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?

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