5 Major Ways Freelancers Will Change the Economy by 2040

THE 9-TO-5 JOB IS DYING. BUT WHAT WILL AN INCREASINGLY INDEPENDENT WORKFORCE MEAN FOR THE ECONOMY?

By 2040, the American economy will be “scarcely recognizable,” according to a new report published by the Roosevelt Institute and the Kauffman Foundation.

We’ve seen glimpses of the looming changes already: freelancers now make up 34%—that’s 53 million people—of the U.S. workforce, according to a 2014 survey by Edelman Berland. In the next 25 years, this shift will accelerate in a major way towards entrepreneurship, independent contracting, and “peer-to-peer” work on platforms like TaskRabbit. Additionally, there will be major diversification of entrepreneurship as new platforms like crowdfunding and relocalized production become increasingly popular.

As traditional jobs wane, there will be some growing pains. “It’s going to put major strains on our public fiscal system,” says Dane Stangler, vice president of research and policy at the Kauffman Foundation. “We’ve built all of our massive entitlement programs—whether it’s social security for retirement or health care systems or unemployment insurance or whatever—around this notion of a fixed job.”

As we veer from this traditional work model, Stangler says the government will end up losing major payroll taxes, and that’s going to create challenges for our fiscal system unless some “very significant policy adaptations” are made.

He warns: “There’s a whole ripple effect if this is going to be an actual and growing part of the economy.”

The report, which includes insights from 30 economists, technologists, policy makers, and entrepreneurs, focuses on four main topics: the future of work, the future of technology, the future of entrepreneurship, and the future of inequality. Below are five changes to expect from America’s next economy:

1. WORK WILL CONSIST OF MANY “SHORT-TERM” ASSIGNMENTS

It used to be that having a job meant security and success for Americans. Since the recession, the idea that a good job is the centerpiece of the “good economy” was proven wrong, as people realized having a good job doesn’t equate to job security.

By 2040, the job market will consist of part-time assignments, portfolio careers, and entrepreneurialism. Instead of day-in, day-out work consisting of much of the same responsibilities, a “career, then, will be composed of thousands of [short-term] assignments spread out over a lifetime,” says the report.

In other words, workers will work on short-term assignments ranging from several days to multiple years, and will become employees for their own firms. As this becomes the norm, the vast majority of job growth in 2040 will come from small businesses.

2. THERE WILL BE MORE PLATFORMS AIMED AT MITIGATING ECONOMIC RISK

As traditional jobs—with their health insurance, retirement planning, and tax withholdings—disappear, we will see more platforms and institutions develop to help workers and their families manage exigencies and mitigate risks. These platforms will meet needs in three distinct categories, according to the report:

1. Offer new means of marketing and selling goods and services, like Etsy does with handmade crafts.

2. Provide ways for workers to learn about new assignments, to qualify for and schedule assignments, to collect payments, and to meet such needs as health care, insurance, pensions, child care, and elderly care, like Task Rabbit.

3. Offer training and education programs for workers to connect with the larger market.

3. THERE WILL BE MORE TALENT AGENCIES LOOKING FOR THE STANDARD WORKER

In the past, talent agencies were reserved for performing artists and athletes, but in the next economy, talent agencies and headhunting firms will start to play a bigger role in the lives of the everyday professionals looking to further their career. The report says:

There is not a single model or clear linear path along which the platforms of the new economy will evolve, but it is evident that the profoundly different nature of jobs and work in the emerging new economy will require profoundly different platforms for organizing work and careers.

4. SMALL-BUSINESS GROWTH WILL LEAD TO A BOOST IN WAGES

The rise in self-employment will inevitably increase wages (think: you’re no longer suffering under an underpaying employer). Additionally, as the aging population retires and with a birthrate below replacement, the labor supply will decrease, which will also play a role in boosting wages.

While immigration can help meet new labor demands, it’s unlikely to stall wage growth, according to the report.

5. EVERYONE IS RESPONSIBLE FOR THEIR OWN SUCCESS

Sure, you’ll be free from an underpaying employer, but this also means your career success relies solely on you.

The report says:

In particular, workers will be forced to think constantly about their next assignment, the skills required for that assignment, and the education and credentials required to gain those skills.

There will no longer be specific guidelines or career ladders to guarantee a career trajectory. Instead, workers will have to be savvier than their predecessors, because life has gotten much more complicated.

To be successful, individuals will have to be more entrepreneurial in thinking and planning their lives, meaning constantly selling themselves, defining one’s own work, and educating themselves for future assignments. In the next economy, work may be more lucrative and fulfilling, but the idea that you’ll be professionally rewarded because you’ve been loyal to a company will be a thing of the past.

This article was originally posted on Fast Company.

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Why the Freelancer Economy is on the Rise

HERE’S WHY THE FREELANCER ECONOMY IS ON THE RISE

TWO TRENDS ARE HELPING INDEPENDENT WORKERS LAND MORE WORK, AND TACKLE IT MORE FLEXIBLY, THAN EVER BEFORE.

As of May 2015, 15.5 million people in the U.S. were self-employed, according to the Bureau of Labor Statistics—an increase of roughly 1 million since May 2014. That number is expected to keep growing at a steady clip. By 2020, a separate study estimates that more than 40% of the American workforce, or 60 million people, will be independent workers—freelancers, contractors, and temporary employees.

Increasingly, contractor positions are being held by the best and brightest. Harvard Business Review recently called this phenomenon “The Rise of the Supertemp.” These days, even professionals like attorneys, CMOs, and consultants with world-class training are choosing to work independently.

There are many reasons why independent work is on the rise, from shifting economic conditions to corporate downsizing and employee dissatisfaction. But two things have slowly fueled the trend in a much bigger way, lowering the barriers that once made independent contracting much more challenging.

NEW PLATFORMS FOR PAIRING TALENT WITH BUSINESSES

There are now more ways to work remotely than ever before, from devices, apps, and other personal technology that lets us communicate with one another from virtually everywhere. But there’s another kind of technology that plays an arguably bigger role—platforms designed to match companies with talent.

One of the biggest hurdles for most contractors is business development and filling their project pipelines. Some 35% of respondents in a recent survey by Contently, which matches independent writers and businesses, said that securing enough work was their biggest daily obstacle. But new online marketplaces are launching in a wide range of categories, helping talented freelancers to find jobs in their chosen fields.

I recently visited the Contently offices in New York City and saw how its growing business model and technology platform are pairing brands with journalists, writers, and storytellers. Without it, many such partnerships wouldn’t have been available to either the freelancers or the companies now working with them.

HourlyNerd is a similar platform, designed by Harvard MBA students to connect companies with talented business consultants. The community lets businesses compare consultants’ profiles to those who correspond with their needs. Users can bid on projects within HourlyNerd’s platform, making it a flexible option to find qualified independent partners.

CO-WORKING SPACES IN MAJOR CITIES

It’s not uncommon for independent workers to feel isolated. But the rise of co-working spaces in top urban centers is changing that, offering freelancers unprecedented support and resources.

Co-working spaces are providing more than just a sense of community that comes from working around others. WeWork, for instance, is one of the most popular providers of workspace for independent contractors, and it’s expanding to major cities around the world. The company has raised the bar in part by focusing on creating a collaborative ambience you’d find at any cutting-edge startup. WeWork spaces even boast arcades, fresh fruit, and beer on tap.

There are of course more traditional perks, too. More than 150 WeWork partners offer services like human resources, web consulting, and accounting help—removing some of onus on freelancers to do everything themselves. And in case you think co-working spaces are an unnecessary luxury or just a passing trend in the freelancer economy, remember that WeWork was recently valued at $10 billion.

THE FUTURE OF FREELANCING

Talent-matching platforms and co-working spaces are just two leading trends behind a freelancer economy that’s growing more robust by the day. Other models and services are bound to spring up to bridge more gaps between consultants and companies in more flexible ways than ever before.

And of course, the rise of independent work isn’t just a boon to independent workers, either. It also allows businesses to find more targeted and better qualified talent to address their needs—typically at lower costs. Rather than bringing someone in full-time, with benefits and a salary, a company can hire a consultant who’s ideally suited to a particular project. And that consultant is likely to have more resources to tackle it than at any time before.

It’s worth remembering the new freelancer economy isn’t about “temp” labor. Independent workers are increasingly strategic, experienced, and professional. They want more flexibility than a traditional employee, and in many cases they’re getting it.

 

Author: Brendon Schrader is founder of Antenna, a Minneapolis-based marketing firm that delivers experienced marketing professionals to companies of all sizes. Schrader is a member of the Young Entrepreneur Council (YEC), an invite-only organization of the world’s most promising young entrepreneurs.