of professionals. In a tight labor market, these are highly skilled individuals who, instead of working one job for one employer, now work independently for multiple employers on multiple projects.
At any hour of the day or night, architects, software engineers, designers, educators, manufacturing consultants, designers, marketers, political campaigners and more all rub elbows over Keller Street's microwave or beer tap.
Today, the U.S. Bureau of Labor Statistics estimates that 16 percent of Americans now work independently, up from just 10 percent in 2012 (Harvard-Princeton).
Private studies dive deeper and show that independent workers comprise a much larger slice of the income pie. For example, an Intuit study of individuals using its tax filing platform found that more than 30 percent of U.S. workers and taxpayers today freelance. Other real-time applications and data analysis platforms predict that 50 percent of workers will either supplement their income or work full-time independently by 2030.
The rapid growth is not just due to the rise of Lyft, Uber, Etsy, Airbnb or other app and online gig work platforms. More than 21 percent of full-time independents earn more than $100,000 annually.
As employers struggle to fill open positions in a seemingly hot economy, the key to why could be that 63 percent of freelancers say they wouldn't work for one employer.
Pay transparency is finally available. “Soloprenuers,” who are as likely to be under 30 as they are over 55, can instantly compare what their work is worth through job networking and posting sites like Glassdoor, Indeed and LinkedIn.
Indie workers say they prefer driving their own destiny. Most also prefer the diversity, time flexibility, ability to choose their own projects and relative security of working for four or more clients per month versus one employer.
“We need a different way to overcome labor shortages and avoid future layoffs as business needs change,” said Cynthia Murray, CEO North Bay Leadership Council. “That means looking at labor policies too.”
The risks of working independently directly impact North Bay communities. Independent workers tend to save less for retirement and have no corporate match and tax-deferred withholding is too low compared to freelance incomes. No qualifying for mortgages without a W2 or two years of qualifying income tax returns. Health care insurance isn't subsidized. No corporate childcare or perks. No sick leave or paid vacations. No laws requiring prompt pay and lack of other worker protections will have major impacts on already budget-constrained public programs and social institutions.
“What we're seeing is the rise of the 4th Industrial Revolution,” said Murray. “The corresponding shift to project-based and technologically savvy workforces, complete with Hollywood-style wranglers that head projects and teams, can create challenges. It also creates a more resilient system.”
Shortages in STEAM (science, technology, engineering, arts and math) disciplines, for example, are becoming widespread. According to federal data, more than 600,000 high-paying tech jobs across the U.S. went unfilled in 2016. High turnover combined with longer times to recruit and hire meant that 64 percent of health care employers increased new-hire salaries last year, a trend expected to continue.
It's taking longer to hire professionals, averaging as much as four months. At the same time, full-time employees are job-hopping as much as every 15 to 18 months. The resulting compression of productive work time makes project- or retainer-based expert freelancers more attractive, particularly as freelancers also are more apt to constantly hone their skills through education and training.
“Many of the jobs we know today may not be here by 2030 as technology evolves,” said Robert Eyler, dean of Sonoma State University's School of Extended and International Education. Eyler tracks economic and workforce trends globally.
“With the rise of robotics and IoT (internet of things), we see shifts in local labor needs,” Eyler added. “Combined with major events like fires and housing challenges, the role of education to retrain managers to work with independents and creating a local pool of diverse talent becomes more important than ever, for workers as well as employers.”