Unemployment, The Economic Downturn and Web Working


Photo by _e.t.

Photo by _e.t.

I left my corporate job in June to strike out on my own as a freelance consultant working out of my home office and coffee shops. I had been preparing to make the move for a while, and it was something that I knew I wanted to try. The technology industry was growing and there were plenty of job openings in my field of expertise: online communities and social media. I left confident that I had plenty of time to test the waters as a freelance web worker knowing that I could always go back to the corporate world if freelance consulting didn’t work out for me.

I’m happy to say that consulting is working well for me right now, because I’m no longer confident that I could find a new corporate job as quickly or easily as I might have been able to get one a year ago.

The job market is getting tougher each month as unemployment continues to rise. At this point, I should emphasize that I am not an economist, employment guru or other expert qualified to analyze this data, so consider this just one web worker’s summary of the current economic conditions.

Let’s start with the recent employment data. Grim and depressing are the best ways I could come up with to describe the employment data that was released on Friday by the U.S. Department of Labor. Here are a few “highlights” from the report:

  • Unemployment rose from 6.8 percent in November to 7.2 percent in December.
  • The number of unemployed people in the U.S. is now 11.1 million up by 632,000 in December
  • From the beginning of the recession in December 2007, unemployment has increased by 2.3 percent with 3.6 million additional people becoming unemployed.

However, this may not tell the whole story for those of us in various web working professions. In an article by Brett Philbin, of Dow Jones Newswires, John Challenger, chief executive of Challenger, Gray & Christmas, predicted that the economic downturn could have an interesting impact on web working:

“Challenger said that the economic downturn could lead to a surge in some workplace trends such as telecommuting as companies look for alternative ways to cut costs. In addition, job seekers may look for creative ways to find employment, including the use of social networking sites and posting video resumes on Google Inc.’s (GOOG) YouTube.”

Telecommuting and web working are growing trends that have been covered recently on WebWorkerDaily with posts about The State of Telecommuting and Trends in Teleworking, so I won’t revisit those trends in detail here.

I did decide that it would be good to get the perspective of a couple of job sites focused on freelancers, consultants, and other web workers, so I contacted oDesk and Elance to get their take on the recent news and learn more about how the economic downturn was impacting their job postings.

oDesk provided me with this data:

  • They had 4,100 working providers in December compared to 4,000 in November (growth of 2 percent) despite the fact that December is typically a slow month for starting work on new web projects.
  • The number of providers working in Q4 was up 13 percent over the number working in Q3.
  • They’ve seen a large increase in provider signups (registrations of people that may not have found a job yet): Q3 signups of 36,000 and Q4 signups of 52,000 (47 percent growth).

Elance sent me these numbers:

  • 60,000 new jobs were posted in Q4 of 2008 (up 39 percent compared to same period in 2007). The number of new jobs posted in December was up 48 percent from December 2007 and November was up 35 percent from December 2007.
  • Over $14 million in payments made to service providers in Q4 of 2008 (up over 40 percent from Q4 2007)
  • More than 55,000 unique businesses in working engagements with service providers in the past 6 months (up 44 percent from same time a year ago).

Keep in mind that these numbers are self-reported by companies with a vested interest in the telecommuting and web working industry, and these numbers include jobs outside of the U.S., so they can’t be directly compared to the earlier data from the U.S. Department of Labor. However, they do highlight an interesting trend showing an increase in freelance and web worker activity.

Now comes the hard part: making sense of all of this data. We have several sets of numbers that may or may not be related in any way showing different perspectives and different conclusions, so here is where you come into the picture. In the best tradition of the lazy blogger, I outsource the analysis (the hard part) to you.

Are web worker jobs increasing in spite of the economic downturn or is the increasing unemployment rate pushing more people into freelancing positions while they look for other work? What other data have you found recently that might shed some light on this question? Have you noticed any relevant anecdotal trends as part of your day to day web working?


Rebecca Haden

The thing I noticed about the economic downturn and freelancing is that my private clients — and those of my colleagues in this field — got really slow about paying. I’m working more on oDesk now, because there are high quality jobs there for high quality workers, and payment is guaranteed. This has allowed me to be patient and compassionate with private clients who are having trouble keeping up.

Dominic Taverniti


Thanks for the thought provoking article. Along the lines of Jo L.’s reference to oDesk, my experience in the that particular marketplace left me feeling that the low-cost war WAS the value.

If the trend towards telecommuting and web working continues, I would suspect that the transition isn’t going to be as simple as telling current employees to stop driving into work—though that will be part of it. After the cost saving of cutting the workforce, a conceptual shift to a telecommute model will send companies out to build a remote workforce.

I would agree that oDesk’s niche isn’t going meet top tier U.S. company needs. It brings to mind the current ads and market focus of The Ladder – $100K+ jobs and candidates. I look forward to a quality-driven marketplace for remote workers, to fill the void that price-based auction marketplaces aren’t meeting.

I hope my comments are on topic.

Jo L.

The use of oDesk as a reference is telling. Because they’re leveraging international workers, I’ve seen web design jobs on that site with an average bid of $8/hr. Great news! There are more minimum wage jobs available for experienced and skilled tech workers!

In my mind the more successful they’re doing, the harder it’s going to be for a US tech or web worker to find gigs. I understand globalization is the new reality and I’m not griping, I just don’t think it’s good news to see that $8/hr. jobs are on the rise.

Jonathan Cohen

Anecdotal evidence:

There used to be a number of general writing jobs posted regularly on Guru.com. Nowadays, there are far fewer gig postings, and they all seem to be translation jobs.

Make of that what you will…

Brian Goler

Hi Dawn – Thanks for including oDesk and some of our data in this post. We publish a lot of additional information in the oConomy section of our site (http://www.odesk.com/community/oconomy).

Job posts on oDesk are up *120%* in Q4 2008 compared with Q4 2007 (see: http://www.odesk.com/community/oconomy/jobs_post_statistics) and the average value of oDesk hourly jobs remains ~$5k/post.

We’ve been posted some analysis of oDesk data to our blog (http://www.odesk.com/blog) including a post last week showing the skills with the highest growth rates in 2008 (http://www.odesk.com/blog/2009/01/top-growth-tech-skills-in-2008/)

Please don’t hesitate to let us know if there is other data you’d like to see.

Troy Peterson

One thing that would be interesting, and helpful, would be to see a graph or chart of the kinds of jobs that are being lost.

My suspicion is that a lot of these jobs might be associated with other industries such as brick and mortar retail, financial, and other service industries.

Does anyone have access to this data or know where it can be found?

Matthias Wayland

I’ve read elsewhere that the biggest losses have been in manufacturing and retail. Part of the reason for the retail losses, besides slowing sales and layoffs, may be the failure of retailers to live up to the seasonal hiring expectations that are used to adjust the numbers. This year the big box store have avoided temporary hires in favor of more hours (and even overtime) for their many part time employees.

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