Credit: Shutterstock photoIt wasn’t long ago that, for most people, their entire career was tied to a 9 to 5 job working for one employer until retirement. Today an increasing number of Americans are moving away from traditional paths of employment in favor of freelance work. Millennials have embraced the freelance economy as it provides them the opportunity to set their own schedule, choose their assignments and work in an environment that suits them best. That said, some workers do not pursue this by choice and are often subjected to contingent work by virtue of economic necessity.
For the longest time freelancing has been tied to professions ranging from writing and editing to home design. In the past 5 years, the rapid growth of digital marketplaces has carved out a subsector of the labor market now referred to as the gig or freelance economy. These new avenues create flexible opportunities for individuals to generate income and pursue a career.
While the freelance economy only touches a fraction of the global workforce, its impact is prepared to reshape, for better or worse, the labor market for decades. At the heart of contingent work is whether this drives entrepreneurial self-starters or is the latest sign of worsening income inequality.
Increasingly contract work is being held by the best and the brightest from C level executives to lawyers and accountants. There are many reasons why independent work is on the rise including weaker economic conditions and general employee dissatisfaction. Millennials have embraced the freelance economy as it allows them the freedom to pursue a career at their own pace. That said, the freelance economy has slowly fueled two trends much bigger than happy workers: the rise of new digital platforms and the emergence of co-working spaces.
There are now more ways to work remotely than ever before, from smartphones, apps and other forms of technology that connect each other 24/7. These types of platforms seamlessly connect freelancers to assignments in areas such as software programming, graphic design and accounting.
Even large companies have caught on to the trend. NASA recently partnered with popular Freelancer.com to crowdsource engineering designs to be used in space. Popular freelance economy pioneers like ride sharing app, Uber, are enjoying bloated valuations thereby validating the emergence of freelance work. As the economy rapidly reconfigures and technology pushes us further into automation, contract work is estimated to account for 40% of the global workforce by 2020.
The rapid growth of the freelance economy has encouraged the development of co-working spaces. It is not uncommon to find a group of freelancers or contingent workers congregated at a WeWork. This space not only develops a sense of community with its inhabitants, but has also been wildly lucrative with WeWork now valued at $10 billion.
On the other hand, the freelance economy has more complex and unforgiving consequences in the labor market. A ballooning workforce of contingent workers means a state of non-permanent wages in which workers are underpaid and without standard protections.
Basic benefits such as a retirement plan and health and unemployment insurance are never offered to contingent workers. Moreover, since many of these jobs are found through digital platforms, pricing transparency has put pressure on the wages of contract workers. Many of these positions leave workers earning under a living wage and forced to find their own medical insurance.
Declining unemployment rates of late have ignored other indicators like underemployment which has been associated with contingent workers.
The rapid growth of the freelance economy is not about temp work but rather experienced professionals seeking more flexibility than traditional employment opportunities can offer. That said, the implications of the freelance economy are profound and policies must be put in place to make contingent work a viable long term option.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
