Why Freelancing Appeals to Older Workers

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It may seem that the gig economy is dominated by millennials, but that may be only partly true. Perhaps their desire for independence and the necessity to make ends meet and pay down student debt necessitated their move toward project work. But increasingly, older adults over age 55 are easing into retirement by taking on short-term gigs and freelancing.

The Economic Policy Institute analyzed data from the Bureau of Labor Statistics, comparing statistics for independent contractors and freelancers for 2005 and 2017. Older workers over age 55 accounted for 37 percent of all independent contractors in 2017. For those in the 55-64 age group, 22.97 percent were independent contractors, up from 18.8 percent in 2005. For those over age 65, the numbers were similar. The share was 14.1 percent in 2017, up from 8.5 percent in 2005.

Over the same period, the number of total workers employed as freelancers and independent contractors fell slightly – 10.9 percent in 2005 versus 10.1 percent in 2017. So while the pool of independent workers got smaller, the over 55 workers made up a larger percentage of it. And the folks at EPI expect this trend to continue.

So why are older workers gravitating toward freelancing? According to a recent Forbes article, there are several reasons.

1. The barriers to entry is fairly low. That makes it easier to enter the gig economy. Digital platforms like Freelancers Union, Upwork and Flexjobs have made it easy for anyone to tout their skills compared to traditional word-of-mouth methods. All they have to do is complete their profile, talk up their skills then wait to be connected.

However, as simple as all this sounds, there is no guarantee that there will be a suitable connection between the older worker and an opportunity. It’s a passive approach and there’s a lot of competition. It’s easy for their profile and resume to get lost in the pile of applicants.

2. There’s no apparent cap on what they can earn. As a freelancer, older workers can negotiate their rate more readily than if they were hired. This arrangement can appeal to older workers who may be frustrated by age discrimination that they might have faced in the job market.

3. Older workers’ expertise is more valued as freelancer. When companies hire freelancers, they search for the most qualified candidate. They WANT someone that has experience. They don’t want to train a new person or risk possible mistakes. Experience counts, which is why freelancing may appeal to older workers.

4. Attitudes about “idle capacity” are changing. Older workers don’t want to spend their later years doing nothing but gazing out their window and the world rushes by. They want to participate. They want to be productive members of society and do meaningful work. That’s why many older workers are staying in the workforce longer, and why many of them gravitate toward gig jobs and freelancing.

5. Older workers want to remain connected to the outside world. Without a part-time job or a freelance gig, many older workers would feel isolated. By working, they are more engaged with the world. They join groups and form friendships, which give their lives meaning.

If in doubt about the impact of older workers, consider this statistic by the Bureau of Labor Statistics. By the year 2020 (next year), one-fourth of the U.S. workforce will be over the age of 55.

Older workers are not going away any time soon. They want to work. They want to share their knowledge and expertise. They want to remain relevant and provide meaningful service in our communities. Many of them are choosing contract work and freelancing as a way to do just that.

Two Surveys Give Differing Perspectives of Freelancing

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What is it really like to work as a freelance professional? It seems many Americans are gravitating toward that kind of work lifestyle these days. According to the 2018 Freelancing in America survey by Upwork, nearly 57 million Americans worked as a contractor or freelancer in 2018, making up roughly 35 percent of the workforce. That percentage is expected to grow to 50 percent by 2027.

In Upwork’s survey, a majority of freelance workers work independently by choice, not out of necessity. While many freelancers surveyed admit they earn less money, they also enjoy better work-life balance (77 percent).

With so many freelance professionals flooding the workforce, it might be helpful to learn more about this independent work arrangement. What is so appealing about working  freelance? What are the pros and cons? What type of work do they do? How do they find clients? What are the benefits and challenges?

A survey by Flexjobs.com of 1,000 flex workers and freelancers provides some valuable insights, including some that are surprising and unexpected.

According to Flexjobs, the typical worker whose freelance work is their sole source of income is a female, generation Xer working in the marketing, editing, writing and creative career fields, primarily for small companies and individuals and juggling two to three clients at one time. She has been freelancing for at least three years and plans to continue freelancing for the long-term.

Interestingly, that conflicts with the Upwork survey, which indicates that Millennials and Generation Z workers are the driving force behind freelance work. I suspect that many of Upwork’s estimated 12 million site users fall into those demographics, while Flexjobs’ users are older, more experienced professionals.

Flexjobs reports that while 45 percent of respondents have been freelancing at least three years, 38 percent have been doing so for less than one year. That’s an awful lot of newbies in the market. Interestingly, that percentage dips to 18 percent for one to two years. My guess is the drop off occurs because the newcomers have decided to return to full-time work or that the first year of freelance was to test the waters.

While most freelancers work in multiple fields, the highest percentage are writers (29 percent) followed by customer service professionals (23 percent) and administrative professionals (21 percent). While writing is still considered a valued skill by employers, it seems they’d rather hire them out on a project basis than full-time.

Roughly 24 percent report that their work is a combination of freelance and employee jobs while 45 percent choose to freelance full-time. While 39 percent of freelancers work between 21 and 40 hours per week, 35 percent work less than 20 hours a week. I suspect those working fewer hours are new to freelancing and have yet to build up a steady client base. Or perhaps they choose to work freelance on a part-time basis.

More than half of respondents said they found gigs through networking (56 percent) and from job sites (47 percent). While you would think large companies would be the source of most assignments, that isn’t the case. Instead, most freelancers work for other individuals (56 percent) followed by small companies (46 percent), and mid-sized companies (30 percent). Freelancers worked for large companies only 17 percent of the time. The takeaway from this is if you want to find work, the best sources will be other professionals or small businesses.

Another surprising tidbit: Three-fourths of freelancers do not have a website to support their freelance business. If your work is good and you perform client assignments well, word gets around. Clients will find you. Don’t underestimate the power of a strong referral. A website may not be as necessary for your long-term freelance success as you might believe.

The biggest benefits of being a freelancer are flexible schedule (84 percent), work-life balance (66 percent), freedom to work where they choose (61 percent) and no commuting (60 percent). The desire to be your own boss was cited the least (49 percent)

The biggest challenges for many freelancers are finding clients, cited by 65 percent, and having a steady income, cited by 64 percent. That’s nothing new. Despite the romanticized view of freelancing, often by traditional employees working 60-hour work weeks, freelancing is hard work. One critic of the Upwork survey and the rosy picture it painted of the freelance industry said this: “People who don’t have to freelance love to romanticize freelancing – the actual truth is that making a living as a freelancer is harder than hard and sucks a ton of the time.”

Bottom line: Not everyone is cut out to be a freelancer or entrepreneur.

Despite the challenges, two-thirds of freelancers in the Flexjobs survey reported a better overall quality of life. Sixty percent said freelancing helped them become healthier, 66 percent are less stressed than when they worked in a traditional job and 59 percent are less financially stressed.

Anyone considering freelancing needs to consider the good, bad and the ugly side of the business. For all its outward glamour, the freelancing lifestyle still requires a lot of hard work just to make half of what you earned in a steady gig. Upwork may boast 12 million freelancers using the site, but only 400,000 of them actually earned money in 2018, says Stephane Kasriel, Upwork’s founder.

“Like any business to be successful, specific competencies are required, and our most successful freelancers are painstakingly aware of what they need to do to remain successful. That means having and investing in the right technical skills. But it also means having the right entrepreneurial skills, the ability to sell, deliver, evolve your skills and keep improving over time,” says Kasriel in a Forbes interview.

Which might explain why so many freelancers and small businesses struggle within the first year. Freelancers don’t think about the extra time and work involved to evolve their skills or to sell their services when they set up shop. It’s important to think about these factors when considering joining the freelance movement.