• 4 minute Read

The Independent Worker Economy Is Bigger Than We Thought: It’s Time To Support It

20% to 30% of the workforce in the U.S. and Europe now works independently in some form–double what we thought.

Work used to mean a full-time job with a single employer: nine-to-five, full benefits, repetitive manual labor on a Henry Ford-type production line. Now, it means a variety of things: from driving for Uber, to running a small business, to working “flexibly,” limited or no protections. A lot of people are choosing the autonomy of working for themselves. But equally many others are searching for traditional jobs and not finding them. In the last decade, most new employment in the U.S. and Europe has been among independent contractors, on-call workers, temporary agency workers, and in gigs with contract firms.

Official data on these trends is surprisingly limited. The U.S. government stopped its main survey of independent work back in 2005. And studies since then have been lacking in crucial details: for instance, exactly why people are shifting away from full-time jobs. Have they chosen to work flexibly because they like the freedom, even if it means organizing their own retirement and health insurance? Or, have they been forced into flexibility because there’s nothing else for them?

A big new report from the McKinsey Global Institute shows that 20% to 30% of the workforce in the U.S. and Europe now works independently in some form. That’s about double the rate of previous estimates, which have been in the 10% to 15% range. These counted only people who are self-employed or on temporary contracts, not people who, say, drive a few hours for Uber or rent out a room on Airbnb. When you include everybody, it turns out the world of nontraditional work is bigger than we thought (and getting bigger all the time).

“More than half of independent workers are doing this as a supplement to some other activity,” says Susan Lund, a coauthor of the report. “They may have a traditional job as well, or about 40% of them are students, retirees, or caregivers.” About half of independent workers are women, and about a quarter are under 25.

The consultants split independent workers into four segments. “Free agents” (30% of the total) choose independent work and get their primary income from it. “Casual earners” (40%) choose it, but see it as supplemental. “Reluctants” (14%) rely on independent work but would prefer a traditional job. And “financially strapped” (16%) see it as supplemental, but as a necessity not a choice. In all, 72% see independent work as a choice, compared to 28% who see no choice. The numbers are based on a survey of 8,000 workers in the U.S. and five European countries.

Not surprisingly, the free agents and casual earners report higher levels of work satisfaction than those doing it out of necessity (reluctants and the financially strapped). And the free agents are happier than people working traditional jobs by choice. At the same time, people working out of necessity, whether permanently or contingently, report “similar levels of dissatisfaction.” In other words, independent work can be the best or worst form of work; it depends on the situation.

McKinsey expects the independent workforce to grow substantially in the future. Given the choice, between 40% and 50% of the people in the U.S. and Europe would choose to work for themselves. Currently, digital platforms like Uber provide income for only about 4% of us, but there’s a lot of room for growth. About a third of U.S. workers are not even aware of such income-generating possibilities, the survey says.

The big question is how to better support independent workers, particularly among the “reluctant” and the “financially strapped” segments, so they can become “free agents” if they want (that is, happier). That could include setting up new types of “portable benefit” schemes so workers can move between jobs more easily while keeping disability and unemployment insurance (see more here). It could mean legal categories of worker that fall between W2 (full worker) and 1099 (independent contractor) classification. Or, it could mean extending the protections of federal unemployment insurance to allow some supplemental forms of work. Currently, if you’re laid off and start, say, driving for Uber, you lose the right to benefits. Lund says it makes sense to encourage people to earn money, remain active, and develop new skills.

The shift to independent work is a complicated phenomenon, offering both autonomy and flexibility, but also insecurity and under-acknowledged costs to public finances. It’s time we had a better balance of the pluses and minuses.

“Enabling people to work in the style they prefer, with more control over their own professional destiny and work-life balance, has the potential to make millions of workers happier and more empowered,” the report says. “If this shift is carefully monitored and managed, it could unlock real benefits for workers, companies, and broader economies.”

Have something to say about this article? You can email us and let us know. If it’s interesting and thoughtful, we may publish your response.

About the author

Ben Schiller is a New York staff writer for Co.Exist. He edited a European management magazine and was a reporter in San Francisco, Prague and Brussels.