Are Freelancers To Blame For Our Slow Economic Recovery?

The new workforce is questioning the call of consumerism. But that’s not necessarily a bad thing says the founder of Freelancer’s Union.

Are Freelancers To Blame For Our Slow Economic Recovery?
[Photo: Flickr user Roland Tanglao; App photo: Flickr user Peter Minarik]

We know that freelancers are changing the way we think about work, with their flexible schedules and multiple employers. And we know that freelancing is on the rise: 53 million Americans are now freelancing, according to a 2014 study by the Freelancers Union and Elance-oDesk (now Upwork). But what people probably don’t realize is that this move toward freelancing will have a huge impact on our economy. Why? Because freelancers are working less and earning less than they did back when they had traditional full-time jobs. And that means they’re going to be spending less, too—in every facet of the marketplace.


If you take a look at consumption numbers, it’s already started: “You aren’t spending enough to boost the economy,” read a CNN headline this spring. The economic recovery is ambling along with relatively positive monthly jobs growth, but Americans are not opening up their wallets. People are spending less on things like new furniture, clothes, and cars. The response we hear from analysts and sometimes even our government leaders is that we need to go out and buy more stuff—that it’s even our patriotic duty.

But freelancers are rejecting that maxim in droves. It’s outdated. It promotes needless consumption, and as an economic philosophy, it ignores the fundamental changes transforming the U.S. labor force and disrupting the traditional idea of success. This new workforce faces episodic income—not on a temporary basis, but as a fact of life. That leads to a very different mindset about earning and spending. They’re questioning the constant drumbeat of consumerism.

In this worldview, calculations are two-fold: How much more would I have to work to afford a bigger house, and—most crucially—is it worth it?

Independent workers overwhelmingly reported to us that their main goal was to build lives that are “free, connected, and values-driven.” This notion ranked higher than maximizing profits. It’s all part of what I like to call meaningful independence—living a life that may be smaller in fiscal terms but bigger in personal dividends.

Freelancers are choosing to spend money on experiences instead of things

Perhaps because they know they cannot count on a steady paycheck to afford the traditional markers of status, they’re focusing on spending their time in ways that are meaningful and valuable to them. Learning a new skill. Taking care of aging parents. Building a community network. Assuming more childcare responsibilities. Devoting time to a food co-op, political activism, volunteering, faith-based organizations, and, of course, to their pets.

And there’s science behind this: New studies show that prioritizing experiences over goods makes us happier in the long-term, because it encourages us to place importance on shared connections, instead of on the transient appeal of new items that will, by nature, fade in value and function.


Related: The Science Of Why You Should Spend Your Money On Experiences, Not Things

Wealth has declined

There’s also a harsh reality behind it: Independent workers simply have less money to spend. Their careers are unpredictable in terms of hours, income, and even location. So when they do spend, they’re turning to alternatives like sharing or renting rather than buying. In a recent report from PriceWaterhouseCoopers, 86% of people surveyed said that using a ride-sharing app or renting out someone’s spare room rather than booking a hotel “makes life more affordable.” More than 80% said it was “less expensive to share goods than to own them individually.” And 43% went as far as to say that “owning, today, feels like a burden.”

That kind of meaningful independence is a social and economic movement that’s not going away. It’s a relief for many of today’s new-wave workers, who can’t afford up-front costs of big-ticket items. But it’s not so helpful in addressing the underlying problem that income inequality in this country is very real and growing worse.

The ranks of independent workers continue to grow. But as long as their incomes continue to shrink, so will their spending.

It’s time to address the income instability of this growing workforce. We know that the full-time jobs of the past aren’t coming back, so we need to make sure these new-guard jobs pay enough and are secure enough for an independent worker to get by, and maybe even save a little.

An economic recovery can’t just mean waiting for America to “get back” to what we did before and hoping that consumer spending will “return” to previous levels. We need new systems, new regulatory frameworks, new categories, and crucially, a whole new mindset: accepting that people can buy less and still have more.


About the author

Sara Horowitz is the founder and Executive Director of Freelancers Union, a national labor group that represents freelancers including selling health insurance and other products.