Can the gig economy support pandemic recovery?
By Anne-Frances Hutchinson
The waning days of the most catastrophic era in living memory are ahead, and all eyes are on recovery. The rise of remote work and the need for millions of unemployed workers to find alternatives to jobs lost during the pandemic has led to a major shift in the nation’s workforce. Today, over one third of it is made up of gig workers. At the very least, the gigging boom—which encompasses freelance, contract, and temporary work—is expected to outlast the pandemic and be an important aspect of getting the nation’s economy back on its feet.
“There’s a strategic shift happening where employers competing in a war for skilled specialty talent have accelerated their adoption of contingent labor—and it’s not only “gig” app and blue-collar jobs anymore. In fact, 40% of all white-collar workers fall into this category,” said Kevin Akeroyd, CEO of workforce management specialists PRO Unlimited.
Their December 2020 survey of market trends in the gig economy revealed that business pros are welcoming freelance work more than ever. “Not only does this new contingent economy offer increased flexibility and high-paying white-collar jobs, but employers benefit from a more diverse talent pool, greater innovation, better fiscal management, and much more,” Akeroyd reported. “By late 2021, we expect over half of skilled workers will be contingent and employers will need to successfully manage this expanding workforce as part of their overall human capital strategy.”
As employers reeled from the disorientation that marked the pandemic’s earliest days, hiring freezes, furloughs, and layoffs were common strategies used to manage the uncertainty. Initially, temporary hiring plunged by 56%, a more rapid and deeper descent than in the Great Recession of 2008. Those rates bounced back to normal levels by July, and by September the hiring rate had increased by 9% year-over-year.
“It’s no surprise that freelancing is on the rise, especially now that we have fully disentangled ‘where’ we work from ‘what’ we work on,” said Hayden Brown, President and CEO of Upwork, the nation’s leading online talent staffing firm. “Amid all of the uncertainty brought about by COVID-19, the data show that independent professionals are benefiting from income diversification, schedule flexibility, and increased productivity.
“At the same time, companies are finding that these professionals can quickly inject new skills and capabilities into an organization and strategically flex capacity up and down along with changes in demand and workloads. We expect this trend to continue as companies increasingly rely on freelancers as essential contributors to their own operations.”
In their analysis of the current freelance landscape, Upwork found that while freelancing has increased overall, 10% of the workforce has paused it. The occupations most affected are also those most adversely impacted by social distancing and those where remote work isn’t feasible. Of the employers temporarily halting freelance hires, 88% said they were likely to return to it in the future.
“(T)he shift towards greater workforce flexibility coupled with the necessity to maintain continuity brought new demand for independent professionals from businesses. The changing dynamics to the workforce that has occurred during the crisis demonstrate the value that freelancing provides to both businesses and workers,” noted Upwork Chief Economist Adam Ozimek.
The advantage of highly skilled gig workers
Although much attention has been paid to the unskilled sector of the gig economy, such as workers providing delivery, shopping, and ridesharing services, skilled professionals will benefit substantially from the labor market’s embrace of contingent hiring. Monster predicts that the gig economy will continue to flourish post-pandemic, as companies approach the future with increased caution and take advantage of the economic benefits of hiring independent contractors.
“Employers avoid the cost burden of recruiting new talent, onboarding, training, benefits, unemployment insurance expenses and the exposure to worker’s compensation, and liability when they use a gig worker,” John Schuller, PMP, EVP, Chief Operating Officer CORE, Headway Workforce Solutions told Monster.
While companies benefit from the agility that on-demand workers bring when hiring to meet the needs of specific projects or responding to market fluctuations, those choosing to freelance do so as well. The freelancing pool added 2 million workers from 2019, over a third of whom are now freelancing full-time.
Upwork found that 12% of the American workforce began freelancing for the first time because of the pandemic, and that 48% of new COVID-era participants see freelancing as a long-term, full-time career opportunity. According to Akeroyd, “Millions of skilled workers have chosen the flexibility in time, location, and work experience benefits of contingent as their long-term career path, and have chosen not to take full time jobs anymore.”
Tim Robbins, VP of staffing and recruiting at Monster, expects contingent hiring to maintain its newfound popularity in the near term, at least. “Historically, the staffing industry has been a leading indicator of economic recovery. As we look to 2021, I see guarded optimism for ongoing recovery across the majority of the key staffing sectors,” he said.
“There are key sectors in the space like warehouse and transportation that are experiencing significant growth, due to changing consumer behavior due to COVID-19,” he stressed. In addition to the rise of temporary hiring in healthcare in response to the crisis, “Growth will also be fueled as hospitality and retail recover from the impact of COVID-19, in the second half of 2021,” he said.
Monster found that the most in demand contingent workers are IT analysts, data engineers, IT/tech project managers, marketing managers, clinical pharmacists, and designers.
Speaking to business.com, Brent Messenger, vice president of public policy and community at Fiverr, said, “When the pandemic first hit and during the first wave of lockdowns, we saw an uptick in personal project-oriented services, such as music and crafting lessons, fitness plans, video game coaching, and the like,” he said. “However, after about a month, we began to see a jump in the demand for business-related services, particularly ones that were linked to bringing traditionally offline businesses online or those that help promote businesses online, like social media marketing and more.”
The Upwork survey showed that 50% of current contingent workers are very highly skilled. The availability of remote work spurred by the pandemic has also made gig work more attractive to 58% of professionals who hadn’t previously considered it.
“Non-freelancers new to remote work say they are considering freelancing in the future because it has made them a more productive worker (73%), they’d prefer working remotely over returning to a traditional office (74%), and to earn extra income to cope with the impact of the pandemic on their personal finances (85%),” they said.