Human Resources

Goodbye, 9-5! The Growth of the Freelance Economy

Growth of the freelance economy

They design your favorite websites, photograph your wedding or the weddings you attend, and even drive the ride-sharing vehicles you hire. They work from home offices, coffee shops, or co-working spaces, and they dress in everything from pajamas to power suits. Although they tend to work alone, they sometimes join online networking groups, attend professional events, and even form unions. They’re freelancers, and they’re taking the workforce by storm.

The U.S. freelance economy has grown rapidly in recent years to approximately 53 million freelancers, or around 1 in every 3 working Americans. Forget the 9-to-5 life: Many of today’s freelancers are motivated by the promise of freedom, flexibility, and autonomy rather than corporate benefits and job security.

To glean valuable insights about freelancing in the U.S. today, Paychex analyzed over 400,000 freelancers’ resumes posted on job site Indeed.com. How has the freelance economy grown? Which states and cities are home to the most freelancers? Which jobs are the most common in the world of freelancing? And what types of education and skills do freelancers possess? Whether you’re thinking about taking the plunge or simply curious about the current state of freelancing, you can get all the details below.

How many freelance jobs have existed over time?

Goodbye, Daily Grind: The Growing Popularity of Freelancing

By tracking the start dates of freelance positions people listed on their resumes, we were able to paint a picture of freelance trends in the United States for the past 45 years. For the majority of the 1970s, ’80s, and even ’90s, working generally meant heading off to a typical 9-to-5 job. But during the new millennium, the freelance economy took flight: Between 2000 and 2014, freelance jobs listed on the resumes we examined increased by over 500 percent.

What factors have fueled this dramatic increase? With today’s focus on pursuing rich, meaningful lives, many workers simply prefer the freelance lifestyle. Independent workers forgo the set hours, commutes, office politics, annual reviews, and daily meetings associated with traditional jobs. In return, they gain flexible schedules that accommodate family time, travel, and hobbies.

Businesses are also more interested in hiring freelancers. For many companies, the need to cut payroll and insurance expenditures has led to an increase in outsourcing. While some independent contractors are self-employed by choice, for others the new path may be the result of a layoff. And although companies once may have balked at hiring remote workers, today’s technology–in the form of email, mobile phones, and collaboration software–enables freelancers to stay seamlessly connected with their clients.

Technology also empowers freelancers to conquer what is arguably their biggest challenge: finding work. The spike in the graphic above coincides with the launch of numerous online marketplaces in the late ’90s and 2000s dedicated to connecting independent contractors with potential clients. These platforms completely revolutionized the playing field for freelancers.

The growing freelance economy in major U.S. cities.

Self-Employment from 2000 to 2016

The graph above provides a visualization of freelance trends in major U.S. cities during the past 16 years. Opportunities have grown exponentially over time, especially in hip cities like Los Angeles, New York, Denver, and Seattle. Freelance graphic designers, for instance, command some of the highest rates in these locations, according to the AIGA.

Some of the freelance growth reflects these cities’ growing industries–for instance, the tech boom in San Francisco. While freelancers can live and work from practically anywhere, it’s clear that big cities offer big opportunities for self-employed professionals. And for locals, a unique opportunity has emerged: co-working spaces. Along with the camaraderie of a co-working space, some workspace providers offer services such as human resources and accounting. Many even deliver the types of perks found in some offices, such as free fruit, foosball tables, and pinball machines.

The most popular freelance jobs in each state.

Top Freelance Gigs Across the U.S.

Next, we analyzed job titles that were featured in freelancers’ resumes. The winner by a landslide: graphic designers. Designer gigs were mentioned most often on resumes across 34 states. Writers dominated in 14 states, mainly in parts of the West and South, as well as New York. (Technically, writers and designers tied for the most mentions in Oklahoma and South Dakota.) The only state that deviated from the world of writing and design was Alaska, where freelance makeup artists came out on top.

Along with the demand for certain skills, the type of work many freelancers do may simply relate to its inherent flexibility. Of the 53 million freelancers in the U.S., only 21.1 million are the traditional type who work from one project to the next project, according to an independent study commissioned by Freelancers Union & Elance-oDesk.

Who are the rest? You may not be surprised to find that 14.3 million freelancers are technically moonlighters (people who hold down full-time jobs with benefits, and work freelance jobs during off hours), and another 9.3 million freelancers have multiple sources of income, such as part-time jobs without benefits. For workers juggling multiple gigs, writing and design are both tasks that people can typically squeeze into packed schedules and complete outside of office hours.

The number of freelance roles by time spent in roles.

The Duration of Self-Employment

According to our study, it appears the majority of freelancers aren’t necessarily in it for the long haul. The largest proportion by far stays in the field less than a year. As time goes on, the number of independent contractors who quit grows steadily. However, there is a relatively high proportion who stick around for over 15 years.

Why might freelancers quit the business? The reasons vary by individual. By its very nature, freelancing for a living means embracing a state of flux. For some, changing life circumstances, such as having a child, may prompt the desire for the stability and benefits that come with a full-time job. In the case of those who are moonlighting or holding down multiple gigs, the desire for more leisure time may be the impetus to stop freelancing.

Other freelancers simply may grow sick of the work, become tired of the hustle, or weary of worrying about money. Perhaps they’re horrified by health care costs, or maybe they long for paid time off. And although autonomy is a plus for many, sometimes freelancing means swapping one irritating boss for many irritating clients.

How long do people stay in freelance positions, by state.

Freelancing Durations Across the U.S.

Next, we looked at the average length of time that people in each state continue to freelance. South Dakota was the only state where freelancers averaged fewer than three years in the field. Interestingly, the state also has the lowest unemployment rate in the nation, which may mean more traditional job opportunities to tempt freelancers. New York, North Dakota, and New Jersey were all among states where freelancers averaged fewer than four years.

On the other hand, freelancers in Alaska tend to stick it out the longest. In fact, the Last Frontier is the only state where self-employed workers made it over five years on average. Alaska ties for the highest unemployment rate in the country, which means for some freelancers, taking the flexible career path may be the default option rather than a choice. Mississippi, Delaware, and Oklahoma had an average freelancing duration of 4.5 years or more.

Frequency of some of the most commonly mentioned skills on freelancers' resumes.

What Do Freelancers Bring to the Job?

Based on the resumes we analyzed, today’s freelancers possess widely varied skills. The most common by far was a talent for design. However, phrases that imply tech-savviness dominate the top of the list: Freelancers often claim to be fluent in Microsoft products, Photoshop, Adobe software, Illustrator, Excel, and HTML.

Still others have a knack for writing or photography, and many have specialized skills such as video and SEO.

What subjects did freelancers focus on in college?

College Majors of Today’s Freelancers

Analyzing the Education section of freelancers’ resumes yields a snapshot of the most common areas of study for self-employed workers. Over 7 percent of the freelance resumes we looked at listed graphic design or design as the field of study, and another 7-plus percent revealed communications-related majors, such as English or journalism.

But design and communications aren’t the only popular fields of study for freelancers. The arts–including art, illustration, photography, and fashion design–are also a common path for freelancers. Business professionals sometimes go independent, too: Many of the majors we saw were in business administration, business, and business management. Other fields of study include advertising, marketing, computer science, psychology, and education.

The wide range of majors we noticed underscores the increasingly diverse opportunities available to freelancers. For instance, today’s technology enables education majors to become virtual teachers even from the comfort of home–no chalkboard necessary. And the evolving employment landscape has also led to increased trust between clients and independent contractors, enabling high-level business professionals, for instance, to complete tasks that typically would fall to permanent employees or established companies.

The most common job fields among freelance workers.

The Top Jobs for Freelancers

Based on the number of positions listed on the freelance resumes we examined, graphic designers dominate the world of freelancing. Today, design gigs are more varied than ever: Graphic artists work in fields from publishing to marketing, advertising to manufacturing. They design websites, publications, infographics, advertisements, logos, and even packaging. Many offer specialized skills such as the ability to create animation and motion graphics. According to the BLS, the job outlook for graphic designers is holding steady.

Writers and editors are the second-most common type of freelancers. Companies are increasingly outsourcing their writing needs. While many focus on journalism, the demand for content writers has risen as well. Along with newspaper and magazine work, writers work in marketing, social media, and advertising, and write everything from long-form articles to video scripts.

Other popular freelance gigs include photography, audio/video, technology, and consulting. But although these types of industries are among the most common, they’re not the only opportunities. Freelancers work in a variety of fields, including fashion, food, legal, events, and accounting industries.

The Freelance Boom

As our resume analysis reveals, freelancing is on the rise. Gone is the time when freelancing came with a stigma of it not being considered a “real job.” Today’s freelancers command respect, and many earn as much as or more than they would in full-time positions.

Most share a desire to set their own schedules, be their own bosses, and carve out more leisure time. And although the lack of steady paychecks, benefits, and workplace protections may be an issue for some, one thing is clear: Freelancing is here to stay.

Whether or not your business relies on freelancers, there’s one thing you can outsource to make life easier: your HR functions. That means you can focus on work while our experts tackle everything from handling policies and procedures to finding and hiring employees. Visit Paychex.com today to see what we can do for you.

Methodology

We looked at over 400,000 resumes mentioning the word “freelance” on Indeed.com and categorized their contents. Due to the natural inconsistencies from one resume to another, we categorized job titles, skills, educational backgrounds, and job fields by rigorously querying keywords within each of those fields. Once the data were aggregated and sufficiently categorized, we visualized the results.

Sources

Indeed.com

http://fortune.com/2014/12/11/health-insurance-freelance-workers/

http://fu-web-storage-prod.s3.amazonaws.com/content/filer_public/c2/06/c2065a8a-7f00-46db-915a-2122965df7d9/fu_freelancinginamericareport_v3-rgb.pdf

http://www.aiga.org/best-cities-for-freelance-graphic-designers/

http://www.fastcompany.com/3049532/the-future-of-work/heres-why-the-freelancer-economy-is-on-the-rise

https://www.entrepreneur.com/article/228967

http://www.huffingtonpost.com/sara-sutton-fell/5-surprising-facts-about-_b_5881862.html

https://hbr.org/2012/05/the-rise-of-the-supertemp

http://www.bls.gov/web/laus/laumstrk.htm

https://www.freelancer.com/community/articles/6-growing-trends-for-freelance-writers

https://hbr.org/2012/05/the-rise-of-the-supertemp

http://www.forbes.com/sites/susanadams/2014/09/05/more-than-a-third-of-u-s-workers-are-freelancers-now-but-is-that-good-for-them/#627642703f04

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