Back in February 2005, the Bureau of Labor Statistics identified 7% of U.S. workers as "independent contractors," which included independent consultants and freelancers. Today, some 40% of the workforce consists of contingent workers: freelancers, contract workers, and part-time workers.
While the freelance economy has certainly been spurred by the growth of the sharing economy, the likes of Uber, Airbnb, and Taskrabbit can't account for all or even most of that expansion. Millions of Americans now work independently as contractors, web designers, virtual assistants, and much more.
In fact, today’s labor market would be barely recognizable to someone from 2005—which is why the U.S. Department of Labor announced steps early this year to help get a better handle on what freelancing actually looks like in 2016. Here's what that could mean for independent workers of all stripes.
"I’m excited to announce that our Bureau of Labor Statistics is working with the Census Bureau to rerun the Contingent Worker Supplement to the Current Population Survey," Secretary of Labor Thomas E. Perez wrote on his blog in January. "It will give us reliable, credible insight into what’s going on across a range of work arrangements—from independent contractors to temporary employees to workers holding multiple jobs at the same time."
The Contingent Worker Supplement will become part of the next population survey in May 2017. When the population survey was last run in 2005, it measured the number of people who said they didn't expect their jobs to last or else reported working temporary jobs. That included independent contractors, which the survey defined as "independent consultants, or freelance workers, whether they were self-employed or wage and salary workers."
Right now, the government doesn’t have recent, accurate data on those growing millions of American freelancers, which means it can’t keep up with their needs. According to Perez, the information from the new survey will help the Labor Department understand current trends, which he says is "essential to smart policy making and smart business."
As Mike McDerment, CEO of FreshBooks, points out in the Huffington Post, "Everything from mortgages to tax filing to Social Security was designed in and for an era when nearly every American worked for a company and got a regular paycheck. That era has long passed. We need a new mind-set for a new era, one where working on your own is as common as working for someone else."
So far, there are few details on how the government will use this data, but these are three ways it could help.
Each year, new jobs are invented that didn’t exist the year before. The government uses "Standard Industrial Classification" (SIC) codes to track types of work, but they need to be updated to reflect today's workforce.
Proper classification is the first step in being recognized as a worker with unique needs, contributions, and challenges in the labor market. It's only then that policymakers can start addressing them. Hopefully, this survey will prompt a much-needed update to the SIC codes currently in use in order to better capture the wide range of work that contingent workers do.
Without an accurate picture of how many freelancers there are and what they do, it's hard to know how effective current programs actually are.
Take the Affordable Care Act, for example. It was designed to give more choice for individuals regardless of employment status, but how can we know how well it's succeeded when we don’t have accurate data on all Americans’ actual employment status?
Information from the Contingent Worker Supplement can help authorities pinpoint successes and shortcomings in law, and a whole slate of other programs.
Finally, the survey data may even help expand opportunities for people interested in working independently. When the survey numbers are released, the government won’t be alone in considering how it can improve its policies for freelancers. When the private sector learns how many freelancers and independent workers are out there, companies and professional organizations will be better able to tailor their own services and offerings to contingent workers.
That could wind up making business better for everyone—traditional businesses and independent workers alike. Entities whose models aren’t often freelancer-friendly may find new ways to accommodate this growing resource.
A recent study by my company, Field Nation, found that up to 88% of freelancers chose to work that way because they value flexibility and independence, not because they felt pressure to do so.
In other words, it’s not that freelancers can’t find traditional employment; it’s that they don’t want to. We are in the midst of a fundamental shift in how people work. A large segment of today’s workforce is more independent, digitally connected, and committed to controlling their own future than ever before.
The U.S. government is finally recognizing that. And that's reason alone for freelancers and the rest of the workforce—whose fates are now more intertwined than ever—to feel optimistic.
Mynul Khan founded Field Nation in Minneapolis in 2008. He has a programming and data analyst background, as well as a honed "growth-hacking" business focus. In 2013, Field Nation was ranked 43rd on Inc.'s list of the 500 fastest-growing private companies in the U.S., and the company made the list again in 2014.