How many people are in the gig economy?

We’re very interested in this question at Nation1099, and, as it happens, it isn’t an easy question to find answers to, especially since the gig economy is growing and changing very fast and people mean many different things by the term.

Employment in general is undergoing dramatic changes, often summarized as “the future of work” or Workforce 2.0. Anyone following workforce trends will have seen eye-popping numbers about the gig economy along the lines of “one third of all workers are freelancers” or “half of us will be in the gig economy by 2020.”

But these statistics, which we will review in detail below, use broad definitions of the gig economy. They often lump together strategy consultants, freelance designers, musicians, drivers for ride-sharing apps, day laborers and people who work for temp agencies.

Related: How Many Different Freelance Careers Do You Know Of? We’ve Found Over 130 So Far

And the headlines about these studies on the gig economy usually conflate full-time freelancers, part-timers and people who had only one gig in the last year. All of these are part of the picture, of course. But if you’re trying to understand how many people work in the gig economy instead of in a traditional job, you need to rule out people who freelance as a side hustle or who are only dipping their toes in.

Gig Economy Infographic - 13 Stats That Explain the Gig Economy

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At Nation1099, our focus is on the knowledge work part of the gig economy — people selling professional or creative skills on a freelance basis. And, as we want to help professionals get better at managing and growing their freelance businesses, we’re interested to understand how many people are full-time in the gig economy.

So, in this ultimate guide to gig economy data, I’m going to round up and summarize all the reports, surveys and studies we can find. But I also have a secondary purpose of trying to answer the questions that interest us most: How many people are actually “making it” as freelancers? How many are freelance instead of in a traditional full-time job?

Another reason it’s difficult to answer how many people are in the gig economy is that some key stakeholders aren’t actually counting us. For interesting historical reasons that we’ll get into below, there is little government data about people who make their living freelancing.

For generations the BLS really just counted three broad categories: farm employment, non-farm employment and employer.

But however imperfect the data sources that do currently exist, there is still no doubt that the gig economy is the future. Consulting firm Accenture makes the case forcefully in Technology Vision 2017 report. They predict that legacy models of employment will be “dissolved and replaced with talent marketplaces” driven by the “surge of on-demand labor platforms and online work management solutions.”

We plan to update this list of gig economy data sources regularly, so please do let us know about any we missed or if your organization publishes good data in the meantime.

For now, here’s our conclusion: Based on this synthesis of all the high-quality studies we can find, we estimate that approximately 11 percent of the working adult population in the U.S. are working primarily as full-time independent contractors in the gig economy.

That’s considerably lower than the numbers about the gig economy that you see in the headlines. But it’s also a more meaningful figure that shows how much the future of work is defined by professional freelancing. Read on below to see how I get to that estimate.

Alright, let’s dive in . . .

Statistics that explain the gig economy

A short history lesson: Why is it so difficult to get gig economy statistics?

In 2001, before smartphones, cloud computing and videoconferencing, Daniel Pink published Free Agent Nation: The Future of Working for Yourself in which he effectively predicts the workforce changes we’re seeing now. One interesting thing about Pink’s reporting is how much it had to rely on anecdotes rather than conclusive data.

As Pink explained himself, the U.S. government didn’t really do a headcount of the free agents. The U.S. Bureau of Labor Statistics (BLS) understandably wants to show long-term trends, so they don’t add survey questions lightly, and they don’t revise categories based on what’s trendy.

As a result, for generations the BLS really just counted three broad categories: farm employment, non-farm employment and employer. There weren’t many gradations for job categories in their data beyond that, except by industry.

Screenshot of McKinsey Global Institute study of the gig economy

U.S. data from Independent work: Choice, Necessity and the Gig Economy, McKinsey Global Institute, 2016

You can see the limitations of that pretty quickly. For example, full-time consultants are presumably self-employed, but from the BLS’ perspective that puts them in the same bucket as the owners of cafes, food trucks, auto garages and other small businesses — or factory owners, for that matter. “Self-employed” in that case doesn’t really tell you much about the size of the gig economy.

Other government data on the gig economy

It’s amazing the extent to which this issue that Pink ran into in 2001 is still relevant 16 years later. In fact, a recent article by BLS economists notes that the last helpful survey on “contingent workers” was from 2005 and found that they accounted for 2 to 4 percent of all workers. In that case, the BLS was probably counting temps and day laborers rather than freelance professionals anyway.

Other government offices have data on the freelance workforce with similar limitations. In 2014, the U.S. Government Accountability Office (GAO) attempted to get some perspective on the size and characteristics of the gig economy. Their 96-page report looks at statistics from the BLS, the Census Bureau, the Internal Revenue Service and elsewhere.

Depending on how those agencies define a contingent worker, they arrive at figures ranging from 5 percent to 40 percent of the workforce. Which is just another way of saying we don’t really have a common working definition of what a gig economy worker is.

From my perspective, the GAO isn’t on track to get a clear picture of the the gig economy, because they are looking at it the wrong way. The question they are asking presupposes a “deficit” perspective about the freelance economy:

“No clear consensus exists among labor experts as to whether contingent workers should include independent contractors, self-employed workers and standard part-time workers, since many of these workers may have long-term employment stability. There is more agreement that workers who lack job security and those with work schedules that are variable, unpredictable or both—such as agency temps, direct-hire temps, on-call workers and day laborers—should be included.”

In other words, the GAO is really trying to measure job insecurity. But in the emerging gig economy, what one worker calls job insecurity another may say is the whole point of going freelance. As we’ll see below, more and more people choose freelancing so that they command their own fate or because they value the flexibility.

Official numbers are similarly difficult to find in the U.K. The Office for National Statistics, which is responsible for collecting employment data in that country, is also at the stage of publishing reports on the feasibility of measuring the sharing economy. (Short version: it’s not easy.) The relevant U.K. government agencies are still in the process of developing and adding questions to the surveys they give to workers, employers and tax filers.

What one worker calls job insecurity another may say is the whole point of going freelance.

How many people work in the gig economy?

While government data on the gig economy isn’t easy to find, research and analysis firms are stepping into the breach for now, along with companies selling services in this area. Most of the data you may have seen cited before is coming from these sources.

First, let’s look at three major surveys that attempt to tally up all the freelancers.

The UpWork/Freelancers Union survey of freelancers

One of the most comprehensive is a 2016 study commissioned by Upwork and Freelancers Union, which has a +/- 1.27 percent margin of error at 95 percent level of confidence.

But this study has one of the complications introduced above: it counts anyone who has engaged in supplemental, temporary, project-based or contract-based work at all within the last 12 months.

Many of the headlines about this study, therefore, look only at the total figures and lump everyone together. By that count, 35 percent of the U.S. workforce — 55 million people — are freelancing.

Deeper behind the headline number, though, the Upwork and Freelancers Union study has data closer to what we’re looking for by breaking out that 55 million people into more meaningful segments.

A 60 percent share of the original 35 percent is made up of people who are primarily in traditional employment — what the authors call diversified workers (28 percent/15.2 million), moonlighters (25 percent/13.5million) and temporary workers (7 percent/3.6 million).

The rest, a subset of approximately 42 percent of the 35 percent, are independent contractors (35 percent/19.1 million) or freelance business owners (7 percent/3.6 million).

If the question is how many people have gone full-time freelance to replace a traditional job, the Upwork/ Freelancers Union study shows that the number is closer to 14.7 percent.

Each of those groups is an interesting early predictor of the future of work, but if the question is how many people have gone full-time freelance to replace a traditional job, the Upwork/Freelancers Union study shows that the number is closer to 14.7 percent.

The McKinsey Global Institute survey of independent workers

Next, let’s look at Independent Work: Choice, Necessity and the Gig Economy from McKinsey Global Institute, which conducted a survey in the U.S. and Europe and found that 20 to 30 percent of the working-age population engage in independent work. That’s up to 162 million individuals.

The McKinsey Global Institute study groups contingent workers into four categories:

  1. Free agents — These freelancers actively choose gig economy work as their career or professional framework. Free agents are 30 percent of independent workers in the U.S. and Europe, numbering around 49 million.
  2. Casual earners — These are professionals who also choose to freelance to augment their primary income. These part-time freelancers number around 64 million, representing 40 percent of the contingent worker population in Europe and the U.S.
  3. Reluctants — These are like full-time free agents, but not by choice. Reluctants were either laid off or are hindered in some way from getting traditional employment. They derive their primary income from the gig economy. They number around 23 million, accounting for 14 percent.
  4. Financially strapped — These are similar to casual earners but more out of necessity than choice. They freelance because they need to augment their primary income. Financially strapped freelancers could be as many as 26 million and account for 16 percent of the contingent workforce in the US and Europe.

So, a subset of about 43 percent of the original 20-30 percent make their living primarily from independent work. For the rest, it’s a side hustle. That implies that around 8.6 percent to 12.9 percent of working adults in the U.S. and Europe are full-time freelancers, either by choice or reluctantly. The more enthusiastic share of that group accounts for 6-9 percent.

That implies that around 8.6 percent to 12.9 percent of working adults in the U.S. and Europe are full-time freelancers, either by choice or reluctantly.

The MBO Partners “State of Independence” survey

MBO Partners conducts an annual survey of the independent workforce in the U.S. that paints a similar picture. They find that 40.9 million adults are self employed, representing $1.2 trillion in revenue or 6 percent of the GDP.

The MBO survey projects 3.6 percent annual growth in this workforce and that during the next five years half the adult U.S. population will have worked independently, but that includes in the mix people who freelance only part-time or occasionally.

We’ll look closer in a later article at how Uber drivers and other on-demand economy workers are over represented in most discussions of this subject. Most of the gig economy is in fact made up of knowledge workers who provide professional and creative services. For now, note that the MBO survey finds that one in five independents earn more than $100,000/year.

Other ways of estimating the size of the gig economy

Another way of gauging the size of the gig economy is to look at what companies say about where their workforce comes from. In its 2016 Global Contingent Workforce Study, professional services firm EY (f.k.a. Ernst & Young) asked companies around the globe how much of their workforce was contingent. The average was 17 percent.

Gig economy data: Screenshot of Global Contingent Workforce Study, EY

Global Contingent Workforce Study, EY

Other figures of note from the EY survey on the gig economy:

  • Twenty percent of the world’s organizations have a workforce comprised of at least 30 percent contingent workers.
  • Half of the organizations have had a significant increase in the use of gig economy workers in the last five years.
  • By 2020, 25 percent of businesses will have a contingent workforce comprising at least 30 percent of its talent resources, with one in five workers across the globe is actively engaged in the gig economy.

EY surveyed companies with more than 1,000 employees, so their data leaves out startups and small employers where the percentages might be different. (My hunch is that startups, being new companies, are more likely to use flexible talent sources and that established small companies might have less flexibility.)

The EY survey also leaves out employers who are not companies at all. Much of the demand side of the gig economy is from individuals, essentially in a peer-to-peer model. Freelance marketplaces like Upwork let individuals hire freelancers for gig work. And many freelancers run their businesses by hiring subcontractors.

Another way of estimating the size of the gig economy is to look at where the job growth is. A study by Harvard’s Lawrence F. Katz and Princeton’s Alan B. Krueger found that “all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.”

The authors found that total U.S, employment grew by 9.1 million jobs between February 2005 and November 2015. They trace that primarily to alternative arrangements such as freelance contracts.

A third alternative approach to understanding how many people are in the gig economy is to look at just one profession and see the different ways that people work in it.

Stack Overflow’s comprehensive annual survey of software developers does this, asking about tools, education level, company size, working conditions and many other factors for this group of professionals. And deep in the survey is a question about employment status.

Screenshot of Stack Overflow study on developers, gig economy data

Stack Overflow, Developer Survey Results, 2017

Ten percent of the developers in the survey identify as independent, freelance or self-employed. That doesn’t include part-time and side hustle work.

There’s no way of knowing what a similar survey of writers, photographers, designers or marketing experts would show. But if you hypothesize that developers represent a “typical” group of professional or creative workers, then the Stack Overflow survey suggests that an estimated 10 percent of the workforce works primarily in the gig economy.

So, relying on my unscientific reading of the above surveys, and focusing on my interest in knowing especially how many people full-time freelance rather than in traditional jobs, we’re looking at a range of 8-14 percent.

And that’s how I arrive at the estimate I gave in the intro: approximately 11 percent of the working adult population in the U.S. are working primarily as full-time independent contractors in the gig economy.

Who is in the gig economy?

In a later article, I’ll look at what these studies can tell us about the characteristics of gig economy workers. (For example, it’s fewer millennials and more older professionals than you might have guessed. And we’ve already touched a little on what freelancers earn.)

For now, I want to point out two trends in the data that help explain who is in the gig economy.

First, freelancing no longer means “between jobs.” We noted that some freelancers are reluctant to be in the gig economy, but a growing share of them are “freelance by choice” — 70 percent according to the McKinsey Global Institute study quoted above.

And according to the 2016 Field Nation Freelancer Study: The Changing Face of the New Blended Workforce:

  • 74 percent of professional freelancers say it is their ideal employment situation.
  • 95 percent say they love, like or are satisfied with what they do on a daily basis.
  • 86 percent said they opted into freelancing.
  • 72 percent say they make the same amount or more money than they did before.
  • 45 percent of freelancers characterize themselves as small business owners and entrepreneurs.
Gig economy stats: Screenshot from Field Nation Freelancer Study: The Changing Face of the New Blended Workforce on gig economy

Field Nation Freelancer Study: The Changing Face of the New Blended Workforce

Second, freelance doesn’t necessarily mean outsider. The Field Nation study notes that one of the factors driving the growth of the gig economy is “evolving team structures that reinforce collaboration and support freelance workers across every stage of engagement.” The growth of the gig economy is part of a larger change in the nature of work that might be better described as the “blended workforce” model.

The blend is unique to every project, and that means in practice that a gig economy worker may be more “internal” than some employees. Employees can be remote, and consultants can be brought in to work on site for extended contracts.

At Nation1099, we strongly believe that companies that don’t manage freelancers as if they are outsiders, disposable or “unemployed” are developing a talent management strategy based on the future of work.

Companies that don’t manage freelancers as if they are outsiders, disposable or ‘unemployed’ are developing a talent management strategy based on the future of work.

The future of the gig economy

As I noted earlier, the consulting firm Accenture is publishing a lot of interesting material that looks at the future of work and what it means for employers. Another of their reports, Workforce Marketplace: Invent Your Own Future, argues that in the next five years everything we assume about “full time employment and freelancers will flip completely.” On-demand talent platforms will serve as the primary driver of economic growth around the world and they will eventually replace conventional management models.

As I’ve written elsewhere, this means employers will have to think very differently about how they cultivate and engage with freelance talent. The employers who see gig economy workers as partners will be setting themselves to succeed in this new labor environment.

For example, the McKinsey Global Institute’s study highlighted many real economic benefits of the gig economy that will accrue to employers including increased engagement and improved productivity.

Finally, let me leave you with the conclusions of The World Economic Forum’s The Future of Jobs report, which looks at various socio-economic and technology trends and predicts a “perfect storm” of business change:

“Telecommuting, coworking spaces, virtual teams, freelancing and online talent platforms are all on the rise, transcending the physical boundaries of the office or factory floor and redefining the boundary between one’s job and private life in the process. Modern forms of workers’ organization, such as digital freelancers’ unions and updated labor market regulations are beginning to emerge to complement these new organizational models. The challenge for employers, individuals and governments alike is going to be to work out ways and means to ensure that the changing nature of work benefits everyone.”

The gig economy is here, largely as a result of technology changes we’re all familiar with. What comes next is when it gets big enough to be its own force, fundamentally changing work and workplaces in turn.

Research and writing assistance contributed by Joseph Mapue

 

Robert McGuire

Robert McGuire

Publisher of Nation1099

Robert McGuire is the owner of McGuire Editorial, a content marketing services firm specializing in B2B and tech startups.