Tech Workers ‘Own Their Lives’ Through Freelancing, Study Says

In a job market that increasingly gives applicants the upper hand, those with the most sought-after skills are seizing the benefits by working on their own terms.

Freelancers — specifically high-skilled, professional contractors filing 1099 forms with the Internal Revenue Service, as opposed to your average Fiverr or TaskRabbit worker — who work 40 hours per week earned $24,918 more last year than full-time workers filing W-2s, according to a new report from the job-matching site Hired, using its own data. And the freelancers in Hired’s study, the most popular of which were tech engineers, worked only 24 hours weekly on average, by choice. By contrast, full-time tech employees, the report noted, “spend much more than 40 hours a week on the clock,” and if a freelancer dedicated the same number of hours to their job, “the income disparity between the two groups would become even more significant.”

Mehul Patel, the CEO of Hired, said many candidates in the study sample were happy with the added freedom of contract work, even if that meant foregoing eye-popping six-figure incomes or retirement and medical benefit packages.

“A lot of them just want to work 22 hours… They’re happy to make that tradeoff,” Patel said. “I think the underlying kind of trend here is there will be more people looking to freelance — to own their lives more.”

And if they have a particular set of skills, they can. Among the most “in-demand” freelance workers were full-stack, back-end, front-end and mobile engineers, who respectively made $95, $93, $83 and $99 per hour, according to Hired, which used data from 1.5 million job seekers and 10,000 participating companies for the study. The typical freelance engineering manager earned $118 per hour.

That the U.S. labor market has tipped in favor of job candidates is certainly a factor, Patel said.

A full 89 percent of the more than 800 recruiters surveyed by the recruiting software company Jobvite for a report published last week said they expected recruiting to become “more competitive” in the next year, compared to 2 percent who thought it’d become less so. The unemployment rate has bounced between a measly 4.3 and 4.4 percent since April, and has hovered below 5 percent for 16 months straight, according to the Bureau of Labor Statistics. (The labor force participation rate has been trending downward since the turn of the century, but that’s not entirely due to Americans giving up on finding work: Young people remain full-time students for longer, Baby Boomers are retiring and a substantial portion of those considered out of the labor force are — what do you know? — working freelance jobs.)

Carl Van Horn, a public policy professor and director of Rutgers University’s Edward Bloustein School of Planning and Public Policy, cautioned that one piece of research doesn’t define a trend, but noted that shifts in labor market conditions were making short-term, high-skilled work more lucrative, just as generational preferences were likely increasing its prevalence.

“What happens always in labor markets is, when labor gets scarce, the price of labor is bid up,” Van Horn said. He added that today’s recent college graduates may also be more attuned to freelancing as an option, as opposed to Baby Boomers, who in many cases landed a full-time job early in their careers and “have been riding that escalator for 25 years.”

Younger workers also are more likely to gravitate toward freelancing, Van Horn said, because of lifestyle needs — more specifically, providing for oneself versus providing for a family. But until then, the Affordable Care Act certainly gives them some leeway, he said.

“One of the things Obamacare did was it made it attractive to have a gig,” he said. “It’s not just beneficial to low-income people, but to middle- and higher-income people as well.”

Despite the lack of a 401(k) plan that comes with freelancing and the Hired report’s observed $286 difference in monthly health insurance premium payments between the average full-time employee’s coverage and the payouts that come with a mid-tier plan on the ACA’s marketplace, Patel, the Hired CEO, said, “when you factor all of that in, there is still a spread between the two” with greater gains for the high-skilled freelancers.

Still, the top benefits that recruiters polled by Jobvite said worked best to attract candidates were the sort that come with full-time work: medical and dental insurance and a 401(k) plan. The portion of recruiters who listed the latter as among the most attractive to candidates, however, was on par with “flexible work hours” and the ability to work from home.