The freelance market is growing at a significant rate, to the extent that half of the UK and US workforce will be freelancers by midway through this decade. But freelancing is not without its risks so some pain points have inevitably developed. These pain points include work consistency, affordable health care, and competition from other markets To place the pain points in context, the landscape of the freelance market including its players are set out in part 2. One of the less talked about issues, when moving into the freelance market, is the loss of professional networks, which has meant skills like collaboration and sparring cannot be sharpened. The importance of these skills should not be underestimated in the professional world, so freelancers and their employers are increasingly looking to technology and the tools that have been created to facilitate processes like collaboration and sparring. Finally, the typical freelancer is introduced. It will come as no surprise that the Millennial and Gen Z are in the thick of it.
PAINPOINTS FOR FREELANCER
Keeping the Work Flowing
- With freelancing comes the associated risk of busy and slow periods. The nature of freelancing work is such that a consistent workflow cannot, in most instances, be guaranteed. There will always be time between contracts or holiday periods where demand is low. Inconsistent workflow leads to unpredictable income, the number one pain point for 19% of freelancers.
- Choosing to become a freelancer sees a person go from the security of a permanent and regular paycheck to the uncertainty of non-regular paycheque but the promise of better rates. Often the proviso, the promise of better things' comes only if the work is consistent is forgotten, but reality inevitably sets in. Freelance work comes without the safety net of paid leave, whether for sickness or holidays.
- The stress associated with an inconsistent workflow only escalates as more time is needed for prospecting and administrative tasks. For some freelancers, this can consume up to 50% of their working day.
- To overcome this issue, career freelancers will look for long term projects, which bring with them the security of a regular income. Regardless of the project length, the industry encourages freelancers to plan their work calendar as much as possible in advance. By accepting forward-thinking projects, much of the uncertainty around inconsistent workflow can be minimized. Unfortunately, the possibility of a period of inconsistent workflow is always a possibility when freelancing; it is the nature of the market.
- There are also periods where there is a significant amount of work available. Many freelancers will take advantage of these periods working long hours, to increase reserves so that the periods of low workflow have less of an impact financially on them.
- If COVID-19 has taught anything, it is the importance of having health insurance. In this context, the cost of health insurance and the lack of paid holiday or sick leave may start to carry more weight in the pain point stakes when people weigh up life as a freelancer. Freelancers are, of course, responsible for their own insurances, and any time off is unpaid. Affordable healthcare is considered the number one pain point among freelancers, with 22% of freelances expressing it as their predominant concern.
- This issue impacts those in markets that do not offer a universal health care system. Finding affordable health care options as a freelancer is not perceived as easy, although there are a wealth of resources on this topic available online.
- The cost of healthcare in the US is high, and the majority of Americans could not afford to pay it out-of-pocket. This means the risks associated with freelancing that lacks the health benefits that come with a regular paycheck are not small if affordable health care cannot be found. For many people, the risk would be unacceptable and cause most to contemplate the viability of freelancing as a long term career option.
- Conscious of the deterrent effect this pain point has on the freelancer population, there are a huge number of online resources that address the issue and offer some solutions. There is widespread advice emphasizing that the best option is an extension of a spouses' policy or parent's if the person is under 26) is the best option.
- Several insurers have policies that are aimed specifically at the freelancer market. There is also plenty of advice available that emphasizes how freelancers should approach this aspect of being a freelancer. The freelance community is very valuable to the US economy, as its stakes are increasing the incentive for providers will likely increase seeing increased options entering the market which would hopefully reduce the number of freelancers who consider this a pain point.
- There have also been legislative changes that came into effect in 2019, reversing the compulsory health insurance requirement of the Affordable Healthcare Act.
- Taxes are another of the top pain points for freelancers. The situation around taxes is not helped by ongoing confusion among freelancers as to precisely what is required. Part of the issue relates to the status of freelance workers, although they do not receive any of the employment benefits, they are legally classified by the IRS as employees. However, they don't have an employer to pay their payroll tax, so they are responsible for ensuring the correct amount of tax is paid at the correct times.
- Two factors contribute to why taxes are a pain point in the freelance industry. The first is the amount of time that a freelancer needs to spend doing administrative work, a portion of which is tax-related. These are non-billable hours, so the longer the time commitment, the more likely taxes place in the pain point stakes will rise.
- The second factor is doing the taxes. The general advice is to use an accountant. But accountants can be expensive and add to financial pressure, especially when a freelance career is in its infancy. There is not additional cash needed to pay an accountant. Despite having to address two tax systems, state and federal, many freelancers attempt to do the taxes themselves, adding to the time burden. They are often unfamiliar with the requirements, and mistakes result in severe consequences. It is not uncommon for a first-year refund to become a reasonable tax bill in the second year.
- In an attempt to alleviate this pain point, the industry encourages freelancers to ensure at least they have a basic understanding of freelance tax laws. Given the increasing number of freelancers, many tax organizations are offering webinars or seminars free of charge to freelancers. At a minimum, these types of courses provide the freelancer with at least a basic understanding of the tax laws and how they apply to them.
- Many of the organizations offer packages or exclusive deals for freelancers, which can help minimize the burden, but as previously indicated, this is often unaffordable. For those that elect to do their own taxes, there is a wealth of information in the form of guides and educational material to assist in the process, while not ideal it helps. The pressure is considerable as payments based on estimates are required quarterly. The consequence of underestimating can be a huge tax bill at the end of the year. Given this, it is clear why taxes are considered a pain point.
Competing in the Global Market
- Competing in the global market is a pain point for many freelancers. The freelance market is constantly referenced as a truly global market that provides companies with access to the brightest minds no matter where they are located in the world. A pain point that is more common in developed countries, that is a result of the global market is the undercutting of rates by freelancers from developing countries.
- As the overseas markets have developed, an increasing number of freelancers in developing countries have shown that they are prepared to work for a minimal reward if it means they are able to get the project awarded to them. This has lead to ongoing frustrations among freelancers in developed countries, especially those who have limited experience working as a freelancer.
- This is a pain point for the industry, at least those outside of the developing countries who are struggling to compete with competition from a number of Asian countries. Competing with freelancers from these countries is unrealistic as the costs of living in a developed country mean that there is a point, at which it is no longer economical, and reducing the fee further will cost the freelancer financially.
- Fortunately, companies from developing countries are helping the freelancers take back some of the work they lost to the developing markets. In what is somewhat of an irony, many companies from developing countries are choosing to hire freelancers from the US and other developed countries due to a perception that the insights they offer can assist the company in getting a foot in the door in a new market.
- Time has proven that some of the freelancers offering the cheaper rates do not have the necessary technical skills of those in other markets, which is contributing to the use of freelancers from developed countries by companies from developing countries. Guatemala City based, Perinola is an example of a company that has had to adopt this approach, because despite the lower costs, they found that many of the local freelancers did not have the skills they needed to expand their operations and have elected to employ Canadian freelancers as a result.
No Paid Leave
- COVID-19 has illustrated just how important paid leave is when it comes to employment. For freelancers, this is one of the pain points they are faced with. The lack of paid leave is industry wide and known by all when they enter the industry. The ability of the freelancer to manage this pain point depends largely on the pain points already discussed.
- It is particularly reliant on the consistency of the workflow and income the freelancer is receiving. If the income is regular this presents as less of an issue, as freelancers can make plans to ensure they have funds available should they need to take some time off.
- One way that freelancers are encouraged to address this issue is by allocating a proportion of their income each pay to cover holiday periods and slow times. The reality is, it requires a level of discipline that many cannot attain and even if religiously adhered to can see all the hard work saving dissipate to nothing when there are periods where work is not available.
The US Market
- Prior to COVID-19 over 36% of the US workforce were freelancers. That equates to 57 million Americans. Companies like Uber, eBay, and Freelancer.com, and other similar organizations have contributed to the growth of this market in no small way, having presented Americans with a chance to work either part-time or as a second job. By 2028, there will be 90.1 million freelancers in the US.
- The following graphic represents the forecast growth of the US freelance market through to 2024.
- Freelance income is worth $1.4 trillion to the US economy, accounting for 4.8% of the US GDP. This represents a greater share than traditional favorites like construction and transportation.
Freelance Categories, Benefits, and Rates
- 48% of freelance jobs are paid on a project basis, while 29% were paid an hourly rate. The remainder being a combination of the two methods. The pay is often industry-specific, with some industries paying well. 31% of freelancers make more than $75,000 year. This is up from just 16% in 2014.
- Freelance writers have some of the lower rates with, 30% make less than $10 an hour in their first year. 31% of writers earn $11-25 per hour, 20% earn $26-40 per hour, 10% make $50-75% per hour, and only 9% make over $75 per hour.
- The art and design industry employs the most freelancers, with 75% of its workforce being freelance. 55% of those working in entertainment are freelancers. Construction, rounds out the top three industries, with 52% of its workers being freelance.
- From an employer's perspective, the case for the use of freelancers is strong, with companies seeing an average increase in productivity of 13% by those freelancing. This saves an average company $2,000 per year. Employers save, on average, $11 per hour on employee benefits by using freelancers.
The Freelancing Population
- The increasing popularity of freelancing has seen 30% of Fortune 500 companies looking to source their workforce through UpWork, one of the largest freelance platforms globally. Recent statistics show that 30% of large employers have said they found the perfect candidate on UpWork.
- Online freelance platforms are used by 73% of freelancers to find work. Freelancer.com, Fiverr, and Upwork have over 50 million users between them. 33% of freelancers look to referrals to find work, 15% turn to social networks, and 14% look to business focused networking sights like LinkedIn.
- Freelancing is increasingly becoming a career choice rather than a side hustle, with 28.5 million American freelancers long-term, up from 18.5% in 2004. 38% of freelancers are work full-time, up from 17% in 2014.
- Long-term freelancers have a job satisfaction rate of 84%. The average freelancer has a job satisfaction rate of 63%. Around 25% of freelancers left their job to become a freelancer, 60% are earning more as a result. Although this was often not immediate, with only 33% achieving this immediately. A further 24% achieved it within six months.
Top Freelancing Job Categories
- The top five freelancing job categories are a follows in descending order:
- Writers are increasingly used by organizations to assist in communications between the organization by way of web page material, blogs, and promotional material, for example. Recently, food, copy, and senior medial writers have been some of the more popular sub categories.
- Coming in second place is the computer and IT category with its most popular recent jobs being desktop support analyst, technical support analyst, and technology architect. This category of work covers everything from software issues to system development and building.
- Rounding out the top three is the software category. This job category designs, implements, and maintains software options for businesses. The most popular jobs in this category are mobile front end developer, WordPress developer, and senior python developer.
- Accounting and Finance is forth, with this category encompassing all jobs and roles in the average finance department. The role of clerks is expected to decrease by 4% over the next 10 years will see the number of personal advisers increase 7%. The most popular jobs in this category are accounts payable processor, accounting assistant, and book keeper.
- Finally, in fifth place is the Project Management category, which has a broad scope across all aspects of a project in a range of different fields. The most popular jobs in this category are Project Manager, IT Project Manager, and Project Management Coordinator.
- The fastest growing industries over the last ten years are healthcare with 91% growth, artistic literary and media roles with 103% growth, and sports and fitness with a growth rate of 107%.
- A total of 1.07 billion hours are spent freelancing weekly, which is an average of 19 hours per week per freelancer.
- 64% of freelancers say freelancing has given them an opportunity to earn more than they would in traditional jobs. 77% say they have more time for friends, family, and interests since they started freelancing, as a result 51% would not return to a traditional job under any circumstance. 84% of freelancers say the live the life they want as opposed to just 63% of full-time traditional job workers.
THE COLLABORATION AND SPARRING PROCESS
Enrichment of Services
- As a freelancer, many of the benefits of working in a team environment can be lost, which is why collaboration is such an important process. Collaboration provides freelancers with the opportunity to enrich their services, which have the potential to become stale when working for oneself.
- Enriching the product on offer has the flow-on effect of improving the freelancers offerings to potential employers, which can result in increased job opportunities.
- Sparring has a similar effect, in that it gives the freelancer the opportunity to maintain their mental edge, which is vital given the competitive environment that freelancers operate in.
The Importance of Collaboration
- One of the downsides to freelancing is the somewhat insular working environment. This often results in situations where a conscious effort has to be made to stay in touch with the technologies available and developments within a specific market. As a freelancer, it is easy to miss something that could have been a valuable addition to the memory bank.
- When collaborating, a freelancer creates an opportunity for themselves to upgrade and improve their skills. The skills gained from collaboration do not have to be significant to be of benefit. Something as simple as learning a new keyboard shortcut can still be of value if it improves the service
- Sometimes when a better than average job becomes available, freelancers are prevented from pursuing it because they lack experience or a qualification in a specific area. By engaging in the practice of collaboration, a freelancer has a unique opportunity to improve their skill base and create a more comprehensive service in the long run.
- The optimistic will argue that collaboration can result in an epic creation. This is a product that is developed in such a way that it bursts onto the market and creates a career-defining opportunity. Although the incidents of this fall in the less likely category, collaboration provides an additional chance that his possibility, however small, will become a reality.
Where to Find Collaborator
- While working as a freelancer, there are several ways to find a suitable collaborator. For some freelancers, finding a collaborator is more complicated than the collaboration itself. Several places can be the source of a collaborator.
- Wordpress meet ups can provide some unique opportunities as they tend to have a wide range of freelancers from a wide range of backgrounds in attendance. They also have a number of people that work in specialized or niche markets preset. These types of opportunities do not often present, so it is one that should not be passed up.
- Wordcamps are a step up from \WordPress meetings, and often bring out the stars of the industry, creating a unique opportunity to learn from the best. One of the advantages of these events is usually a live social media event is created around them, so events in different cities should not be written off as inaccessible. The social media feed can give freelancers a chance to listen to those asking the questions and identify someone who they would like to work with.
- Co working spaces were created partly new response to demand for workspaces from the freelance community. Often the areas house a range of freelancers with a range of different backgrounds. Co working spaces can create a sense of community with those who use the facility. They also host social events to develop this sense of community. Given the range of different backgrounds and skills that those in attendance have on display, it creates an opportunity for those looking for collaborators.
The Importance of Sparring
- A strategic sparring partner is defined [as someone you trust, who is able to step in your shoes given their firsthand business experience, and who understands the strategic context of your organization. You can reflect on challenges and bounce off ideas and strategies to overcome them. A strategic sparring partner will challenge your thinking, ask some tough questions and help you get to the core of the issues. A good sparring partner will even help you clarify your role in the situation by holding up the mirror for you and showing you your blind spots]
- On a number of occasions sparring is a more public affair with illustrations on display at various networking events. This is partially to give those who might not otherwise have the opportunity, the chance to observe from those that are in the top echelon of freelancers.
- There is also a social aspect to events that is important in the freelance world given that the majority of freelancers work alone from their homes. Sparring can be seen at a number of networking opportunities, and even if not one of the participants, can be of value. One commentator has gone as far as to suggest it can mean that a freelancer with a weak professional network is not insulated from valuable educational opportunities.
Expansion of a Traditional Concept
- Traditionally sparring was a practice that was used by CEOs, board members, managing directors, managing partners, and anyone else who had responsibility for an organization. It was felt the benefits of the process were most significant among those at the top of their field, who became removed from the day to day operations. It really is tough at the top, and in a number of instances, these business leaders lacked someone they could confide in or run their ideas past.
- As a result, the practice of sparring evolved, which saw business leaders using the opportunity to unburden themselves and share the weight of sensitive information in a confidential setting. It created a clarity of thought, that was not present previously.
- Research has found that the external perspective that was received from sparring created a broader knowledge base of the topics of discussion, as well as insights that would not previously been obvious to the leader had the process not been adopted. The benefits of engaging in the process on an ongoing basis were noticeable to the participants, and so the process remained popular.
- With increasing numbers of freelancers adopting a work practice that by default limits their human interactions on a daily basis, the freelance community was an obvious area for this practice to expand into and one that is slowly gaining in popularity among the freelance community.
TOOLS FOR COLLABORATION AND SPARRING
- Slack was designed to facilitate collaboration in the work environment. It is a tool that is increasingly being adopted by companies who use a number of freelancers or remote workers, to ensure the collaboration that used to occur over the course of the day in an office environment is not lost, as research had shown the benefits of such interactions.
- The tools offered by Slack are extensive. They have also developed a range of extensions and applications that can be used to facilitate the collaborative process.
- Slacks basic package is free. This includes establishing a page for the community, the incorporation of channels and real time chat options saw its popularity increase. Slack also facilitates calls via the internet between community members, which further assists the collaborative process. An integrated file transfer process, enables members to quickly and easily share documents.
- Slack had over 12 million active users in October 2019. One of its uses has been touted as connecting a remote workforce. Research company, Wonder is an example of a company that has used Slack to maximum effect, to connect its 8,000 plus analyst community. Slack enables members to communicate, get advice, offer solutions to issues, and discuss the merits of various jobs. It has enabled the creation of a virtual community with members from all over the world.
- Google Documents is a collection of office software, including word processing, spreadsheets, and slide shows. These tools are readily accessible to anyone who has signed up to Google. The documents are stored on a dedicated cloud and members are able to permission users or sent shareable links to those that need to work on the same documents.
- The documents update in real time, and multiple people can work on the same document at the same time. By having one complete version of the document in one location, it negates many of the issues that are created from the circulation of multiple documents that a range of differnentpeople are working on.
- The product has become increasingly important as the remote workforce and freelance community has evolved, allowing all parties to access and edit documents, in a way that was previously only possible through internal servers.
- Among the companies that use Google Documents is BBVA who has found the real time interaction to be fundamental in collaboration between operations in more than 30 different countries. Due to the scale, the implementation of Google Document was rolled out in stages. Despite a number of comments alluding to the benefits, no hard data has been provided by BBVA in this regard.
- Microsoft Teams is the main competition for Slack, currently offering many of the same services through its platform. In October 2019, Microsoft Teams had over 13 million users.
- Over the last year or so, it has been slowly eating into Slacks client base. It is expected the product will become even more popular, when Microsoft retires Skype later this year. Services provided through the Teams hub include, chat, video calling, and audio calling. It is designed with the freelance and remote workforce in mind. The realtime updates allow collaboration on issues and strategies with participants from all over the world.
- It is designed to be mobile friendly, which increases it popularity among users. Incorporated into the product, are email and scheduling features.
- Air France is a company that has adopted Microsoft Teams as part of its normal workflow process. It has meant that the events on ground and in the air on flights are coordinated from one central location, and all employees are able to easily access the platform, meaning the information is readily available. This has negated the complex communications, that were required to coordinate flights between ground and air staff, and created huge time efficiencies for the company.
- Zoom is the premium business video conference calling software currently on the market. The focus on customer service has seen the company grow at an unprecedented rate. Collaboration is once again at the forefront with Zooms offerings including video conferencing, webinar, conference rooms, messaging, and audio calling.
- The communication options that Zoom has developed have created an environment that lends itself to the freelance community. It enables the community to interact with each other and those working at any on site operations instantly, as if they were all sitting in the same room. The quality is excellent, so the days of trying to hear through bad lines or connections are a thing of the past.
- Uber has recognized the mobility that is associated with Zoom, and in an industry that is heavy on communication and coordination, Zoom has proved itself to be an invaluable resource. The added security features, which Zoom has incorporated, mean the company is confident in communicating sensitive information through the system. Uber described its choice of Zoom, * We like that anybody on the go can use it. We have a very mobile workforce and we don’t want to be tied down to just offices. We are everywhere, so it’s very important to have the most easy way to go and start meetings.*
- Freelancing is most popular among Generation Z, with 53% of those aged 18-22 working as a freelancer. 40% of those aged 23-38, also known as the Millennials, are freelancers, while Gen X, those aged 39-54, sees 31% of its members working as freelancers. Among Babyboomers, those aged 55 and over, 29% work as freelancers.
- Freelancers are predominantly female with a there being a 55% increase in their numbers since 2008. The growth rate for males entering the industry is 36%.
- Some studies have put the percentage of female freelance workers as high as 73%.
- 78% of freelancers are white, Asians make up 7% of the freelance community with African Americans coming in third making up 5% of freelancers.
- 80% of freelancers have a degree or higher as their primary qualification.
- Income levels for freelancers are on average higher than 70% than all professionals. The median hourly rate for freelancers is $28 per hour.
- The average wage for a freelancer in the US is $68,300. By way of comparison, the US median income is $59,300.
- There is no accurate way of estimating the number of freelances globally. By using the earnings per country to calculate the annual growth for 2019, a snapshot of the freelance industry can be captured. This data has previously been used as a basis on which to estimate the countries with the largest number of freelances.
- The countries that are home to the most freelancers are (in descending order): the US, United Kingdom, Brazil, Pakistan, Ukraine, Philippines, India, Russia, ans rounding out the top ten, Serbia.