February 27, 2018
A growing army of Americans want to trade their traditional jobs for self-employment, according to new research.
Twenty-seven million people could be poised to leave traditional work for full-time self-employment according to the FreshBooks Self-Employment Report. That would triple the number of self-employed professionals, by the estimate of FreshBooks, a provider of cloud-based accounting software.
FreshBooks conducted the survey of more than 2,700 full-time professionals, independent professionals and small business owners with the consultancy Research Now in November 2017.
Many of those who say they wish to go freelance may not actually do it. However, says Mike McDerment, CEO of FreshBooks, “It is very interesting there is a huge jump in people wanting to go out on their own.”
So why do so many people yearn to leave their jobs? Many want to call the shots in their own careers, the survey found.
The top reasons traditional employees say they want to transition to self-employment are control over their career and career change, each cited by 43%. (Respondents could choose more than one motivator).
Perhaps because of the slow wage growth we’ve seen in recent years, some workers are realizing they’ll be better off drumming up projects on their own than relying on a salary. Financial factors were the third most popular motivator, cited by 33%.
Among traditionally employed respondents, 67% said they expected to earn more in self-employment. And this may not just be wishful thinking for many. Among those who were already self-employed, 54% actually did bring in a larger income.
Some traditional workers are drawn to self-employment because they are bumping up against the industrial-era ways that jobs are structured—and looking for flexible ways of working that better suit their lifestyle. Family reasons (cited by 32%) and health reasons (mentioned by 15%) were popular drivers.
“The notion of people prizing flexibility above all else came out here,” says McDerment. “They want a sense of control of their time and flexibility to choose their own hours.”
There do seem to be health benefits to self-employment—perhaps because it liberates people from unhealthy routines like long commutes and eating convenience food. Among those who are already self-employed, 55% said they have better health now that they have made the switch from traditional jobs.
Freelancing also brings better career satisfaction, with 71% of the self-employed saying they are satisfied with their careers, vs. 61% of those in traditional jobs.
One interesting development is how many men are interested in leaving traditional jobs for freelancing. Among those who wanted to start a freelance career, 64% were male. Fifty-two percent of respondents with traditional jobs were male.
Younger workers are also gravitating to freelancing. Among respondents who want to become self-employed, 44% were Millennials, compared to 34% of those in Gen X and 32% of Baby Boomers. Currently, Baby Boomers make up 39% of the self-employed, followed by Gen Xers (33%) and Millennials (18%).
There was also significant diversity among those who want to become self-employed, with 66% of white respondents, 17% of black respondents, 10% of Asian respondents and 9% of Hispanic respondents sharing this aspiration.
Many respondents were highly educated workers earning good salaries. Among those surveyed, 65% hold a bachelors’ degree and 23% have a masters degree. Many bring in a healthy income, with
27% earning $51,000 to $100,000, and 32% bringing in more than $101,000.
Although many of the respondents were optimistic about freelancing, they did seem to be aware of the pain points.
Among those hoping to become freelancers, for instance, 74% expect to work harder than they do now. In reality, 59% of self-employed respondents said they actually did work harder than in a traditional job.
And many existing freelancers are dissatisfied with government support for their businesses.
As the report points out, self-employed professionals “live and work in a world not yet designed for them. From tax regulations to retirement, favor tends to traditional employees over self-employed professionals.”
Perhaps, as a result, many of those who are currently self-employed don’t see the federal government doing much to look out for them.
Only 9% said the federal government represents their business needs well, down from 17% in 2016. And 25% said they would change political affiliations to support a party that better represented them.
Despite such drawbacks, many would-be freelancers are already taking steps that will allow them to work around the obstacles and leave their jobs.
The moves they are making include:
Paying down debt (58%)
Learning new skills (52%)
Reaching out to potential clients (42%)
Getting advice from other entrepreneurs (42%)
Building a personal brand online (36%)
Taking courses in person or online (26%)
Lining up potential investors or partners (26%)
Interestingly, men were more inclined to line up potential clients, while women focus on developing skills.
The results of this survey may seem to pertain only to freelancers, but they should be a wakeup call to employers.
The fact that so many well-compensated, highly educated professionals want to leave traditional jobs indicates that the war for talent isn’t just a contest with a company’s competitors. Employers today have to prove they offer something better than self-employment would bring to attract and hold onto highly-educated, capable people. Apparently, many employers are not making that case successfully.
Elaine Pofeldt is the author of The Million-Dollar, One Person Business(Random House, January 2, 2018), a book looking at how to break $1M in revenue in a business staffed only by the owners.