All About Freelance Economy

Sep 29, 2010
Preetam Kaushik

The Significance of Freelance Economy - Wikimedia Commons

At a time when world economies are passing through a difficult phase, the freelance economy can provide much-needed relief.

There is no denying the fact that the freelance economy has become increasingly competitive during recent times. If you do not have a suitable job, then there could be lot of trouble in store for you. There is no doubt that there are countless job opportunities in the freelance economy but there is a scramble and the competition is indeed stiff. It can be terribly frustrating to keep patiently applying for freelance jobs and receiving no response or negative responses.

Understanding the Freelance Economy

Understanding the behavior of freelance economy is absolutely necessary to survive. The one common mistake most people commit is lowering their rates to stay competitive – little realizing this could prove counterproductive. You should know your worth and not accept jobs that fetch lower rates. Once you settle for lower rates, it will be very difficult getting jobs that pay more.

Besides, it is also not necessary that you should agree to do jobs that demand extended hours of work. As a freelancer, you should work from your home or a place of your choice at your convenient and flexible hours and on your own terms. In short, you will have to elbow your way up - or else, you will be pushed out.

Present-day Scenario

After the economic recession, self-employment has become rampant not only in USA but throughout the world. Due to recession and consequent job loss, people were forced to venture into self-employment.

This trend is continuing although no reliable statistics are available because there are conflicting definitions about self-employment and self-employed people today that include those with multiple jobs, full-time employees also doing part-time freelance work, those doing some sporadic ad hoc jobs, etc. The Bureau of Labor Statistics reports that the national self-employment rate is steadily going up.

The rate of self-employment, though tricky to calculate, became flat during the 1970s but has risen sharply after the economic recession. Economists argue that recession is not the lone cause for this phenomenon, because more and more businesses have begun to outsource heavily, with a view to increasing productivity and in-house efficiency.

It is a fact that today, corporations and multi-national companies outsource documenting and report writing tasks to freelance writers, organizing conferences to event managers, recruiting to job agencies etc. Most businesses favor outsourcing because it reduces overhead expenses, wage distribution, maintaining personnel records and payroll-tax. The companies can also make do with fewer employees and reduced office space.

Technology and Freelance Economy

Thanks to rapidly advancing technology, the bulk of the impediments to start a small self-owned business or freelance work have vanished. Spending just a negligible amount every month, anyone can construct and maintain a website advertising their goods /services and that will instantly reach all parts of the world.

Besides, most wage earners believe that self-employment can vastly increase their comfort levels than a conventional, rigid nine-to-five office job. Added to this, housewives who were hitherto restricting themselves to doing household chores are doing computer-oriented jobs from their homes.

Benefits of Freelance Economy

Many economists aver that self-employment benefits the economy in a big way. In fact, it is reported that mean earnings of a self-employed person are much higher than full-time employees working for monthly salaries. Self-employment can often prove to be a stepping-stone to gradual mid-size entrepreneurship, creating jobs for others.

Apart from being a source for eventual job creation, self-employment can go a long way in reducing employee inefficiency. It is true that corporations tend to keep employees on the payroll even after they have become superfluous because retrenchment poses hurdles. Independent freelancers, on the other hand, can be hired for the required period of time and on a project to project basis.

It may be unwise to conclude that the freelance economy creates an ideal state free from all problems. Freelance economy admittedly enables self-employed people to evade tax payment - because much of the time self-employed people accept cash payments and do not reflect it in their account books. “Unreported income may amount to as much as $2.3 trillion,” says Edgar Feige, Professor Emeritus of Economics of the University of Wisconsin at Madison. This whopping drop in tax collection can adversely affect the State and Federal revenue.