Perceived security in independent work jumps 28% in two years

When I left the safety of a permanent full-time job for the unknown of self-employment, 19 years ago, I was an outlier in my cohort of employed friends.

My son had just turned 4 and my daughter was two and my relationship with their mother was over. I no longer had a marriage or a mortgage.

I decided that I had nothing left to lose so I may as well take the plunge and see if I could make life work without a guaranteed income stream.

Although self-employed seemed risky I decided it was a lot less risky than staying as an employee and, some years later, potentially regret that I didn’t back myself when I had the opportunity to do so.

Although there were plenty of hairy moments in the first four years I had built some great momentum heading into year five. My biggest invoicing month was October 2008 – then the GFC hit.

The next three years were tough, especially as my second son was born in July 2007 and extra expenses combined with my wife’s reduced earnings, and a new mortgage meant money was very tight again.

No matter how difficult things were I never doubted that I was now self-employed for life. I just couldn’t imagine not being totally in charge of my own schedule, or reporting to somebody else again.

In my mind, I was permanently unemployable.

Fast forward to 2022 and a large majority of those close friends from 19 years are self-employed and many newer friends are also self-employed.

According to the latest ABS data approximately 1 million workers in Australia (7.8% of all employed) are independent contractors.

Contrary to popular belief independent contractors have declined as a share of the total workforce in Australia over the past decade. The ABS reported that 980,000 workers (9% of the workforce) were independent contractors in November 2012.

What has changed significantly over the past decade, at least as far as U.S. data on independent contractors demonstrates, is the attitude workers have to self-employment.

In Emergent Research’s 2021 survey of 6,240 U.S. workers, including 928 independent workers, 68% of independent workers responded to the statement “I feel more secure working independently” in the affirmative — up from 53% in 2019 and 32% in 2011. That’s a 28 per cent jump in two years and a 111% rise in 10 years.

What’s even more revealing, in terms of rapidly shifting attitudes, is that increasingly employees agree with the statement that working independently is less risky than permanent employment.

According to Emergent’s data the share of these salaried workers saying yes increased from 18% in 2018 to 29% in 2021.

As the researchers summarise “Put another way, 7 in 10 independents and 3 in 10 traditional employees say independent work is more secure than traditional employment.”

The researchers posit that the trend is the result of the following powerful, longstanding trends, accentuated by the pandemic, in both the traditional and independent work spaces.

• Declining security of traditional jobs: Even when times are good, corporate restructuring and layoffs have become common and workers are increasingly cynical of the ‘people are our most valuable asset’ corporate doubletalk when jobs are slashed at the whiff of a downturn.
• Increasingly confident and common self-employed: As self-employment has become more common, more employers are comfortable dealing with independent workers, and a larger proportion of the general public knows people who are doing it
• Technology: Advances in cloud technology have made it easier to operate an independent business, or to work as an independent contractor. Platforms, software, and other services have sprung up to help find, service and retain new clients and provide support for many administrative and compliance aspects of self-employment.
• Spread of risk: Many independents believe that having multiple sources of income, such as multiple clients and different streams of cash flow, provides a greater level of security than relying on a single employer. There are multiple dimensions to security. Being in charge of their work lives allows independent workers to adjust to changing economic conditions rather than be subject to the whims of mercurial managers and employers.
• Earnings: Although getting started in independent work may mean a year or two (or more) of earning below previous levels, the longer-term earning potential is generally very good, at least for highly-skilled workers. It’s also much easier for an independent to increase their charge rate when demand climbs, compared to asking for an equivalent salary increase as an employee.
• Interesting work: When the researchers surveyed independents as to why they are satisfied with their self-employed status “I have interesting work” was the most popular response (followed by “work flexibility and control” then “my customers/clients appreciate the quality of my work” as the third-most common response).
• The COVID-19 pandemic as an accelerant: The pandemic both heightened the tensions inherent in relying on a traditional job and accelerated the trends toward people wanting greater levels of work flexibility, autonomy, and control. The often shattering and all-enveloping experience of Covid-19 has stimulated a fundamental rethinking about what people want and need from work — or whether they want to do it at all. Many have expressed a greater desire to find work that reflects their values and fits their passions. Others have come to realise that they don’t want to endure long commutes or be tied to an office.

As the researchers conclude:

Job security is a key reason people choose traditional employment.

 But declining perceptions of job security, coupled with workers rethinking what they want when it comes to work/life balance, are leading more people to prioritise flexibility, autonomy, and control when choosing where they will work.

 Because of this shift, to successfully attract and retain top talent in the post-pandemic world, employers will need to give their employees the freedom and flexibility associated with independent work.

As the disconnect between vacancies and available workers reaches new highs in this country it’s not just the prospect of their employees being seduced by higher paying or more interesting jobs with competitors that employers should be worried about; it’s the increasing attraction of life as an independent worker that may be the greater threat.

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