MBO’s State of Independence: Is Gig Work the New Normal?

mbo state of independence - man at desk
Posted by Emily Slayton in Future of Work on Jul 13th, 2018 15:46 CDT

There’s no doubt that payroll jobs have rebounded in a big way since hitting bottom at the beginning of 2010. Historically, we might expect this sort of growth to cannibalize the independent jobs market, but a new report from MBO Partners found that this hasn’t really been the case. In fact, the increase in 17 million payroll jobs over the last seven years hasn’t made much of a dent at all in the number of full-time independent workers.

Defining “independent”

As we saw with the Bureau of Labor Statistics (BLS) report earlier this year, the way independents are categorized can have a significant impact on how we assess this segment of the workforce.

The BLS took a much narrower view, including only full-time freelancers in its analysis, which resulted in numbers that seem to indicate a decline of 0.5%. The recent MBO report, on the other hand, includes part-time and occasional gig workers, revealing an overall uptick of 2.2%.

We feel it’s important to include all of the 42 million adults who work as consultants, freelancers, contractors, and temporary workers, as this big-picture view takes into account the evolving nature of freelance work. As the MBO report puts it, choosing between freelance and payroll jobs “is not necessarily an either-or choice.” More and more individuals are choosing to supplement traditional roles with freelance work.

The state of independence: holding steady

Like the BLS, MBO found that the number of full-time independents dropped slightly; but when compared with the massive growth in the payroll job market, this decrease actually hints at stability. From 2011 to 2018, payroll jobs grew by 17 million, yet the number of full-time independents shrank by only 200,000.

Part-time independents fell by slightly more—about 700,000—which makes sense, since many of these individuals were “reluctant independents” who were eager to return to traditional roles once they became available. There’s also a certain fluidity within the independent market: full-timers and part-timers often cross the boundary between the two from one year to the next. But if both full- and part-time independents decreased, where’s the increase coming from?

The answer: occasional independents. The number of people who work side gigs at least once a month has jumped 42% over the last two years. This is significant, as it indicates a growing overlap of the two worlds. More and more people are looking to supplement the security and benefits of a payroll job with the freedom, control and additional income of freelance jobs.

It also underscores a general shift in attitude toward independent work. Though there’s still a need to broaden social contract for independents, freelance work is now widely accepted as a viable, and the platforms and tools that support it continue to grow.

Strong support from digital platforms

By and large, technology is driving the gig economy’s growth. It facilitates connections between companies and individuals that might otherwise be impossible due to distance or accessibility.

MBO found that personal networks remain an important part of finding freelance work, with 44 percent of full-time independents reporting referrals as their primary source, but social media and digital platforms are filling in the gaps. Millennials are three times more likely to use online platforms, and as their share of freelance jobs grows, so too will these technologies.

Digital platforms are also making it easier for highly skilled workers to connect with the growing number of executives that seek high-level support. This group continues to grow, both in numbers and in earnings. Nearly half of the total spending at big corporations is on contract talent, due to the fact that skilled independents provide much-needed agility for evolving and increasingly complex businesses.

This demand gives highly skilled independents leverage, too. Not only are they able to pick and choose the projects they work on; they’re also able to command higher rates. Today, more than one in five full-time independents earns $100,000 or more annually, and most of these are likely to work in highly skilled fields.

Strong satisfaction from independent workers

Perhaps one of the most important indicators of the independent market’s strength is the satisfaction of its cohorts. Many independents choose to pursue gig work because helps them better balance their work and their daily lives. The MBO report reveals that 79% of full-time independents say they’re happier working outside of traditional employment, and 68% say they’re also healthier for it.

As freelance work has become more accepted, it’s also become less volatile. MBO found that only 33% of full-time independents worry about keeping their work pipeline full, a significant decrease from 46% in 2011. They also worry less than payroll employees about displacement due to automation—55% said that automation technology won’t affect any of the work they do, compared with 44% of workers in traditional roles.

The only real detractor from this sunny outlook has been uncertainty about benefits. From 2011 to 2016, those who reported concern about benefits fell to 33%, but MBO reports that since the 2016 change in administration, the number of full-time independents citing these concerns has shot up to 42%.

Fortunately, some organizations that work extensively with contract workers, such as Silicon Valley’s Survey Monkey, are already looking for ways to extend benefits to independents. This may very well hint at the market’s next evolution.

Forecasting the future

Though the rapid pace of technology makes it difficult to predict what the future holds for American workers in general, let alone independents, MBO expects contract work to continue to increase, and we agree. After all, rapid change requires greater organizational agility, which is something the independent workforce is proven to deliver.

As business becomes more complex, so do jobs, and we believe this will lead more workers to seek greater balance in their lives. Stagnant wages in the traditional job market will encourage payroll workers to dip their toes into the freelance world to supplement their income.

And just as technology is driving this evolution, so too is it helping to create the infrastructure that supports it. We believe online talent marketplaces like BTG will continue to grow to meet the needs of both independent workers and the organizations that look to connect with them.

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Emily Slayton

Emily Slayton

Emily is an award-winning writer who specializes in B2B marketing. She has been helping global brands reach targeted audiences to drive sales and awareness for more than 15 years. As a small business owner herself, she understands what it's like to source a team that can scale with sudden growth.

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