The Role of Freelancers in the Post-COVID-19 Workforce

The current state of freelancing, and projections for what contract work will look like post-pandemic 

COVID-19 will forever change the global workforce, and one of the biggest transformations can be seen in the freelance market. Although there has been steady growth in freelance opportunities over the years, the need for contract workers dramatically increased during the pandemic. Numerous companies sought flexible and affordable resources to become more efficient and hedge against uncertainty, with specific industries seeing much greater demand than others.

Many are wondering, however, what a post-COVID-19 world looks like for the self-employed. Will contractors be set afloat as the economy recovers, or continue to thrive as organizations rethink their long-term business models?

Let’s take a look at the current state of freelance, some of the industries that are seeing the most growth, and where contractors may fit into the workforce when the pandemic has subsided.

The state of freelance

The gig economy has dramatically expanded in recent years for several reasons:

1. Leading companies like Uber, Etsy, and PostMates are designed for the gig economy, making it easier than ever for people to support themselves with a flexible job centered around their availability and interest.
   
2. Platforms such as Upwork, Fiverr, and Freelancer.com centralize available freelance opportunities so people can easily find and apply for work, while also building a solid reputation and portfolio.
   
3. Gen Zers are flocking to freelance work in greater numbers than any generation before them. Even before the pandemic, 46% of Gen Zers were freelance, and 73% of them were doing it by choice rather than necessity. Given that over 50 million members of this generation are expected to join the workforce in the next five years, the trend will continue.

The freelance pool was affected by multiple angles when COVID-19 hit the U.S. in early 2020. Many companies had to let go or furlough employees who turned to freelance work, throwing millions of highly skilled workers into the contract world in the blink of an eye. Simultaneously, organizations seeking to streamline operations and cut costs turned to temporary workers as a solution, creating a surge in demand.

But the availability of contract jobs is mixed, and the demand for freelancers is highly dependent on the nature of the work. About 50% of freelancers reported a decrease in the need for their services at the beginning of the pandemic, while another 40% reported consistent or increased demand. During Q2, the number of freelance job openings increased by over 25% compared to Q1, and the month-to-month freelance revenues in the U.S. increased nearly 30% from April to June.

The exact future of freelance work is undetermined. But given companies’ forced exposure to the model in recent months plus younger workers’ increased demand for more flexibility and ownership, the gig economy is expected to continue its growth. And the vast majority of freelancers believe that the demand for their services will increase post-pandemic.

Some areas where freelance has seen significant growth

Several industries have experienced more demand for contract workers than others. Here are a few examples:

• The legal industry, much like other sectors, is changing as a new generation of lawyers enters the workforce. Millennials and Gen Z lawyers are more averse to the traditional (and often overly demanding) firm model and seek more flexible opportunities. And the demand for contractors exists, especially from companies that need occasional counsel or specialists but not a permanent in-house attorney. With freelance work, lawyers can work with preferred clients, invoice the work themselves, and operate out of any location. In a legal climate where the chances of making partner in a big law firm are as low as 4%, going down the entrepreneurial path is a much more appealing option for many.

• Mathematics and statistics: The largest surge in employment demand related to COVID-19 was seen in the mathematical modeling field, with jobs increasing two-fold in Q2 alone. Statistics and analytics positions rose 75%, as well. The need for these skills has been widespread, as healthcare institutions, government entities, and media organizations (among others) demanded rapid interpretations and predictions.

• Ecommerce: Top retail sites experienced an average of a 125% increase in traffic throughout the pandemic. So, it’s no surprise that job postings for freelance ecommerce professionals rose by 54% over the past few months. Many companies realized the need to transform or upgrade their online presence to keep up with the shift in traffic, and they turned to freelance workers as a solution.

Of course, many other industries and roles have experienced increased demand for contract work. But the inverse is also true. Uber and Lyft drivers—perhaps the most well-known aspect of the gig economy—were devastated by early lockdowns, with “ridership dropping between 70% and 80%.” And many contract workers in a variety of industries were let go when long-term projects were shelved by companies looking to preserve cash.

Thus, the trend toward increasing freelance work is highly dependent on what that work is and how it fits in what’s being called a “K-shaped” economic recovery. Some sectors will continue to grow and even thrive, while others will see a persistent downturn in demand.

Embracing the role of entrepreneur

First and foremost, freelancers must offer services for which there is a demand to succeed. But they also have to embrace the role of “entrepreneur.” 

And whether you are a part-time freelancer or have a steady job, it’s essential to be proactive about your career by networking, increasing your skills, and seeking out attractive opportunities. This maxim holds doubly true for those in the full-time gig economy. 

There are several essential tactics to set yourself up for success:

• Always be prepared for the next change: Don’t wait until one job ends before looking for the next one. Keep your resume, portfolio, and information updated with the latest projects. Continuously research potential client options and income streams, so you are never caught flat-footed. 

• Network: Networking looks a little different in 2020 with the absence of in-person events, but that doesn’t mean efforts have to suffer. Seek out virtual events that connect you with new pools of like-minded people. Make connections on LinkedIn, and join groups and discussions in your industry that you can actively participate in to establish yourself as an expert. Look for mentorship opportunities (as the mentor or mentee)—you never know what you’ll learn or who you will meet.

• Continue to educate yourself: As a freelancer, professional development is on you. This includes continued education and skill development. It’s easy to put your nose to the grindstone and assume you have all the skills you will ever need, but trends and technology change quickly. Don’t get left behind. Dedicate time to sharpening your expertise regularly and staying up to date on your industry’s latest needs. This will increase your billing rate, make you a more attractive candidate, and open new doors.

• Don’t forget your benefits: Leaving a corporate job also means leaving behind employee benefits—and going freelance doesn’t diminish the need for those benefits. Anyone working independently needs to plan for their financial needs, and freelancers can structure health insurance, disability insurance, life insurance, and retirement benefits for themselves. Speaking to a knowledgeable financial advisor would be an important step to make sure you are taking care of yourself and your family as an independent businessperson.

The future of freelance work post-COVID-19 isn’t precisely clear. But most analysts believe that this mode of work will continue to grow in popularity and expand into new markets that realize a need for it. Many companies have been forced to utilize contract work to cut costs, and may never look back to hiring full-time workers for specific tasks.

In any case, a freelancer’s success depends on his or her ability to adapt and take steps to establish a strong foothold in the changing economic landscape.

At KARP HR Solutions, we help business owners and freelancers with advice on career direction and benefits needs. Call us at 954-684-3284 or complete our contact form to learn more.