We find ourselves in an interesting situation, my fellow freelancers. The weakened economy, swelling unemployment and intense corporate pressure to cut costs and get the work done with sharply reduced internal staff is creating a surge in freelancing opportunities.
As a result, more and more unemployed professionals are giving up their emotionally draining job search and trying the freelance route for a change. And many established freelancers are seeing increased workloads and new opportunities.
This countercyclical trend is something we’ll be discussing at length in this blog over the next few months. It’s a hot and very relevant issue. And we want to invite lively and productive discussions about how you can launch a lucrative freelance career-one that enables you to accomplish both your professional AND personal goals.
To get that discussion started, I wanted to point you to a fascinating article in City Journal titled “The Promise and Peril of the Freelance Economy.” Here are some key points from the article, including some of my observations:
–> The interest and growth in freelancing is undeniable. According to the U.S. Census Bureau, the number of one-person businesses in the U.S. rose from 15.4 million in 1997 to 20.8 million in 2006. Experts estimate that number is now much higher. Maybe as much as 20% of the total U.S. nongovernment workforce!
–> The way the numbers are trending shows that it’s not just the economy that’s forcing people into self-employment. For many, it’s a personal choice.
–> Study after study shows that the self-employed report higher levels of job satisfaction than other workers.
On the topic about whether or not freelancing and self-employment is good for the economy:
–> More companies are hiring freelancers to reduce their overhead, payroll tax burden and sky-high health insurance costs. In my opinion, freelancers should not underestimate the current corporate obsession with cost cutting.
–> Companies that use freelancers are also saving on costly commercial office space. The surrounding community benefits through less traffic congestion and reduced pollution. In Atlanta, GA, where I live, I’ve noticed a significant drop in rush-hour traffic. If you know anything about the legendary Atlanta traffic, you’ll know this is welcome relief.
–> Thousands of freelancers want to work in media, entertainment and other highly creative fields. Unfortunately, this is bidding down freelancer fees and tempting some companies to ask for more concessions from their freelancers (or to simply delaying payment as long as possible). Not good.
–> This last point further highlights the need for freelancers to work harder at differentiating themselves. It also stresses the importance of developing a specialty for which there is strong demand. Communicating your differentiators and how your bring economic value to the table has never been more important.
–> “Permalancers” pay the biggest price. These are the soloists who work permanently for one client. They do everything a regular employee would do, but are paid as independent contractors for business reasons. Unfortunately, they lack the benefits their employee counterparts get. Plus, their income upside is severely limited. This is NOT the best long-term situation for freelancers.
–> Health insurance is a major stumbling block for many aspiring freelancers in the U.S. As a freelancer, I understand the issue and its importance. But the article left the reader feeling as if this was a HUGE stumbling block for which there’s no good solution. Nonsense! If you’re looking to go solo…or if you’re already there and have no insurance…I urge you to contact a good health insurance broker. For most individuals, there are many affordable, high-quality health insurance options available.
Personally, I feel that the benefits more than make up for the “ugly” side of freelancing. I can’t even put a price on the increased flexibility, freedom, income and personal and professional growth opportunities freelancing has afforded me.
I’m glad that more people are taking the plunge, even if it’s the result of a negative situation such as layoff.
What are your thoughts on this “freelance revolution”? Is this a good thing? A bad trend? Why?
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Ed Gandia is the co-editor of The Wealthy Freelancer and publisher of the biweekly newsletter, The Profitable Freelancer. To get a free copy of his audio recording, “10 Smart Ways to Grow Your Freelance Income in a Recession,” visit www.TheProfitableFreelancer.com.
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You mentioned how the volume of freelancers joining the market is bringing rates down. I’m finding that bloggers are bringing rates down as well. They are accustomed to producing content for free for blogs, and so when offered any pay for writing, they jump at the chance.
It’s difficult to persuade a new client to spend $100+ per page of web copy, for example, when he knows of a blogger who will write it for $10.
Recently laid off after four years of PR firm work, I thought long and hard about my options. I was a freelancer for several years. I determined that though the economy is tanking there are opportunities outthere. Being my own boss is very attractive so I am now working to re-establish my freelance career. In this economy, I’m making lemonade of the lemons.
As far as insurance goes, I’m lucky that my spouse is employed which provides us with access to a great health plan. I don’t know that I could find clients to pay the significantly higher hourly rate needed to cover that kind of overhead. We have three children–comprehensive health insurance is so important that I would give up the benes of the freelance world for the coverage we need.
@Susan – Thanks for your comments! Actually, the article was specifically talking about downward rate pressure in the media and entertainment sectors, because that’s where many freelancers flock to. I still say that there are many ways to differentiate, even in more competitive sectors such as these.
I agree with you re: blog post writers who give their work away. But again, just like in any industry, there are thousands who still make a comfortable living in these areas.
Part of the secret is knowing who your REAL prospects are. A $10-a-web-page client is not a good prospect for most of us. And trying to convince that individual that you’re worth $100+ is, IMO, a waste of time — and the reason so many freelancers get frustrated.
@Robin – Good to hear from you, Robin! You’re absolutely right in that looking to a spouse’s plan through work is often the best option. However, I can tell you that the health care plan options that have surfaced over the last 5 years or so are surprisingly affordable, mainly because of Health Savings Accounts (HSA). So when the spouse is not employed, most of us shouldn’t panic.
In my case, I didn’t have to sacrifice quality, either. In fact, I’m on the same exact plan I used to be with before I left my day job, which is a great (big) company with excellent service. And, frankly, I don’t pay that much more in monthly premiums than I did when I was employed. Yes, my deductible is higheer, but I pay for medical expenses with tax-free dollars (because of my HSA). It’s mostly a wash at the end of the day.
I think where people get scared is when they try to get the same EXACT arrangement they had at work ($15 copays and a bunch of free or nearly free stuff). Now…THAT’S what’s going to cost you an arm and a leg.
I’m passionate about this issue because I almost gave up on the whole freelance idea, thinking that my premiums would be $1,000/mo. Once I looked deeper into this, I found that there are many great options.
Ed, I am 100% behind the freelance revolution. Freelancing offers more control and more flexibility both for the freelancers and the businesses that employ them. This truly is a revolution that is going on – and we have front row seats.
Health care and benefits are a huge issue for all of us. I believe the govt is going to have to address this in the next couple years. Check out what http://www.freelancersunion.org is doing on that score in the meantime.
Hi Ed,
How are you? This is interesting for a lot of reasons. I used to be in the photography business, part of that time as a rep for Kodak. I used to work certain east coast big and medium sized cities. Always there were three tiers of photographers working those markets: A) Big players w/big clients and big paydays. They were in constant demand. B) Medium in terms of client list and talent – they were much like their colleagues and struggled to differentiate themselves within their segment but there was a ton of work so it didn’t matter too much and c) those folks who, like the $10.00 a page writers noted above, would work for anything. Freelance writers, photographers, anyone needs to figure out how to specialize and get cozy with their ideal clients and markets…Still working on that one in spite of some great help from Captain Nick Usborne.
There will always be ways to differentiate yourself as a freelancer. Let’s face it; when you landed your employment job in the first place, you managed to differentiate yourself from the other applicants, freelancing is no different.
I think part of the challenge is that there’s still too much “if I build it, they will come” thinking out there among freelancers. That hasn’t been true for years!
Fact is, you HAVE to differentiate and you need to offer proof points to make those differentiation claims believable. And, of course, you have to CONTINUALLY market yourself.
This is terrible news! Freelancing is the ONLY way to work as far as I am concerned. I have been doing this for 5 years and it is without a doubt the best 5 years working. Now because of the crappy economy our secret is getting out and people are coming over to our side of the fence…it won’t be a secret anymore…NOOOOOOOO!
Seriously, I believe this is simply a cycle repeating itself. At one time in our early history (as a country) most people were self employed. As industrialization kicked in we became a nation who worked for those that could amass the equipment. Now technology has put the means of production back into the hands of individuals and the trend is going back to the way it was in our early history.
Daniel Pink in his great book “Free Agent Nation” discusses this concept. He says as this trend continues it will revolutionize policy and the work relationship. One note I remember very well is taxes. Currently if you are a freelancer you send in one BIG check to Uncle Sam every quarter as opposed to having a little taken out of each check where it isn’t quite as noticeable, which is the way the government wants it. However once enough people have to start mailing giant checks into the government every quarter the focus on how high taxes are will certainly take on a new tone. It will be interesting to see what other changes start to take place as this takes hold.
Michael, I agree completely.
This is very similar to pre-industrialized society, but what’s interesting is that the self-reliance is combined with the ability to market your products and services to the world, instead of just your local village.
So we can see people going into much tinier niches than was ever possible before.
That goes back to your point, Ed, about differentiation.
This is something that has worked well for me. I’ve been freelancing for 15 years now, with a tight focus on doing marketing & PR for small software companies.
That has been a powerful differentiator that has made it much easier – and less expensive – to attract quality clients.
I would encourage anyone to have a function focus (marketing, bookkeeping, whatever) plus a vertical/industry specialization. It just makes everything so much easier.