Note: This post was originally drafted in 2024 and not published on the blog. I believe the trends continue to be underway. While I made some updates, most of the content is sourced from the 2024 timeframe.
There continues to be a movement underfoot that pushes against the traditional full-time employee model. Hiring freelance is an approach that agencies and marketing teams are leveraging more strategically.
According to UpWork, in 2023 there were 64 million freelancers (38% of the US workforce). Of the 64 million, 47% were providing knowledge services such as consulting, computer programming, and IT.
The Employer Benefits – Freelance “Salary”
When it comes to what a company pays for when making the decision between a freelance employee and a full-time employee, one area that is discussed is the “overhead cost” of full-time. This overhead cost is made up of benefits and costs not associated with labor costs – building, computers, health insurance, office supplies, maintenance, etc.
The cost that isn’t considered in that list is the full-time salary being paid for unproductive work. While this unproductive work can be scrolling social media and socializing with co-workers, it is more likely pseudo-work – attending meetings they don’t need to be in or answering email (1/2 of which is likely unproductive). In fact, research has suggested full time employees only have 3-4 productive hours each day – 15 to 20 hours per week.
With freelance, the story changes. Freelance workers only bill companies for the hours they work on the projects they are contracted to do for the client. This does not include time spent in non-project-related meetings, invoicing clients, marketing their services, or attending to email. Overall “work” hours are higher, but the time spent on non-productive work is not counted in what they are paid.
The Employee Benefits – Freelance Autonomy
Research conducted in 2021 by SIA (Staffing Industry Analysts) found that 85% of knowledge workers are open to becoming freelancers for the benefits of working from anywhere, being their own boss, and working on projects that interest them. When asked why they weren’t freelance, 73% said financial stability (not health care or 401K) is the reason they continue with traditional employment.
Yet, based on research by Exploding Topics, there is a spread based on age. While 50% of Gen Z freelanced in the last year, the number drops to 44% of Millennials, 30% of Gen X, and 28% of Baby Boomers. Younger workers are more comfortable with ambiguity and often have a side hustle.
The Freelance Dance
The structure of employee / employer relationships is changing and there will be different burdens on both the individual and the business as these changes take hold. Being at the forefront of the shift will enable those on both sides to help shape what the future will look like.
In the 2022 Future of the Workplace global survey, Deloitte reported that 86% of respondents say “effective management and orchestration of external contributors is now critical to their organizations’ overall performance.” As freelance work becomes more prevalent, companies are going to need new processes and approaches for managing work.
In addition, the US Census Bureau is doing work to better understand the solo-business owners and self-employed (including freelancers).
Your Turn
Are you seeing the shifts to freelance, fractional, and gig projects?
Have you ever taken a freelance or gig role?
How do you see the shift impacting workplace dynamics?