At the beginning of this year, optimism flowed freely through businesses and homes. But in one of the most remarkable plot twists in history, we have experienced a year filled with economic challenges and changes for nearly every industry and household. As the workforce shifted practically overnight, workers and companies alike had to adapt to a new, remote environment with continuously evolving needs. But freelancers and decentralized companies found themselves prepared for the new normal.
Navigating the New Normal
An article in the Harvard Business Review from the beginning of March 2020 predicted that the current economic situation due to the novel coronavirus would “hasten the progress to more decentralized global value chains.” Before the digital transformation that ensued during March, decentralization remained a somewhat taboo concept even while cloud computing technology took off. We are now navigating a new standard, conducive to an independent, decentralized workforce, making freelancers an essential pillar in supporting the United States economy.
Forging Optimism with Freelancing
The independent workforce powerhouse, UpWork, commissioned a study during summer 2020 with input from over 6,000 U.S. working adults. It stands as the most comprehensive study of the U.S. independent workforce, analyzing the freelance economy’s size and impact today. The study provides us with data-backed insights into the advantages and opportunities of decentralized work. The insights give us a glimmer of hope during a rather challenging time, revealing how the future of freelance will impact the future of the United States economy.
Key Findings for the Future
Amidst uncertainty and chaos, the number of individuals freelancing at any given point over the last year has increased from 35 percent to 36 percent. The economic downturn from COVID-19 impacted some aspects of the independent workforce, including increased amounts of first-time freelancers and paused opportunities and contracts. The study examines the compositional changes of the independent force and shines the spotlight on the importance of freelancing as a way of hiring and working.
Below are a few key findings from the study that gives us a glimpse of freelancing’s impact on the economy now and in the future.
Prosperity Among a Recession
Amid a global recession caused by the novel coronavirus, the freelance workforce remains an essential pillar supporting the United States economy. According to the study, freelancers contributed $1.2 trillion to the United States economy in annual earning, a 22 percent increase from 2019. UpWork’s President and CEO commented on these findings stating, “Among all the uncertainty brought about from COVID-19, the data shows that the independent professionals benefit from income diversification, schedule flexibility, and increased productivity.” He continues to explain how companies are discovering that independent professionals can efficiently inject new capabilities into an organization, supporting and expanding organizations that would otherwise suffer during this turbulent time.
Increased Earning Potential and Economic Opportunity
The data shows us that freelancing increases the earning potential of individuals who quit their full-time job to pursue freelance. Approximately 75 percent of the individuals who leave their job say they earn the same or more in pay than when they had a traditional employer. Young adults resort to freelancing for economic opportunity amid a tough job market, but they are not the only ones. Half of Gen Z chooses to freelance, while 44 percent of millennials, 50 percent of Gen X, and 26 percent of Boomers choose as a stream of income, too.
An Essential Pillar to the Economy
The financial impact freelancing has on the economy is noteworthy, but the qualitative impact supports the stability of the economy. Freelancers report lower rates of experiencing the adverse effects of COVID-19 on their overall well-being and financial health. The positive impact on freelancer’s well-being enables them to be more optimistic about the future. The study reports that 86 percent of all freelancers say the best days are ahead. A lively and ambitious outlook helps facilitate the recovery of other pillars of the economy.
We Are in This Together
Whether you are an individual or an enterprise, it is essential to remember you are not alone. There are many businesses and people out there who have made freelancing their primary source of income and a decentralized team their business model. Being well-equipped with encouraging, accurate information, the tools necessary to thrive, and personal connections for support can make the new normal much more tolerable.
Since its inception, The Bauen Group has been a decentralized team. We understand what it takes to not only survive but thrive in this environment. Having a partner to help build your decentralized infrastructure, especially one involving cloud computing, can make the difference between chronic stress and smooth sailing. Our team of experts is always ready to help with your transformation and transition.