Freelancer Workforce Growing – Financial Issues Raising Concerns

Piggy bank

According to CNN Money, the Gig Economy makes up 34% of the U.S workforce. For those not in the know, the “Gig Economy” refers to freelance workers, no matter what their field of work is. This information comes from Inuit, the other of TurboTax, which has been looking at the size of the gig workforce based on the reported income sources for the last year.

Brad Smith, CEO of Inuit, believes that the trend will continue and that the Gig Economy will grow even larger in the coming years.

“The gig economy…is now estimated to be about 34% of the workforce and expected to be 43% by the year 2020,” he said on an earnings call. “We think self-employed [work] has a lot of opportunity for growth as we look ahead.”

The types of work he was referring to applies to freelancers of all kinds. Those that use platforms like Uber and Lyft, or traditional fields like plumbers and electricians.

One of the major causes in the growth of the freelance business is that, according to one-third (36%) of 1,400 executives surveyed by Robert Half, there is a poor skills match with new hires. And it is cheaper, in the long run, to temporarily hire a freelancer for certain work, than to hire and train an employee.

However, despite the growing size of the freelance workforce, there have been concerns about a troubling trend. Nearly 20 million of the 68 million freelancers in the workforce do the work because they can’t find work or better pay elsewhere.

The Freelancers Union, which represents all freelancers not just those online, claims that employers keep on average $6,000 per year from the average freelancer.

Sara Horowitz, the founder of the Freelancers Union who is pushing for a bill in New York City to improve worker protections, had this to say.

“We don’t have any protections for freelance workers in America. For people who are feeling forced into this, it can be difficult for them.”

Another issue that has come up is they, freelancers, don’t have an education on finances that lets them reduce their tax input. Many freelancers, according to Stride Health, are paying some 25% in tax rates when they could be paying as low as 8.7%.

CEO of Stride Health, Noah Lang, raised concerns on this issue.

“When we really drill into that problem — ‘why are they not adding any deductions?’ — usually, it’s just because they didn’t understand. For many gig workers there hasn’t been that education, that financial guidance…to help them understand.”

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