Self-Employment Is About to Spike Hard: Study

Over 27 million Americans are going to abandon their jobs for full-time self-employment over the next 24 months, according to a new study from FreshBooks.

The largest driver of such change is, in a word, control. Some 43 percent of respondents to FreshBooks’ survey say they simply want control over their careers, while an equal percentage report they’re hungry for a career change. Another 33 percent point to “financial reasons” as a precursor for self-employment, while 32 percent are doing it for their families. Around 15 percent say their health is driving them to become self-made.

In preparation for their new life as freelancers or startup founders, 58 percent report they’re working hard to save money and pay off debt ahead of quitting the 9-5 grind. Just over half (52 percent) are learning a new skill. A surprising number have begun their freelancing prep before leaving their jobs; 45 percent say they’ve already begun reaching out to potential clients, while 36 percent are hard at work building their “personal brand” online. Another 26 percent are lining up seed money for their new venture.

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Data from the Dice Salary Survey supports these future freelancers’ impulses. Consultants make over $20,000 more per year than full-time tech pros, on average. The base rate for consultants has also risen 4.7 percent to $72.32 per hour. Self-employment pays off!

Tangentially, the Salary Survey found other indicators that tech pros are ready to go freelance. Respondents say higher compensation, better working conditions, more responsibility, fear of losing their job, and a shorter commute all drive their reason for wanting something else in terms of a career.

The findings aren’t specific to late-career professionals, either. FreshBooks reports over 40 percent of the self-employed workforce will soon be Millennials. It also discovered that job satisfaction long-term improves for the self-employed, while those in traditional jobs are less satisfied the longer they sit in offices and cubicles.

For those less adventurous, remote employment is always an option. Employers are starting to offer better benefits in lieu of more pay as tech salaries plateau, so now is a great time to negotiate a “separate” working environment. Trust us; shorts and a tee on your couch is far better than khakis and a polo in the cubicle.

10 Responses to “Self-Employment Is About to Spike Hard: Study”

  1. wageSlave

    Ahh yes, the contractor’s dilemma. When Nathanial Pink published contractor nation he purveyed a vision of self-employed extreme specialists working from home in their underwear making big bucks without handlers. Doesn’t that sound great? It is a very motivational image to disseminate to people desperate to escape the yoke of labor oppression. I wonder if the controllers of the opportunity, that most contractors know all too well, will give up there market shares to perpetuate the dream of self-employment. I think not. Lottery anyone. Some people do win sometimes.

  2. Obsolete

    It would be equally interesting to get responses as to how many people are freelance because they were caught in the up-or-out, self-employed by 40 attitude perpetuated in business. Tech employment has a shelf life, and I’m afraid that the reason so many millennials are about to join the freelance ranks is they’re starting to find this out as they get into their 30s. Of course, once you’re “up,” you’re ripe for downsizing. There are also only so many senior or management positions at any company, so people get faced with the fact that they are never moving up unless someone quits or dies. Meanwhile, as they get into their 40s, it becomes harder to find a job (some part ageism, some part very few open senior positions to even make a lateral move). Older than 45, you might as well hang out your shingle before even looking. Even if you don’t make as much, you won’t have the humiliating experience of going hat in hand for a job only to watch the shock followed by thinly disguised disgust as interviewers realize you’re older than they are. Going in as a freelancer conveys expertise perhaps, but it also conveys that you won’t be there long, so who cares; you’re there to solve a problem.

    Of course, on those freelance interviews, tech people have to watch themselves not to give out too much information, because they’ll get “interviews” where people are only trying to get free advice or steal ideas. They also get the new world of self-employment tax. Don’t bother with freelance marketplaces, as you’ll be undercut by someone willing to do the work for $2 to get “experience” while competing in a global marketplace where $2 is a standard bid (doesn’t matter whether people can do the work when the person hiring doesn’t care either or expects someone living on slave wages in another country will be happy to get that money and have superior skills to anyone in the US). Then, too, there are places that hire consultants demanding that the consultant be willing to sign on for a long-term commitment, only to lay off people every single year.

    So many potholes to work around for a new freelancer that you just never see on these happy-talk discussions. If someone is getting the up-and-out feeling or the siren call of making more money working in their underwear (eww), they need to know real problems and things to watch before they head into it – many don’t, as they are caught short after a layoff or job outsourcing. Too many companies still see computers and all related things as incidentals, cost centers that aren’t at the core of their business, without realizing that their business would be impossible without technology (let’s hear it for those toilet cleaners!). Freelance at least gives the patina of self-respect.

  3. BBeen There, Done That

    I contracted as a W2 for 13 very prosperous years. I never met a contractor, W2 or otherwise, who just said, “Gee, I’m tired of a study paycheck. I think I’ll fly without a net.” But what I found was that once I was out there, it wasn’t too bad. I stopped because I wanted to buy a condo and lenders preferred salaried employees, no matter my track record.

    However, keeping up with the new tech was on my nickel and I did have to go to quarterly taxes. And, once you do that, you cannot go back.

  4. I am a freelancer, sitting in his underwear, and happily typing this reply :-)

    This is happening and it is going to work well. It will help if we add some minimal lean structure to it to get the freelancers better organized. Check the #OpenConsultingGroup on LinkedIn.

  5. Self employment abounds everywhere and is frequently called sole-proprietorship or DBA (doing business as). The DBA is nice, because of the pass thru tax advantages, until you make a bunch of money. Then for a few hundred bucks and some paperwork, you become a corporation and get the new tax cap benefits.

    I was freelance in the early 2000’s. It was great for me, because I used multiple skills beyond tech and was truly enjoying the variety of roles in life. The downside was, I wasn’t hungry for money and planning for retirement wasn’t something I did automatically – so I ultimately went back into the corporate environment … but now I’m out again, and the world is my oyster.

  6. YourNotFreelance

    I think a lot of contractors think they are freelancers. If you are on a contract you’re probably like and hourly employee without the benefits. Ya, you work form home and all that. But if you’re freelance, you will have had the experience of having to invoice and get paid after a whole months hours are built up, and sometimes much more. it’s a lot of bucks if your invoices get held up. The bigger the project and the bigger the bucks the bigger the hassles with getting invoices paid. On some projects you get to worry about your invoices being paid at all! Have you, “freelancer” done fixed bid work? Like lawyers? At some point you will need one!

    I’ve started and shut down several companies over the past three decades. I made bucks in this business when you really could pick your projects. Now, I prefer a contract through an agency. Weekly check and if I quit the project, who cares. No threats of law suits. Owning a company and going freelance is a good experience. You should know how to be self sufficient.

    The most money with the path of least resistance, that’s my advise! Want to be Freelance? Get ready to compete. Go on RFBs and spend the time on that too, no pay for that time. If you get a good project, you get to include other freelances and contractors to meet the promises you made to land the project. Again, some good experience! Thought everything was specified and had a clearly laid out scope of work! Get ready to break even on some projects too! That’s fun!

    Ha Ha… Happy “Freelancing”! “Go for the Gold Parker!”