Stealth freelancers and the mystery of the missing self-employed

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Lots of experts, including plenty on this site, have predicted a rise in the number of independent workers, and the web is littered with personal anecdotes claiming more and more people are working in a gig-based fashion. But hold on, some economists reply, standard economic data such as numbers from the Bureau of Labor Statistics don’t actually show an uptick in self-employment. Who’s right here?

It’s a question we posed to Fabio Rosati, CEO of Elance, when we spoke to him a few weeks back. In a nutshell, he said that the categories used by the BLS don’t fully capture new, more flexible ways of working. “I believe that the trend of increased flexibility in the workforce is substantial and is significant,” he said, suggesting several ways the statistics might not fully reflect that trend, including labeling solopreneurs as small business employees and missing all those that work flexibly through staffing firms. “If you look at the number of individuals that have been hired by staffing firms and then in turn placed as temporary workers with clients of the staffing firms, that number is increasing significantly. The BLS numbers don’t tell the full story,” he said, pointing as well to the increase in the number of folks telling the BLS they work part-time for non-economic reasons as more evidence of an increasing incidence of flexible working.

Rosati may have a point that the BLS criteria are more rigid than the current reality of the job market, but there may also be another explanation at work – an increasing number of “stealth freelancers.” When GroupTalent, a site that matches top-tier design and development talent with projects in need of extra hands, sifted through its data recently they discovered something that CEO Manny Medina found startling. More and more workers selling their services on the site also have full-time gigs.

66 percent of freelancers, it turns out, hold full-time jobs. That’s a 50 percent jump from when the site launched in November. Speaking to these freelancers, Medina found they constitute a “dark pool” of talent, which doesn’t advertise but can be quietly recruited through sites like his or through personal referrals for the right sort of challenging projects.

The site screens freelancers by examining a candidate’s portfolio and then conducting a short interview. “At the very beginning it was 50/50 people who were doing full-time freelancing and people who were in startups. What we started seeing is a lot more of those who were coming in to our site were those who had full-time jobs. A lot of these people don’t want it to be known that they’re freelancing,” Medina explained in an interview.

“There’s not enough talent to go around and on top of that there’s a quality signaling problem. Employers are so desperate looking for developers right now that they’re willing to take someone on a part-time basis,” Medina said, explaining the increase in stealth freelancers from the perspective of employers. From the perspective of the worker, you might think that a full-time job plus high-octane freelance projects sounds like a stressful drag you’d only take on if you needed the money, but Medina has found that most of the stealth freelancers on his site seem pleased with the arrangement.

“We’ve been interviewing some and some of them do it for fun. If you work for a company, you get antsy. They like the challenge of building something new. They get that start-up rush again. Most of these people work on projects anyway on weekends, it’s just nice to get paid,” Medina said. He noted that any talk of motivation was partially speculation, but gave as an example a guy who works at Gilt, has his own startup on the side and rents out about five hours a week on GroupTalent. “We’ve only been in business for three months, but people return,” Medina said to illustrate that freelancers didn’t seem motivated only by short-term economic need (though of course extra cash flow is great for those with startups) but viewed this stealth freelancing as a long-term work style.

“You see a lot of articles talking about the freelancing world and in reality you’re not counting those that would be willing to freelance on the side. I think that the real number of freelancers is a metric that hasn’t been really accounted for,” says Medina, concluding, “we’re firm believers that the world will move to freelance.” Perhaps it’s moving that way slightly faster than official statistics indicate.

Do you agree that official employment statistics don’t fully reflect that shift towards the so-called gig economy or is the ‘everyone will be a freelancer story’ overblown?

Image courtesy of Flickr user Kenny Holston 21

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