While the “gig economy” continues to be a buzzword trend, self-employment has proven to be a movement that is here to stay. More than 40% of the U.S. adult workforce reports either currently working or having worked independently at some point in their careers, and there are now a seemingly limitless range of work options for the self-employed.
On one end is a fast-growing population of commodity workers — on-demand drivers, freelancers who help with daily tasks, or those who supplement their income by renting a spare room. This population’s quick growth, popular services, and numerous worker classification lawsuits have thrust it into the media spotlight.
On the other end of the spectrum, however, is another growing population: highly-skilled workers who provide specialized expertise in industries such as IT, biotechnology, marketing and pharmaceuticals. This cohort has turned to independent work as a flexible alternative to traditional employment.
While both of these populations enjoy the freedom, control and purpose self-employment provides, data from MBO Partners’ 2017 State of Independence in America report show levels of health, wealth and happiness are even greater among the high-earning segment of full-time independent professionals.
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High Earners Thrive
High-earning independents were once a small minority — there were just 1.95 million in 2011 — but have now risen steadily in number over the past six years. Now, one in five full-time independents, or 3.2 million, earn more than $100,000 annually, representing an impressive compound annual growth rate of 6.45%. Demand for workers with specialized skills who can complete projects on an as-needed basis is growing, enabling this population to charge a competitive rate for their services.
Because high earners are thriving as independents, they are more likely to continue to work this way. Not only do many report earning more money working on their own, but 70% say independent work is better for their health, and 84% say they are happier working on their own than in a traditional job. It is clear that this population is psychologically, emotionally, and financially satisfied. In fact, only 10% — the lowest rate yet — plan to deviate from independence and pursue traditional employment in 2017.
A Shifting Labor Market
A steady jobs market has helped to establish this stable population of high-earning independents. People who turned to independent work reluctantly, perhaps as a need to supplement their income or because they lost a payroll job, are now returning to traditional employment thanks to a strong payroll market — 222,000 payroll jobs were added just last month.
This shift has created a core group of higher-earning independents who are committed to self-employment and the accompanying lifestyle. As those who turned to self-employment out of need begin to find traditional jobs again, we are left with a population of independents who are truly passionate and devoted to their work. It has become easier for this group to find and maintain a steady pipeline of work and as demand for their expertise increases, they are able to charge more for their services.
Much of this success is due to the growing skills gap, which is proving to be a very real problem in the U.S., affecting businesses both large and small. Hiring someone for a full-time position is a big commitment for companies, one that involves finding the right person in an already scarce talent market, providing costly benefits, and dealing with the fallout if that person doesn’t end up being the right fit for the position.
Independents are thus emerging as an essential solution for many organizations as they provide staffing flexibility, access to specialized skills, and better control over employment costs. The State of Independence data suggest that companies are becoming increasingly confident in the ability of independents to deliver the expertise, services and skills they are looking for. Organizations experiencing a talent shortage should consider the population of happy, driven and motivated independent workers as a solution to fill their skills gap and work more efficiently.
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