A new, much-anticipated report from the Bureau of Labor Statistics (BLS) gives us new data about the state of independent work in the U.S. Here’s what you need to know — and what these numbers mean for the future of working on your own.
According to the report:
- Contingent workers make up 3.8% percent of the overall workforce — 5.9 million workers.
- Independent consultants make up 6.9% of the overall workforce — 10.6 million workers.
- The total percentage of independent consultants in the workforce has actually dropped since 2005: “Compared with February 2005 (the last time the survey was conducted), the proportion of the employed who were independent contractors was lower in May 2017.”
- 43.4% of independent consultants work in management, business, and professional occupations – making professional work the biggest industry among those outside the traditional workforce.
What the Numbers Mean
On face value, the drop since 2005 seems significant. But since we have a 13-year gap between reports, we don’t have the data to judge whether there have been peaks and valleys in independent work. Plus, it’s important to note that we’re currently in an incredibly strong labor market. The U.S. economy has added jobs every month for 81 months in a row (nearly 7 years) and the unemployment rate, at 4.4 percent, is at a near-historic low. That’s good news for workers, and given those factors, I would expect the percentage of independent workers to be lower right now.
In addition, we know that independent work isn’t static. People flow in and out of traditional jobs and independent work. Given the nature of the economy, workers have the option to take permanent jobs or choose to consult, and they often move between those roles as opportunities come up.
The BLS numbers give us a narrow peek into the state of independent work — they don’t tell us everything. This report does not track subcontracting, supplemental income from project-based work, or “side hustles.” As is often the case with research about independent work, we’re struggling to find a common definition and a common vocabulary. That makes it challenging to definitively put a size on this segment of the workforce.
Other reports paint a different picture of the scale of independent work:
- In 2015, a Harvard/Princeton study found that the percentage of independent workers rose significantly between 2005 and 2015, from 10.7 percent in February 2015 to 15.8 percent in late 2015.
- Intuit estimates the “gig economy” to be 34 percent of the U.S. workforce.
- Upwork predicts that the majority of U.S. workers will be freelancers by 2027.
Pay, Benefits and Engagement: More Insights from the Report
The report also looks at what work is like for independent workers. Independent workers are happy with their work — 79% of independent consultants say they prefer their work to a traditional job.
And working as an independent doesn’t necessarily mean a pay cut: Earnings for independent contractors were roughly similar to those for workers in traditional arrangements.
But health insurance is still a sticking point. Workers in alternative arrangements are less likely than workers in traditional arrangements to have employer-provided health insurance. While 53 percent of workers in traditional arrangements received health insurance benefits through their employers, far fewer workers in alternative arrangements received employer-provided health insurance. The tricky question of health insurance for independent workers is an issue we’ll continue to cover in more detail on Indypendently in the next few months.
My Take as a Long-Time Independent
I’ve been working in the gig economy for 12 years — since about the time the last BLS report came out. So I’ve lived this trend in real-time. Here’s what I take away from these new numbers: for all the instabilities in the modern American workforce, the demand for independent workers remains strong.
Let’s look at the past decade. We’ve lived through the worst recession most of us have ever experienced. But when the economy was bad, my phone was ringing. Companies wanted the flexibility of an independent who could work short-term on their most pressing projects, without adding to the payroll. When times were tough, companies learned to lean on a newly formed talent pool of independent workers.
And then, when the economy started to improve, my phone was still ringing. There is a high demand for independent consultants to help companies put more gas on their business, try new things, and move faster. As the labor market tightened, companies often couldn’t find the talent they wanted to bring on full-time as employees, so they turned to contingent talent instead.
This new data shows that professional services makes up a large percentage of independent work — and the percentage of independents doing professional work is actually higher than the percentage of traditional workers doing professional occupations. When we talk about the gig economy, it’s not all Uber drivers. It’s a good fit for consultants and other knowledge workers.
The labor pool of independent workers in professional services is incredibly robust. That’s good news for companies. And the good news for independents? After a decade of relying on our services, companies now better understand how to use independent workers. The demand for our independent workers is steady, through the economy’s ups and downs.
The time for independent work is here. Let’s get to work.