The monthly ups and downs of American employment as recorded by the Department of Labor don’t track the full story of modern jobs. The agency doesn’t take into account U.S. freelancers. This is a major omission. There are 70 percent more self-identified independent or freelance workers (17.7 million) than unemployed professionals (10.5 million). While the most recent report eased concerns about the jobless growth (the economy added 175,000 new jobs this February), we will continue to see the transformation of the way we work and hire. Many of today’s traditional office jobs will soon be a relic of the 20th century.
Millions of workers have already embraced technology that enables independent work for a variety of employers. For them, work is no longer in one office, at one desk, for one company. Workers are moving into “virtual offices” and using online jobs marketplaces (Elance.com, oDesk.com, Freelancer.com, etc), which provide instant and on-demand access to expertise and talent. Industry incumbents expect that the recent merger of giants oDesk and Elance will create $750 million in income opportunity. Initially, freelancers had mixed reactions to the announcement, but the staffing industry and the employers learned that a major change can occur almost overnight.
Elance, oDesk, and freelancer.com, among others, have been promoting offices without borders for the past decade. That has helped to change business as usual, as freelancers become a powerful new force in the world economy. For example, 3.3 million independent professionals in the U.S. and worldwide saw over 1.2 million new jobs posted on Elance in 2013. oDesk reports 5 million registered freelancers and freelancer.com has over 10 million users.
A recent Elance survey asserts that employers are bullish on online freelancers. Nearly 85 percent of businesses that use online jobs marketplaces say that hiring online gives them advantages over their competition, and almost three-quarters report they intend to hire more online. By tapping into online freelance pools, employers transcend geographical boundaries and bypass many employment restrictions.
Rather than paying an in-house staff, many companies seek independent contractors for specialized projects, such as website development, logo design, and a variety of IT assignments. Telecommuting and working from home are routine nowadays, and jobs can be outsourced online to skilled workers anywhere in the world. Billions of additional Internet users will come from emerging economies in next few years, yielding a growing supply of literate and skilled people willing to work for less than people in developed countries. The Elance survey shows employers find the skills available on the Web equal to or better than the locally available workforce.
Freelancers may be a bargain but they aren’t free
Elance freelancers in the U.S. saw over 50 percent year-over-year payment growth in 2013, with the average freelancer earning $29 per hour. These online employment sites take their cut of earnings (around 10% of the total cost), but 77 percent of freelancers say they are committed to staying footloose and fancy free.
Online work creates opportunities for many who can’t join traditional employment settings. Students can jumpstart their careers and gain experience, and full-time parents are able to earn extra income from their home computer. Online hiring may also narrow gender gaps, with the potential to bring women into the workforce at competitive salaries where they don’t have possibilities to be hired locally.
When employers hire remotely, they naturally expect specific and measurable results, finished products and deliverables. About 83 percent of Gen-X freelancers say they were hired based on their unique skills and expertise.
Overall, in 2013, independent work generated $1.17 trillion, which equals almost 11% of the U.S. GDP. Interestingly, freelancers not only generate additional revenue, but also create new jobs themselves. This spillover effect is quite significant: a quarter of them hire others. As the number of freelancers increases and they create more small businesses, maybe we’ll lose the stereotype that being a freelancer is tantamount to being “unemployed.” Some estimate that over 40 percent of the workforce in the U.S. will be freelancers by the end of the decade.
Questions on the future of online work
Many questions and challenges remain unresolved as online e-work expands globally. Will regulations emerge for hiring and working online? Can workers be guaranteed minimum wages and benefits? How can disputes between employers and employees be resolved? Will existing professionals prepare themselves quickly enough for a changing work world? The new world of hyperconnected work will be a very different world.
Elena Kvochko manages the outreach to technology industry for the World Economic Forum USA. Views are personal and do not represent the position of the employer.