New Stats on How People Freelance Today
Note this article could alternatively be titled: How freelancers still haven’t figured out how to manage their businesses — but are increasingly adding income streams and mixing job types — but we figured that might be too wordy.
Having been a freelancer and now the co-founder of Lance, I’ve become more curious than ever about how this industry is evolving.
Freelancing has already gone through a few iterations:
- As that job that a relative had between jobs…Not quite a lifestyle, more of a patch between 9-to-5s.
- Then there came the distinction between freelancing (i.e., white collar jobs like web design and business consulting) and gig work (i.e., Uber driving, dog walking, contract work).
- And now with the proliferation of client marketplaces — like Fiverr, Upwork, Uber, Lyft, Wag, Rover and the list goes on — we started to hear more about people mixing job types to smooth out their annual incomes.
This latest iteration we kept hearing about, but couldn’t find any stats around! So, as there are often little gut feelings or inklings that stick with me from conversations with freelancers and their support systems. And then there’s the question of how to quantify or prove out those gut feelings.
Back in December, we had one of those moments where we really wanted to again validate what we’re building at Lance again (beyond our user base) and quantify one of those inklings: that freelancers are increasingly working across the “freelancer vs gig worker” segmentation. We felt that we had heard enough comments from people that indicated they were working across job types that are seen as online vs. offline, like being a DJ and web designer or a hair dresser and a social media influencer. But this growth in “job mixing” hadn’t been quantified — and to some extent people didn’t believe that it was happening.
Job mixing is happening.
The whole job mixing thing is interesting because we don’t yet have a sense of the motivator of starting to work across multiple job types or really which ones are most complimentary — though we hope to track that in the years to come at Lance. But there is clear motivation that is intuitive once you think on it for a few moments. More “white collar” freelancing like web design or content creation is typically better paid, but has longer time to payment. But those gigs are typically immediate and paid within the week. So, if you bring those income streams together — sometimes with a passive income stream as well (an often discussed Facebook group topic) — as a freelancer, you can begin to smooth out a higher annual income. This patchwork effect simply works. Through the survey, we found:
Taxes and other BS (business stressors).
Lance is a mobile-first platform that empowers individual freelancers with dynamic backend business management and insights. According to a recent survey the company conducted, the financial confusion is become very apparent in the area of tax prep and filing. Only 60% of the freelancers surveyed deal with their taxes annually, with 20% never even reporting. Furthermore, 50% freelancers believe they spend under $150 annually on tax prep and 40% spend another $150 or more annually on bookkeeping. These perceptions are largely inaccurate, as the cost of working with a CPA would typically come in at thousands of dollars.
In part, these delays in calculating deductions, filing and basic bookkeeping contribute to the average freelancer missing out on over $5,000 worth of deductions on an income of $50,000. If you took this number and looked across the millions of freelancers and side hustlers in the U.S., that adds up to a significant portion of this $1.4 trillion economy. This doesn’t come as a surprise since money, numbers, and taxes are confusing not only to freelancers, but to traditional employees and the general public as well.