FDN LIFE >
EARN YOUR SHARE OF $1.3 TRILLION OF THE GIG ECONOMY
- FDN Life
- May 8, 2019
- 5:02 pm
- ISSUE NO: 01 > MAY-JUNE '19
- THE GIG ECONOMY
Gig Economy
Gig economy
Gig Economy
GIG ECONOMY >
“With all the opportunities currently available in the gig economy, its time to earn your share of this $1.3 trillion giant.”
Quite a lot!
Of the good kind and not so pleasant, as can be expected in an industry that doesn’t adhere to the principles of financial stability, job security and guaranteed pension payouts. But then again, which industry or career can provide long-term security and stability these days?
The horoscope for freelancers, digital nomads and location independents (remotes) have increasingly shown an upward and favorable trajectory over the past 10 years, but nothing compared to 2018-2019 as the world stood witness to a startling rise of job quitters – a reported 40 million US employees resigned in 2018 – rising from 38.2 million in 2017. (US Bureau of Labor Statistics). The rest of the world didn’t fare much better.
‘This strange phenomenon’ (apparently) has left many companies, employers, and recruiters around the globe with hands in the hair as to strategies to retain employees. The 2018 Job Seeker Nation Study, conducted by Jobvite, found that although some individuals were happy in their careers, 82% of them were open to new opportunities and would resign if the opportunity came along. 40% said they would probably hold 4 – 6 jobs during their working lives, with 13% of younger employees reporting the lack of growth opportunities is what made them quit. Interestingly, 10% of female job seekers said they left their job because of the lack of work-life balance, compared to 6% of men.
Job quitting is especially popular among Millennials and Gen Z where more and more are leaving their day jobs and shunning social security benefits to take on the challenge of either a location independent career or business from home. To FDN’s, these statistics come at no surprise. Many FDN’s had quit their day jobs already or believe they might do so in the future. What is interesting though, is the concern expressed by world government bodies, federal bureaus and tax authorities about the inability to track precisely how many gig workers there are. (Who can be classified by any title ranging from freelancer, digital nomad, remote, side hustler, contractor, temporary worker.) An article by Eurofound illustrates their concern at the new dynamic and often untraceable environment the gig-economy is creating, as follows:
“There are concerns about those working in the gig economy in terms of their risk of job precariousness due to factors such as unstable working hours and income, lack of coverage of employment rights, uncertainty around social security and pension, and the lack of access to career development and training.” (EuroWork – 23 March 2018)
Though some aspects of the listed concerns above ring true for many FDN’s, pointing to the lack of access to career development and training, among others, is a laughing matter; as is pension and insurance. (As if FDN’s don’t have the options to private or personal pension and insurance schemes.)
Most FDN’s also said the inability to advance in their career to be one of the chief reasons for quitting their job, and that once they became independent, their skillset increased at a much faster rate than if caught up in a 9-5 job.
THE NUMBERS DON’T ADD UP
There seems to be confusion as to how many FDN’s operate in the gig economy. The US Bureau of Labor Statistics published a report on 7 June 2018 stating that an estimated 16.5 million US citizens now form part of the gig-economy; those that could be tracked anyways. Forbes instead, reported 57 million US workers to form part of the gig economy; 36% of the current US workforce. But a study by McKinsey Global Institute (2016) says the numbers are closer to 68% and that the government is grossly underestimating the number of independent workers. (U.S. data from Independent Work: Choice, Necessity and the Gig Economy, McKinsey Global Institute, 2016)
The difference in numbers is because nobody really knows how to define the gig-economy nor how to measure it. Is an Uber driver a freelancer or a contract worker? How many FDN’s report their income? How do we know how many of the 40 million US citizens that quit their jobs in 2018 are now FDN’s?
When we look at the number of gig workers on a global scale, it becomes even trickier to estimate how many individuals form part of it. McKinsey’s 2016 study found an estimate of 20 – 30% of the working populace works independently. That’s roughly 162 million. These statics although include part- and full-time independent workers, side hustlers and those who tried once or twice but returned to a 9-5 job eventually.
COMPANIES HIRING FDN’S MORE THAN EVER
Upwork conducted a study in 2016 and found that 59% of US companies are now employing a flexible workforce; albeit to some degree. Though the accuracy of the study conducted by a platform needing to promote itself as the freelance platform of choice is questionable, most experienced FDN’s have reported they are indeed witnessing a more significant number of profitable and high-end companies posting projects on freelance and location independent platforms compared to 2-3 years ago.
One of the chief reasons is, of course, the ability to save on overheads but also facing the fact that the future of employment is forever changed and morphing into an online, location independent one. With employees quitting at an all-time high, perhaps most companies have now realized its easier and less of a struggle to hire a location independent that need to earn money for a living. The pressure to earn and the self-declaration of most FDN’s that they are now doing what they love, has proved to be a winning combination for both companies and FDN’s. Location independents are often more dedicated to complete and deliver a project, adhere to deadlines, and don’t need supervision or continued reprimand if wasting time at the office.
Of course, such cannot be said of all FDN’s, but for the most part, an FDN only earns as much as the effort they exhibit. This adds pressure to find and please clients with quality work to earn that 5-star review.
Companies hiring location independents are great news! As more and more companies realize its easier to be flexible and hire location independents, the easier to gain the trust of a prospective client and earn while at home or traveling. A market that should definitely be explored by FDN’s this year via contacting companies in person.
What worked yesterday doesn’t always work tomorrow. One characteristic of the FDN industry is its tendency for change; sometimes even overnight.
FREELANCE PLATFORMS TIGHTEN THE BELT
Some of the biggest news in freelance circles left many a freelancer red in the face. When one prominent platform (we all know which one) announced that bidding ‘Connects’ will no longer be free but charged at $0.15 per Connect, freelancers who earned their sole living from the platform fired up social media for days in dismay. Considering most projects require two Connects, and the platform already earn 20% (<$500 project), 10% (>$500) and 5% (>$10,000) fees from projects their freelancers work on, this was no easy pill to swallow for most. Compare that to the $0 fee clients pay to post a project or the 3% processing fee they commit to only when eventually funding their project.
Disguised under the umbrella of concern for the wellbeing of their clients and that there were too many bids being placed on a single project, the move was justified. But is things really as clear-cut as this?
Rarely. Understandably many freelance platforms have seen an increasing number of alarming issues appear that affect client experiences, such as:
1 – Too Many Bids: Clients that receive a large number of proposals on their projects get lost in trying to find the best freelancer and don’t know which one to choose. Ultimately, no one is hired.
2 – Not Qualified: A large number of freelancers were marked as ‘not qualified’ or ‘not experienced enough,’ by the client.
3 – Overpromising: Clients closed down projects on freelancers who couldn’t provide what they promised or who didn’t adhere to deadlines.
4 – Unclear Payment Terms: Clients are often caught unawares when having to pay the freelancer more than agreed upon or expected; especially when working hourly via time trackers.
5 – Disappear: The client is left high and dry with their project half-done, and the freelancer seeming to have fallen off the face of the earth.
6 – Communication: The inability to understand the freelancer and communicate effectively and clearly, leads to miscommunication and both parties parting on bad terms.
From the freelancer’s perspective, there seems little protection against:
1 – Fake Projects: Clients posting fake projects and spamming the platform. (Perhaps the same rule of a project posting fee should be imposed on clients, right?)
2 – Unresponsive Clients: A large chunk of clients become unresponsive for months, leaving the freelancer hanging and waiting to be paid.
3 – Not Getting Paid: Even more alarming is the number of clients who promise to fund a milestone or payout time tracked, but then disappears with the completed work submitted under the disguise of, “I need to see the work first.”
4 – Underpaid for Quality Work: Probably the most worrisome aspect of the freelance industry is the low rates.
5 – Communication: Freelancers said clients often don’t know how to give proper instructions or to communicate what they want or need.
Is there a way to navigate past the increasing number of requirements, profile approval processes and fees imposed on freelancers to bid on projects in the freelance world?
There always is. Having to pay for bids is not necessarily a bad thing. It eliminates some of the competition since some freelancers will now have to think twice before bidding on any project.
A positive for serious freelancers who sometimes feel overwhelmed competing against 50 – 80 others on a single project. On the flip side, a platform that charges $0.15 per bid will earn roughly $60 million per month in revenue if all of its 12 million freelancers each purchase $5 worth of bids every month.
FIND CLIENTS PRIVATELY
Should freelancers solely rely on freelance platforms?
Successful FDN’s we interviewed in this issue emphasize the reliance on a single platform is dangerous. Most or all of them use a combination of freelance platforms, LinkedIn, cold emailing / -calls, and their personal website to land new clients. To stay competitive and not fall into the trap of solely relying on freelance platforms, learn other methodologies to finding quality clients.
Try any or all of the following:
• Networking
• Self-Promotion
• LinkedIn
• Email
• Cold Calls / -Email
• Personal Website
• Social Media (FB, Twitter)
THE FND ‘INDUSTRY’ CHANGES RAPIDLY – KEEP UP
What worked yesterday doesn’t always work tomorrow. One characteristic of the FDN industry is its tendency for change; sometimes even overnight.
“Applied with the same cover letter for years and all of a sudden not landing any clients?”
The FDN world morphs, grows and evolves like a caterpillar into a butterfly only to eventually die off and start the process all over again.
To keep up with the changing environment of freelancing, remote and location independent work, FDN’s will need to continually track what is working and what is not in their businesses. Stay on top of changes in legislation, standards of operation on FDN work platforms, and how companies are adapting and choosing to work with FDN’s.
Furthermore, learn from client experiences and how clients adjust to new and changing work and financial climates.
ENTREPRENEURSHIP IS EVOLVING
Where entrepreneurship in the past focused on business ownership and eventually registering the business as either a private limited or public company, FDN’s tend to choose the solo entrepreneur route.
They work on their own or sub-contract others. Especially millennials and Gen Z are using their skills to earn a living through either freelancing, starting a side hustle or becoming location independent.
FIRST LEGISLATION FOR FREELANCERS!
Finally, after all these years there is some effort being made to help and support freelancers. A new law was passed in New York City in 2017 to help and support freelancers earn due payments.
Titled, “Freelancing is Not Free,” the law provides protection and support to:
• A written contract,
• Timely and full payment,
• Protection from retaliation.
Read the Law here.
Hopefully soon, legislation in other countries will catch on, not just for freelancers, but everyone working in the FDN and gig economy.
EXTROVERTS & INTROVERTS BENEFIT ALIKE
The ability to work and earn online does not favor only extroverts or introverts. Since most gig workers use the Internet to make a living, it doesn’t matter if you are an introvert or extrovert.
CO-WORK SPACES ARE ON THE INCREASE
Around the world, the co-working industry is morphing into a giant in itself. Everywhere co-work living and workspaces are popping up to accommodate the needs and requirements of FDN’s. Co-working space is especially popular among traveling FDN’s and extroverts who enjoy collaboration and a social work-life balance. FDN’s who own hotels, hostels, resorts or lodges can consider setting up a co-work space somewhere on the property to attract and accommodate the needs of fellow FDN’s.
A PLATFORM FOR EVERYTHING
Nomad Health connects freelance medical professionals with hospitals and practices, while AFM Entertainment caters to freelance musicians and connecting them to clients who require a musician for a concert, event, orchestra or even wedding gig. Others such as Toptal, Kolabtree for scientists, FreeeUp for Filipino freelancers, Pangara for software developers, and Flexing It – are only a handful of platforms dotting the online landscape. With all these options available, there is no reason for FDN’s to be without work in 2019!
WILL FDN’S START TO INCORPORATE MORE OFTEN IN 2019?
Though many FDN’s said they prefer to operate solo, the benefits of incorporation cannot be denied. Incorporation means easier access to funding, tax exemptions and limited personal liability in the case of limited company registration.
Unfortunately, at the time of this publication, there isn’t any indication yet that a new business type will be introduced to support the work-lifestyle of FDN’s, especially location independents and DN’s who are not interested in a private limited or public company business model. Most countries only support brick-and-mortar type business models where a physical office address is required, as well as local employment requirements between 40% – 60% (usually). As most FDN’s have found out, these business types are not suitable to the FDN business model that employs mostly freelancers and focus more on equal employment opportunities.
Are there loopholes and ways to work around these? Definitely. FDN’s interested in incorporating their businesses are advised to consult a professional, such as lawyer and accountant, before registering.
LONG-TERM ACCOMMODATION
Though a more significant number of long-term accommodation (long-term here referring to 1– 6 months) options are available to FDN’s, the fees for such long-term accommodation is still charged mostly via day rates by most institutions. Being one of the biggest expenses to FDN’s, 2019 will hopefully see more and more accommodation options opening up at a per month rate. FDN’s interested in renting accommodation for anything from 1 – 6 months should look at apartment and home rental, or negotiating with a property owner for a better rate if staying more than 30-days.
ACCOMMODATION HOP & SWOP
Other trends among FDN’s – especially digital nomads – are house swops and accommodation hopping. With accommodation becoming more and more expensive, more FDN’s will be looking at cheaper options this year.
MORE PAYMENT OPTIONS & LOWER FEES FOR FDN’S IN 2019
Payment platforms such as Deel and AND.co is taking the hassle out of getting paid. FDN’s no longer have to worry about a client disappearing without paying. Both platforms support the setup of milestones, fixed project fees, and offers the withdrawal of money painlessly and effortlessly.
Fees are dramatically lower than on freelance platforms, which means FDN’s can now take their business private but still get paid via a trusted payment system. An added benefit is the ability to create and sign a contract. A much-needed feature in the FDN’s online world.
UPWORK GOES PUBLIC
Upwork took its once privately-owned company public at the end of 2018 and started trading on the NASDAQ on 3 October 2018 at $15 per share.
Why would a freelance platform go public? Simple. Money, more money and power. There is a lot of money to be made once going public, not talking about sending a clear message to the world of economics and government. “No. Freelancing is not a fad but here to stay. And we are going to grow like crazy. Watch out!”
That’s all great, but to freelancers, all the buzz about going public might mean troubled waters ahead with more restrictions. With the pressure mounting to continue growing and keeping investors happy, it means Upwork might need to generate more of the green stuff from the wallets of freelancers and clients. At FDN Life we predict a change of freelance service policies in 2019, together with money making tactics employed to fuel the company’s growth.
There will probably be an increase in fees (or changes to fee structure), and if not, implementation of alternative income generating methodologies such as we have already seen with the shift in policy to now charge freelancers for every Connect – taking effect on 1 May 2019.
“Experts estimate the freelance workforce is growing at such a rate that by between 2020-2027, half of the US workforce will be freelancers”
NUMBERS ARE GROWING
Experts estimate the freelance workforce is growing at such a rate that by between 2020-2027, half of the US workforce will be freelancers. (From 2005 to 2015 the gig economy grew from 10.1% to 15.8 % according to NACo). Though the growth in other countries around the world is happening at a slower rate, countries in Asia and Europe has seen a dramatic increase of especially stay at home freelancer who benefits from working with foreign clients. In the European Union, freelancers are now the fastest growing group in the labor market, says IPSE. There are now double the number of freelancers compared to 14 years ago (2000-2014).
With the rise of better technology and Internet connection worldwide, (especially in third world countries), expect to see a surge in global FDN figures going through the roof by 2025.
WHAT IS THE GIG-ECONOMY WORTH?
Though hard to predict on a global scale, studies by MBO partners and the Freelance Union+Upwork calculated the gig-economy – with freelance at the forefront – is now a $1.3 trillion giant in the US alone.
By 2025, the freelance and gig-economy are said to grow to roughly $2.7 trillion (US). With numbers this high in the US, imagine what figures on a global scale are like?
$100 to $220 trillion?
No one is currently sure since conclusive studies on the impact and financial growth of the gig-economy have yet to be conducted on a global scale. But we are sure it’s going to be inspirational enough to get every FDN excited about the financial possibilities this year holds!
THE GIANTS BELLY IS OVERFLOWING
With all the opportunities currently available in the gig-economy, its time to earn your share of this trillion-dollar giant. Don’t sit back; this is not the time to relax. One of the biggest opportunities the world had ever seen is available at the footsteps of those FDN’s willing to grab at it.
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3 Responses
Good article mari. I didnt know the gig economi was worth over trillion usd. I was wondering how someone like me who never been a feeelancer can start yo get clients? I still have my 9-6 job because im to scared t quit and it dont work if i start my gdesign business….
Good Morning Angela. Glad you liked the article and found it helpful. Its true that the gig-economy is growing rapidly with more and more money being poured into developing location independent work and gigs. Although, there are also more and more people getting into either freelancing or location independence, so now more than ever its very important that you prepare yourself for success. From my own experience in starting out as a freelancer nearly 12-years ago now, the best thing to do if you want to become a freelancer is to just start. You don’t have to quit your job, but you can start taking on gigs in your spare time. Example, if you want to get into graphic design but have never worked with design software yet, start by doing course. You will need to learn graphic design skills. Its also important thought to learn marketing and sales skills, and how to communicate with a prospective client. There are many free video’s or courses that you could follow to learn all you need. Ill send you a personal PM later on with some more info. Hope that helps to get you started. Have a great day!
Good to know. Hope this year I make more money