Independent work has evolved from “something you do when you can’t get a real job” to a viable, coveted way for many to work, and data from MBO Partners’ 2017 State of Independence in America support that trend. In fact, growth at the high and low ends of the market and a leveling out of the middle indicate that independent work has finally hit a maturation point.
The annual report, now in its seventh year, provides an end-to-end look at the American independent workforce. It is the longest-running survey of its kind. As experts in the independent work industry for more than 20 years, MBO Partners has been lucky enough to observe and facilitate firsthand many of the exciting shifts in the industry.
In 2017, the independent workforce grew yet again to 40.9 million Americans. It encompasses workers of every age, gender and skill set throughout all facets of our economy. There’s much to celebrate — levels of satisfaction and choice in becoming independent are increasing strongly year over year, as are anecdotal reports that independent work are making people both happier and healthier.
We are now almost a decade past the beginning of the Great Recession, and by all estimates, we now have the strongest economy in recent times, with unemployment at record lows and job openings nearing 6 million.
But as one might expect, a growing economy doesn’t always mean equal benefits. Instead, we are seeing a “barbell effect” across the workforce at large, a trend that is particularly apparent with independent professionals.
At the low end of the market, what is often called the On-Demand Economy, work is growing rapidly. Workers pick up shifts through Uber and Lift, run errands as a Task Rabbiter, or complete the occasional gig on Thumbtack. By and large, these independents pursue independent work occasionally (on semi-regular basis) or part-time (less than 15 hours per week). For the most part, they are happy and work to fulfill a passion, to socialize, or to gain a new skill. Extra income is also a bonus, if not the main reason, these people note for picking up independent work.
In the middle, workers often work independently for similar reasons; they want to pick up extra income or learn a new skill. They may look to a platform, such as LinkedIn’s ProFinder, or a specialized marketplace, such as 99 Designs, to complete a freelance gig in their area of expertise. However, thanks to the strong jobs market, many of these independents went back to traditional (payroll) work in 2017, attributing to a small drop in the total numbers of Full- and Part Time Independent Workers year-over-year. This is to be expected, as so-called Reluctant Independents leave the independent workforce, and others cycle in and out of independent work to accommodate lifestyle or family needs.
These trends have been covered extensively in the media, which too often disproportionally focuses on the small portion of the independent who are dissatisfied. In contrast, by our estimates in the 2017 State of Independence in America, the number of Reluctant Independents is just 9%, the lowest in any of the seven years of our survey.
The other side to this barbell is the high end of the market, which has continued to expand rapidly. In fact, one out of every five Full-Time Independents now makes more than $100,000. This number equates to 3.2 million people. That’s roughly the population of San Diego, or, if you’d prefer to think in terms of states, bigger than the population of Arkansas (2.9 million) or slightly smaller than Connecticut (3.5 million), according to the 2010 census. The number of High-Earning Independents has jumped significantly, more than 68% since MBO Partners first started tracking income data back in 2011.
There are many factors causing the independent workforce to increase, including a war for top talent in areas such as computer science and STEM fields, a digital revolution that allows talent to work anywhere they choose, and a growing comfort with independent work. Independents by and large are out-earning the average American worker. The average Full Time Independent earns $65,300, more than the median family household income in the US ($56,515 in 2015).
We expect the number of Full-Time Independents to cycle up and down in response to the strength of the jobs markets in coming years. Those with payroll jobs may want to try a side gig, and, over time, we believe that more Occasional Independents will grow into Part-Time and Full-Time Independents, thus further exaggerating the current barbell at play.
What does this mean? It means that the time is now for businesses to consider how to deal with this fast-growing and highly desirable contingent workforce. Savvy companies already have policies in place to become not just an employer of choice, but a Client of Choice for top talent.
But it also means state and local governments need to consider the very real issues that affect independents, including access to portable benefits structures, murky classification laws, and even tax structures, which MBO discusses at length in our Certified Self-Employed proposal.
One thing’s for certain: the future of work is here. It’s time to get ready.
