For 11 years, as the research provider for the MBO Partners State of Independence Study series, we’ve been charting the growth, profile, desires, and needs of the growing American independent workforce. These are self-employed consultants, freelancers, independent contractors, gig workers, and others who work independently instead of having traditional full-time jobs. We recently found something surprising: An increasingly large majority of independent workers say that independent work is less risky and more secure than traditional employment.
Historically, job security — and the predictable income, attractive benefits, peace of mind, and career progression it represents — has been one of the main attractions of traditional full-time employment. Self-employment, or independent work, involves a series of trade-offs. You might gain greater autonomy or have more freedom to pursue a passion or work you enjoy, but you’ll lose the steady paycheck, the camaraderie of coworkers, and the support that companies large and small can provide.
In our 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 32% in 2011 and 53% in 2019.
And here’s the really interesting finding: For the last four years, we’ve been asking full-time workers whether they agree with the statement that working independently is less risky than permanent employment. The share of these jobholders saying yes increased from 18% in 2018 to 29% in 2021. Put another way, 7 in 10 independents and 3 in 10 traditional employees say independent work is more secure than traditional employment.
It’s also clear that workers — especially highly skilled, well-compensated ones — are voting with their feet. The Bureau of Labor Statistics reports that some 4.3 million Americans quit their jobs in January 2022 alone. Many of those who quit chose to turn to self-employment. According to a McKinsey study, “31% of employees who left their job in the past six months did so to start a new business.”
The shift is the result of the following powerful, longstanding trends in both the traditional and independent work arenas — trends that were accentuated by the pandemic.
Declining Security of Payroll Jobs
Many workers simply don’t see traditional jobs as being as compelling as they were in the past — and with good reason. Over the last few decades, companies have kept wage growth down and pared back benefits. The U.S. Private Sector Job Quality Index, which compares the proportion of higher-wage/higher-hour jobs to lower-wage/lower-hour jobs, has shown a steady decline in job quality in the past 30 years. Plus, the proliferation of information technology has blurred the lines between home and work and stretched many nine-to-five positions to more like 24/7.
Job security is clearly under assault. Even when times are good, corporate restructuring and layoffs have become common. And when a crisis hits, companies take an axe to payrolls. In the Great Recession, between 2007 and 2010, 8.7 million payroll jobs were cut, and they didn’t return to their pre-recession peak until May 2014. When the Covid-19 pandemic hit, the impact on payroll jobs was brutal. U.S. employers slashed nearly 22 million jobs — 14.4% of the total — in two months.
Increasingly Confident Independents
At the same time, independent work is becoming more of a norm in the U.S. economy. According to the 2021 State of Independence report, the number of independent workers has risen steadily over the past decade, reaching 51 million full and part-time independent workers in 2021. Technology, and especially the internet, has made it easier to operate an independent business, or to work as an independent contractor. Platforms, software, and other services have sprung up to ease the burdens and provide support. And the Affordable Care Act, passed in 2010, made it cheaper and easier for the self-employed to get health insurance, which is the most significant benefit concern for most traditional jobholders.
There’s another factor at work: Life is procyclical. That is, the more people do any activity, the more others see it as viable. 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. Data from the 2018 State of Independence study found that 29% of independent workers and 25% of traditional employees said more of their friends were self-employed or starting their own business than in the past. Last year, 42% of independent workers and 38% of traditional workers surveyed provided that response.
Meanwhile, while it may not provide a bi-weekly paycheck or sick leave, independent work does provide its own sources of security. Many independents believe that having multiple sources of income — multiple clients, different streams of cash flow, etc. — provides a greater level of security than relying on a single employer. And 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.
The Pandemic as an Accelerant
The Covid-19 pandemic both heightened the tensions inherent in relying on payroll jobs 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. The YOLO (You Only Live Once) movement, the Reddit anti-work movement, and China’s tangping or “lying flat” anti-work movement, for example, show that there’s a multidimensional global impulse pushing people away from traditional payroll jobs.
Many have expressed a greater desire to find work that reflects their values and fits their passions. Others have come to realize that they don’t want to endure long commutes or be tied to an office. Expanded unemployment benefits gave many people the opportunity and ability to be more selective about which jobs they elected to pursue. The combination of excess deaths, early retirements, and an ongoing crisis in child care have reduced the pool of workers available for full-time jobs. All these factors have combined to increase not only the bargaining power and agency of workers, but also the appeal of independent work.
What Should Companies Do?
Even with the effects of the pandemic subsiding, we shouldn’t expect a quick return to the status quo.
So, what should companies do as they strive to hire and retain workers? Obviously, they need to make traditional full-time jobs more appealing, and more secure. Many employers are in a position to provide more predictable income and better benefits than self-employed people can obtain. But that may only go so far. If workers have a different view of what constitutes job security — and how to get it — then companies need to provide the positive attributes independents associate with self-employment.
We have four principal suggestions.
Provide employees with greater levels of work autonomy, control, and flexibility.
Companies must strive to grant employees more control over work/life boundaries and work/lifestyles. This includes and goes beyond allowing more remote work options, which is something most workers want, according to a recent Pew Research study. Employers also need to give their employees more agency and control over how they do their work.
Show you value employees’ contributions.
According to the recent McKinsey article, “the top three reasons employees cited for leaving their jobs in the past six months weren’t salary, bonus, and benefits. Rather, they were: not feeling valued by the organization (54%) or their manager (52%) and not having a sense of belonging (51%).”
Similarly, when we asked in our survey of independents why they’re satisfied with their work, money didn’t immediately enter the discussion. The third-most popular response was, “My customers/clients appreciate the quality of my work.” (The top two were: “I have interesting work” and “work flexibility and control.”)
Provide on-the-job opportunities to stretch, learn, and work in new areas.
Independent workers reported that they appreciate the variety of tasks they get to do and the opportunities to learn new skills. Improving internal mobility for employees would go a long way toward attracting them. Providing gig-like secondments, offering temporary assignments, setting up internal labor marketplaces, and creating short-term teaming sprints to work on specific projects are ways established companies can provide their employees with opportunities to explore different functions, pick up new skills, and work on a variety of projects.
Hire more independent workers.
If you can’t beat ‘em, join ‘em. That may not be the most sophisticated management maxim. But it is a repeated finding in our work that independents can’t simply be lured back to traditional employment by money or compensation alone. In fact, most independent workers (71%) report being willing to earn less in exchange for the non-monetary advantages associated with being self-employed. We also find that independents are generally intent on continuing their path, with 74% saying they intend to remain independent. As more independents regard their path as more secure, employers will increasingly have to meet them where they are.
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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 prioritize 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.