Sensei Tyra Seldon writes this week about the “Sustainability” of freelancing. As she says, besides the attractions of freelancing, such as “the ability to work from home and to spend quality time with family” it is still critically important “to support and provide for oneself and one’s family.”
As she says, sustainability is a significant challenge and cause for anxiety for freelancers. There are plenty of exploitative, low paying “opportunities” for freelancers. Every freelancer has to worry about money.
In a second piece, Sensei Seldon gives some sensible advice about long term thinking, which includes maintaining cushions for lean times and flexibility for the inevitable changes to come . This advice is actually the same for all workers these days.
On the question of whether there is enough money out there, Sensei refers to a recent study that reports fairly rosy statistics . A study by MBO Partners find 20% of workers earning $100,000 or more annually, and the “average” income of the sampled independents slightly higher than the overall “median” income for the US .
One explanation for these numbers is that there are an increasing number of highly skilled technical professionals in tech and pharma who work as independent contractors, with concomitant salaries. So high paid workers can be high paid contract workers if they want.
This kind of survey tends to make me twitchy and hypercritical.
Obviously, warning lights come on with statements about the “average income” of $69,000, especially when compared to “median household income” ($58,000). We all know about the different kinds of “average”, and with the information above we know that there are quite a few high end earners who will skew a mean income, and shouldn’t be compared to medians. The fact is, the vast majority of independent workers earn less than the average median income (which is none too high, IMO).
There are other warning flags about this and similar studies. For some reason, the study defines “full time” freelancing as 15 hours or more per week. (They also confirm the FU survey’s finding that “full time” freelancers average about 35 hours per week—less than a conventional work week.)
There is the question of what that income figure should be compared to. For a conventional job, the salary is only part of the compensation, which can include insurance, pension, and other benefits, which can be as much as 50% of total compensation. So comparing the pay must account for the cost of benefits, etc. And it is not clear how these are accounted in this survey.
(??) “full-time independents in the tech and pharmaceutical industries tend to earn more than their peers.” (from )
So, does a freelancer’s $100,000 have to pay pension and insurance? If so, it’s no where near as much take home. Again, I can’t tell from the report.
I’ll also note that the study is based on an internet poll, self-reported. Who knows how representative the sample may be, or how reliable the reporting.
One more critical point in the survey: all these trends are happening in a tightening job market, at the end of a big run up. Wages are rising, positions are unfilled. Rising pay is to be expected.
At the next downturn, though, these trends will reverse, and freelancers will be the first to feel the hit. Conventional workers will lose their jobs, but freelancers will lose contracts first, and will have to take less money for the same work. So whatever this survey shows, it certainly isn’t a guide to the future.
Let’s not be too pessimistic. There are opportunities, especially for skilled workers with established credentials.
But let’s not fool ourselves with weak statistics. Freelancing is still risky, especially in many industries, and especially when economic cycles turn down.
On the other hand, conventional employees face similar risks.
- MBO Partners, The State of Independence in America: 2018: The New Normal. MBO Partners, 2018. https://www.mbopartners.com/uploads/files/state-of-independence-reports/State_of_Independence_2018.pdf
- Elaine Pofeldt, New Data: Six-Figure Freelancing Is On The Rise, in Forbes. 2018. https://www.forbes.com/sites/elainepofeldt/2018/07/12/new-data-six-figure-freelancing-is-on-the-rise/#5a65906c2a94
- Tyra Seldon, How to make your freelance business sustainable, in Freelancers Union Blog. 2018. https://blog.freelancersunion.org/2018/09/21/how-to-make-your-freelance-business-sustainable/
- Tyra Seldon, A new study shows freelancing can be sustainable, in Freelancers Union Blog. 2018. https://blog.freelancersunion.org/2018/09/13/freelancing-can-be-sustainable/