The pandemic could be turning the gig economy white-collar, if this summer's new freelancers are any indication

Carlina Teteris/Getty ImagesMore high-skilled workers entered the gig economy this summer than in normal years.
  • Upwork released a report that found 24% more people decided to enter the gig economy this summer than in a normal year.
  • Adam Ozimek, Upwork’s chief economist, said in a blog post that the widespread switch to remote work this year was a boon for freelancers.
  • Freelancers also have the benefit of working for several different clients, Ozimek said, meaning they aren’t reliant on one company to stay afloat.
  • The data suggests that the pandemic may lead to more highly skilled workers entering the gig economy. Companies that may not have the resources to bring white-collar workers back full-time could employ more contractors, executive recruiter Joe Mullings previously told Business Insider.
  • Also, the US Department of Labour said on Tuesday that it will soon propose a rule that would make it easier for companies to classify workers as independent contractors.
  • Visit Business Insider’s homepage for more stories.

As job growth still hasn’t made up for the sweeping unemployment caused by the COVID-19 pandemic, some Americans have decided to pick up freelance gigs in lieu of a full-time job.

A new report from Upwork, which connects freelancers to jobs, found that 24% more people decided to enter the gig economy this summer than in most normal years.

The company conducted an online survey of 6,001 adults between June and July 2020 (the seventh year Upwork conducted this survey). “Normally, around 10% of freelancers have started freelancing sometime in the last six months. However, at the time of the survey in June-July 2020, 34% had started since the onset of COVID-19 in early March,” per a blog post by Adam Ozimek, Upwork’s chief economist.

The “gig economy” — or the segment of the labour force that works on short-term or independent contracts — isn’t just made up of Uber drivers. Freelance workers aren’t full-time employees for the companies they work for, in the same way app-based drivers are not, and thus don’t get benefits like healthcare or paid time off from their jobs.

Upwork found that the number of full-time freelancers grew by 2 million in the last year. The 59 million Americans who report freelancing full-time now make up roughly 36% of the overall US workforce. Last year, Upwork estimated that freelancers comprised 35% of the workforce.

Though the proportion of freelancers in the workforce hasn’t changed much, people who opted into the gig economy increased more than usual. About 34% of survey respondents who freelance said they had started to during the onset of COVID-19 in early March. In other years, just 10% of respondents said they had started freelancing within the prior six months, according to Ozimek’s blog post.

Those who said they started freelancing during the pandemic are more likely to be younger, men, caregivers, with higher levels of education, and from cities. Plus, 36% of freelancers said they do so full-time, an 8% increase from 2019.

The top two occupations new freelancers entered into were computer engineering and business operations.

How the coronavirus pandemic might expand the gig economy

Ozimek said the country’s switch to remote work this year helped the freelance workforce, which has “always been disproportionately remote.” Freelancers also have the benefit of being able to work for several different clients, meaning they aren’t reliant on one company to stay afloat.

“While freelancing on net has increased only slightly this year, the dynamics of 2020 suggest the share of the labour force engaging in freelancing in the future may be higher,” Ozimek wrote in a blog post.

The Upwork data suggests that pandemic might usher in a new era of gig work. Joe Mullings, an executive recruiter who has worked with Google and Siemens, said the pandemic may usher in an “interim economy” where employees need skilled workers but won’t have the resources to bring them back full-time, leading to more white-collar workers entering the gig economy.

Trump’s Department of Labour, which has favoured companies classifying workers as independent contractors in the past, told reporters on Tuesday that it will soon propose a rule to make classifying workers as independent contractors easier for companies, Reuters reported.

Though some freelancers have told Business Insider they prefer the flexibility of self-employment, experts say independent contracts strip workers of the rights to unionize. Since they aren’t employed full-time, they not only lose out on company benefits, but can’t collectively bargain for higher pay.

“A labour market and economy that’s more and more made up of these independent contractors is all the more one where you’re gonna have lower pay, stagnating wages and growing earning inequality,” David Weil, former Wage and Hour Administrator for the Obama administration previously told Business Insider. Weil, also the author of “The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It,” said this would exacerbate “all the things we’re grappling with right now” in the labour market.

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