Though often viewed as the less desirable option due to a lack of benefits or job security, freelance or contract work, whereby self-employed individuals sell their services to clients they are not employees of, makes up a considerable percentage of the workforce. According to a survey conducted by freelance platform Upwork, 36% of the labor force freelanced in 2021.
Skilled freelance work (e.g., computer programming, writing, design, marketing, business consulting, etc.) is steadily rising in popularity while gig work (i.e., temporary unskilled freelance work) is declining. From 2019 to 2021, the number of freelancers offering skilled labor or services rose by 8%. This trend is likely to continue as 56% of non-freelancers say they are likely to freelance in the future.
Importantly, workers who have made the shift are happy with their decision. For example, among skilled remote freelancers, 76% prefer contract work. Understanding why they do is critical for companies looking to avoid losing their talented employees to contract work. The most significant factors include:
- Flexibility: 78% of freelance workers surveyed by Upwork stated they prefer contract work because it provides them with greater control over their schedules, while 73% cited the ability to “work from a location of [their] choosing.”The solution for employers is simple. They must offer more flexibility. Fortunately, many companies are doing just that. According to the 2022 Employee Wellness Industry Trends Report, employers are relying on flexible arrangements to help their employees address a wide range of needs. For example, 73% of the brokers surveyed said flexible work schedules are one of the top three benefits their clients are using to prevent burnout, and 76% said flexible arrangements are used to support caregivers.
- Meaningful work: According to the Japanese concept of Ikigai, purpose is found at the intersection of: (i) what one is passionate about, (ii) what they are good at, (iii) what they can be paid for, and (iv) what the world needs. Given that freelancers often work for multiple companies of their choice on projects they care about, they have an advantage in finding meaning in their work. That’s why 73% of skilled remote contractors surveyed by Upwork say they freelance “to be able to choose what [they] are passionate about or find meaningful.”
Companies must identify and clearly articulate their purpose so employees can readily determine how their work directly contributes to the greater good. Employers should also ask workers whether there are causes or missions they’re passionate about and determine whether their roles can be modified to better suit their values.
- Authenticity: Authenticity refers to one’s ability to express and act upon their genuine beliefs, feelings, and values. In many cases, this ability is reduced in the workplace where employees are expected to abide by company norms or culture, which may or may not align with their authentic selves. This may be why 68% of contract workers say they freelance because “it allows [them] to work in a more open environment where [they] can be [themselves].”
There are several steps companies can take to compete with the high levels of authenticity that freelancing affords. For one thing, they can offer as much remote work as possible, so workers feel less bound by parts of the culture that feel restrictive. They can also take active and strategic control of their cultures, modifying their norms, beliefs, and behaviors to allow greater levels of authenticity. Another option is to make culture a more robust consideration in hiring practices by looking for individuals whose genuine beliefs and values align with or complement the company’s culture.
- Mental stimulation: In an interview with The Wall Street Journal, healthcare process-management expert Krish Venkata states, “I’d be bored if you gave me a full-time job now.” His sentiment aligns with 66% of skilled remote freelancers who say “freelance work keeps [them] more mentally stimulated than other options.”
There are two primary reasons for this. First, freelancers can take on a greater variety of tasks that require different skillsets and backgrounds. Second, as The Wall Street Journal notes, “employer expectations of independent talent can be a lot higher than they are for their own employees.”
Employees looking for higher levels of mental stimulation may be more likely to stick with their companies if they are given opportunities to try out new roles or take on new responsibilities that require greater thought and care.
- Money: According to a CNBC report, skilled freelancers earn a median rate of $28 an hour, earning more per hour than 70% of workers in the overall U.S. economy. In some cases, they can earn well over $100,000. Venkata says he expects to earn more than $500,000 in eight months. With salaries so high, many of the traditional concerns associated with contract work (e.g., a lack of health insurance) hold less weight as freelancers can pay for these services independently while still making more than they would as a traditional employee.
The obvious solution for employers is to pay their employers more, though they may not always be able to match their potential freelance incomes.
- Career outlook: By and large, freelancers feel better about the future of their careers. This is at least partially because they are able to learn a greater number of skills through the broader range of projects they take on.
To compensate for this, employers must offer a plethora of professional development opportunities so their employees feel they are gaining enough skills to stay competitive in a rapidly evolving job market.