A much publicized Freelancers Union/Upwork (FU/U) study in 2014 claimed that freelancers comprised 53 million workers representing about 34 percent of all workers; a second, recently released study finds 54 million freelancers.1 The FU/U estimate stands in stark contrast to what the Bureau of Labor Statistics (BLS) tells us: there were just 14.8 million self-employed workers in 2014 representing 10.1 percent of employment.2 Who is right?
These disparate estimates can be mostly reconciled by noting that the FU/U estimate is of anyone “engaged in supplemental, temporary, project- or contract-based work, within the past 12 months”3 and even includes people who “freelance” but do not have any 1099 income—stretching this group beyond recognition. In contrast, the BLS estimate reflects those whose primary job is or primary income comes from self-employment. Even the BLS estimate stretches the concept of self-employment because it includes people who themselves are employers: only 11.3 million self-employed persons, representing 7.7 percent of total employment, work for themselves and have no paid employees.4
As with most measurement issues, it is important to be clear what is being asked and what one hopes to measure and then examine whether the measurement is accurate. The major problem with the FU/U studies (a 2014 edition was commissioned by Freelancers Union and Elance-oDesk, which was renamed Upwork by 20155) is that the claims of a fundamental shift in “work” as more people make their living freelancing are based on data about how many people earn any income from freelancing even if they clearly rely primarily on other work to support themselves.
In fact, the FU/U survey results actually contradict their claim that freelancing as a way to make a living is rapidly expanding. For instance, although not in any of the press releases, the surveys show 1.8 million fewer independent contractors in 2015 than in 2014, an 8.5 percent drop. (Of the five types of freelancers identified by FU, “independent contractors,” defined as someone without an employer who does freelance, temporary, or supplemental work on a project-to-project basis, comes closest to the BLS concept of people obtaining their primary income from self-employment.) Plus, using the FU/U broadest definition of freelancers (all five categories) the surveys show that the share of “freelancers” in the economy was essentially the same in 2015 (34.2 percent)6 as in 2014 (34.0 percent).
Therefore, despite the hype around the FU/U freelancer estimates it is reasonable to conclude from the FU/U data themselves that freelancing is not exploding as a way that people earn their living in the U.S. today and that the share of the workforce freelancing for supplementary income is not even growing. As the analysis in the paper will show, an alternative headline for the FU/U study could easily be, “Only 12.3 percent of workers primarily rely on freelancing to support themselves,” rather than emphasizing that 34 percent of workers do some freelancing.
What’s the question the surveys answer?
To gauge whether 53–54 million is a good estimate of freelancers one must first determine what question the estimate is answering. Based on what the two studies emphasize in their opening pages, the purpose seems to be to assess how many people earn their living through freelancing, meaning how many people have freelancing as their main way of supporting themselves, their equivalent of a “job.” For instance, the 2014 study opens with the following headline and subhead:
“The way we work is changing. Gone are the days of the traditional 9-to-5. We’re entering a new era of work — project-based, independent, exciting, potentially risky, and rich with opportunities.”
The opening paragraph starts, “For the past two decades, Americans have felt a shift to a new kind of work. The traditional “full-time job with benefits” was becoming less and less common, replaced by a new gig-to-gig, project-to-project worklife. But while many could feel this shift, it was difficult to quantify.”
This description of the study’s findings and their implications focuses on freelancing as “the work” that is replacing full-time employment. Given that full-time jobs are the primary way people obtain income to support themselves it would seem the study is attempting to quantify whether more people are using freelancing as a way to support themselves.
The 2015 study maintains the same theme in its opening headline and subhead: “We have entered a new era of work in this country. Freelancing is becoming a more prevalent, viable option for workers— a trend that spans across borders, industries and occupations.”
If one presumes that work is the primary activity undertaken to generate one’s income then this opening implies that freelancing has become a more prevalent option for people to support themselves (earn a living) in the “new era.”
The two studies clearly position themselves as quantifying a shift in how people support themselves—from relying on regular, full-time jobs to freelancing. But the studies’ methodology for counting the number of freelancers does not match the stated purpose because it does not assess the number of people who primarily support themselves through freelancing. Rather, the estimated 53 million plus freelancers are anyone “engaged in supplemental, temporary, project- or contract-based work, within the past 12 months.” That is, anyone with any income generated by freelancing, whether it is their main source of income or not, is counted as a freelancer. Thus, someone with a full-time job earning a little supplemental income as a freelancer—a “moonlighter”—is counted as one of the 53 million plus freelancers. In fact, the reports so thoroughly scrounge survey participants for “freelancers” that even people who do not receive any 1099 income are counted. It may be interesting to know how many people obtain some income from freelancing—a market for Upwork or other firms— but such an estimate does not support claims about how work (how people earn their living) is changing in America.
How many people rely on freelancing as their main income source?
The FU/U surveys’ breakdowns of freelancers allow us to assess the number of people freelancing as their main source of income. The five FU categories of freelancing are presented in the text box and their numbers and shares are presented in Table 1. There are two panels in Table 1. In Panel A the FU/U survey findings are converted to numbers of people using the total labor force age 16 and older, as the FU/U studies do.7 Panel B uses total employment of those 18 and older. The panel B estimates based on employment are more appropriate. Each analysis starts from the findings regarding the share of each sample who are freelancers (e.g., the 34 percent estimate for the 2014 survey). The FU/U analysis multiplies this share by the number of people in the labor force to obtain 53 million in 2014 and 53.7 million in 2015. However, the labor force includes those who are employed as well as those who are unemployed. The convention for identifying the different types of work is to examine the number and shares of total employment, as panel B does. The data presented in panel B also adjust total employment to reflect workers age 18 or older to match the FU/U survey design (16- to 17-year-olds make up 1.1 percent of BLS estimates of total employment).8 Benchmarking against employment rather than the labor force reduces the estimate of freelancers in 2014 by 7.2 percent, from 53 million to 49.2 million.
Freelancer employment trends, 2014–15
|2014 Study||2015 Study||Change 2014–15|
|Millions||Share of total||Millions||Share of total||Millions||Percent change|
|A. Benchmarked to labor force|
|Freelance business owners||2.8||5.3%||2.5||4.7%||-0.3||-10.7%|
|B. Benchmarked to employment, 18 and older|
|Freelance business owners||2.6||5.3%||2.3||4.7%||-0.3||-9.9%|
|Memo: Share of employment (18+)|
Source: Author's analysis of Freelancers Union/Upwork (2014, p.5; 2015, p. 6)
Definitions of freelancer subcategories
Independent contractor: Did not have an employer; either owned a business and was a sole employee and freelanced or did not own a business but did some freelancing (some had and some did not have any 1099 income).
Moonlighter: Had an employer; did not have more than one employer or job but did freelance beyond primary job (did not necessarily have 1099 income).
Diversified worker: Had more than one employer or job, had 1099 income, and freelanced OR did not have any 1099 income but considered self an “independent professional” and did some freelance work.
Temporary worker: Did not have more than one employer or job; had temporary status on the one job but did some freelance work (did not necessarily have 1099 income).
Freelance business owner: Did not have an employer and owned a business that had at least one other employee; consider self a freelancer.
Source: Author’s analysis of Freelancers Union/Upwork (2014, p. 5; 2015, p. 6)
It would have been useful if the FU/U surveys identified the share of each person’s total income from freelancing or 1099 work so that the share of the sample primarily relying on freelance income to get by could be straightforwardly determined. One wonders why the surveys did not do this given the interest in the answer. Instead, to determine how many people primarily earn their living through freelancing necessarily requires judging which of the five subgroups have that characteristic.
“Independent contractors” seem to be the only freelancers primarily supporting themselves through self-employment, because they do not have any employer (though in the FU/U surveys they do not necessarily receive 1099 income). The other four categories do not capture people who primarily support themselves through self-employment. “Freelance business owners” have paid employees so they do not fit. “Moonlighters” actually have just one employer but simply do some freelancing for supplementary income (they do not necessarily receive 1099 income). “Temporary workers” have just one “temporary status” job, but do some freelancing for supplementary income (they do not necessarily receive 1099 income); according to their survey responses they do not do any work outside of their primary position (the temp job) to earn additional money. The “diversified” group is actually two segments, though there is no information about the size of each segment. Members of both segments have more than one employer. Those in the first segment receive 1099 income. Those in the second segment do not receive any 1099 income but are categorized as freelancers because each considers him or herself “an independent professional” and has done some freelance work. It is highly unlikely that this second segment primarily relies on self-employment income. As to the first segment, without knowing whether their 1099 income exceeds that obtained from their employers we can’t know whether self-employment provides the primary income source. On the whole, the diversified group does not fit the description of those primarily supporting themselves through self-employment.
The employment trends for 2014 to 2015 for each subgroup are presented in Panel B. Independent contractors, the only group that clearly primarily supports itself through self-employment, account for about two-fifths of all freelancers and fell from 19.6 million to 18.1 million between 2014 and 2015, a 7.7 percent drop. As the bottom panel shows, these independent contractors constituted 13.5 percent of all employment in 2014 but fell to just 12.3 percent in 2015. The Freelancers Union/Upwork studies’ headlines about self-employment becoming an increasingly important option for many workers do not match these data trends, nor do the data support the notion that we will soon become a nation of freelancers.
Reconciling BLS and FU/U estimates
Still open is the question of whether the FU/U survey results for independent contractors tell us something that the BLS does not. At first blush the estimates might seem close. The FU/U survey tells us that in 2014 13.5 percent of total employment (19.6 million of the 144,791,000 employed persons age 18 or older) was in self-employment as a primary source of income, 3.4 percentage points higher than the BLS estimate of 10.1 percent. The gap is even larger once one recognizes that nearly a fourth of the BLS estimate of the self-employed is made up of employers with their own paid employees. In contrast, FU/U independent contractors do not have any employees. So, the better comparison is to the 11.3 million BLS self-employed with no paid employees, who constituted 7.7 percent of total employment in 2014.9 That indicates a more considerable 8.3 million gap between the FU/U survey and BLS, or 5.8 percent of total employment in 2014.
What can explain the gap? One technical issue is that the FU/U survey asks people whether they freelanced over the last 12 months whereas the BLS estimates the number of people self-employed each month—a cross-section estimate. In 2013, for instance, the number of people who worked at some point over the year (156,987,000)10 was roughly 9 percent greater than the average employment (143,929,000) in all 12 months of 2013,11 which suggests that the FU/U estimate would be expected to be about 9 percent higher. Correcting for that would explain just 1.6 million of the 8.3 million gap.12 The only other clear difference is that the FU/U survey counts people as independent contractors even if they have not received any 1099 income. This may pump up the FU/U estimate relative to BLS.
There is much discussion among analysts that BLS may not capture all the ways that people bring in income—that many more people earn some self-employment income than what BLS captures. This may be so, but is irrelevant for discussions about the “future of work” and possible shifts in how people will support themselves. After all, there is no apparent reason to believe that BLS does not adequately capture the number of people who earn self-employment income as their primary source of income, and that is the metric that should drive any analysis regarding the “future of work.”
Based on current trends there is no reason to believe that in the near or intermediate future a large and growing share of people will obtain their main source of income from freelancing or doing gig work. The Freelancers Union/Upwork studies provide no evidence to the contrary since their claims are based on a count of freelancers that included anyone who does any freelancing, even when it is not the main source of income, and many who do not even receive 1099 income.
That does not mean that there are not important issues regarding the economic security of freelancers. Certainly any repeal of the Affordable Care Act would limit freelancer access to quality and affordable health care. There is a growing interest in providing portable benefits for freelancers and other types of workers. There is also the desire to help freelancers get paid for their work and paid in a timely fashion, an issue raised by a New York City Council bill that the Freelancers Union backs.13 Freelancers definitely need an advocacy group such as the Freelancers Union.
But any assessment that self-employment has been stable does not speak to whether employee misclassification as independent contractors has risen.14 Blue-collar construction workers on major federal public housing projects who are inappropriately and illegally treated as independent contractors—as recently documented in the award-winning McClatchy series15—probably don’t respond to BLS surveys by answering that they are self-employed. Nor should an analysis of self-employment minimize the growth in overall nonstandard work and the fissuring of the workplace,16 including the spread of subcontracting to shield major firms from liability for shady employment practices and from the demands of low-wage workers. There needs to be attention to all of these issues and to the larger question of how to generate robust wage growth. Hype about freelancing and gig work limits our focus and perhaps distracts from these broader issues.
About the author
Lawrence Mishel, a nationally recognized economist, has been president of the Economic Policy Institute since 2002. Prior to that he was EPI’s first research director (starting in 1987) and later became vice president. He is the co-author of all 12 editions of The State of Working America. He holds a Ph.D. in economics from the University of Wisconsin at Madison, and his articles have appeared in a variety of academic and non-academic journals. His areas of research are labor economics, wage and income distribution, industrial relations, productivity growth, and the economics of education.
1. Freelancing in America: A National survey of the new workforce, Edelman Berland (commissioned by Freelancers Union and Elance-oDesk), 2014; Freelancing in America: 2015, Edelman Berland (study commissioned by the Freelancers Union and Upwork), 2015. The data from the 2015 online survey of 7,107 U.S. adults were collected July 30 to August 14, 2015.
2. Author’s computations of BLS data on self-employed, both incorporated and unincorporated, and total employment.
3. “Freelancing in America: 2015: Results Deck,” Edelman Berland (study commissioned by the Freelancers Union and Upwork), October 1, 2015.
4. Lawrence Mishel, “Claims of an exploding gig economy are contradicted by the lack of growth of self-employed workforce,” Economic Policy Institute Economic Snapshot, October 28, 2015
5. Freelancing in America: A National survey of the new workforce, Edelman Berland
6. Author’s analysis of FU/Upwork survey results, in Table 1 of this report.
7. The FU/U survey sample includes respondents age 18 and older but the survey benchmark is the labor force, which captures those age 16 and older.
8. Table 1 uses the FU/U estimates of the number of people in each category as presented in each year’s study, which sum to the total, to compute shares of the total. Panel B uses the shares estimated in Panel A and the total employed (18+) to compute the number of people in each category.
11. Bureau of Labor Statistics, “Household data annual averages: 1. Employment status of the civilian noninstitutional population, 1944 to date” (online data table).
12. The latest data are for 2013. The number of workers with any work experience in 2013 was 156,987,000 whereas total employment, on average across the 12 months, was 8.3 percent less, 143,929,000. If the 19.6 million independent contractors estimate for 2014 was overstated by this then it would be 8.3 percent, or 1.6 million, less.
13. Chester Soria, “New York City Council bill would fine, jail employers who stiff freelancers,” Metro US, December 7, 2015.
15. The Sidney Hillman Foundation, “McClatchy & ProPublica win October Sidney for exposing multi-billion dollar tax fraud by worker misclassification,” October, 2014.
16. In his book The Fissured Workplace, published in February 2014, David Weil explains how the strategy of large corporations to split off functions that were once managed internally has led to stagnating wages and benefits for workers.