Yes, I know 2040 is too far away. Everyone talks about 2020 and 2025, which in my opinion is not good enough for a fair estimate. To understand where you fit in and, to answer if you can achieve your life goals as a freelancer, let us take understand certain trends that indicate lucrative freelancing.
Everyone is aware that the American economy is a major driving force behind the freelance economy of today. It is fair to estimate that the freelance industry will be highly influenced by the direction that the economy takes. Having said that let us look at which way it is headed.
According to the Edelman Berland study (2014), a small glimpse into the state of the American economy today reveals that:
a. 34% of the working population already freelance, which is about 53 million people
b. Independent contracting and entrepreneurship are the trends that will dominate the next 25 years
c. Peer to peer freelance platforms are seeing a major shift towards growth
d. Relocalized production and crowd-funding are rising in popularity and growing
According to another study published by Kauffman Foundation and Roosevelt Institute, the American economy is going to change drastically in terms of reduction of payroll taxes since the traditional work ecology is expected to die. As per Dane Strangler, Vice President (Research & Policy), “It’s going to put major strains on our public fiscal system, We’ve built all of our massive entitlement programs–whether it’s social security for retirement or health care systems or unemployment insurance or whatever–around this notion of a fixed job.” He stated this with a warning, “There’s a whole ripple effect if this is going to be an actual and growing part of the economy.”
Once the reduction of payroll taxes reaches a critical stage, the American fiscal system will be critically challenged unless the policies are amended drastically. The report was created with some unique and critical insights from over 30 policy makers, economists, and technologists and is focused on four major areas – future of inequality, future of work, future of entrepreneurship and future of technology.
Let me list the 5 major expected changes in the American economy over the next 25 years and how it is going to affect the freelancer economy:
a. The breakup of work culture:
An average American was always of the idea that a job meant success and security. In fact, that is the belief, across the world, today. Today, with the recent recession and the hardships that came with it, the same American has come to realize that having a good job does not translate into a good economy or for that matter, job security. As you can well foresee, the American thought process is undergoing a sea of change.
Trends indicate that a future career would be a collection of short-term assignments over a period instead of a cushy job that you thought, will last your life. By 2040, an average American career will be entrepreneurialism which will be a mix of portfolio careers and part-time or short-term assignments. The work-life balance will shift into comfort mode and a happier stress-free life is foreseeable. According to the report, instead of a job, “career then, will be composed of thousands of [short-term] assignments spread out over a lifetime.”
I think, there will be fewer employer-employee relationships and more people will be employed in their own businesses built on freelancing. In which case, most job demand will come from small businesses, unlike today.
b. Wages will rise: Growth of small businesses means an increase in wages. Self-employment will obviously lead to improved earnings and talent will come with better wages. In the American economy, wages will get a shot in the arm owing to the negative demographic growth rate. This will translate to better wages for immigrants too, that is if the world does not forget geographical barriers by then.
c. Talent Hunt: It is foreseen that there will more and more talent agencies looking for professionals. These agencies will refine themselves and will not limit themselves to hunting for athletes and artists as they do today.
Though there is no clear pre-defined path as to how the new economy will evolve, it is easily foreseen that the new economy will have a bigger spread of talent requirement compared to today. With more small businesses, the number of new platforms will grow exponentially and the required talent will also spread with it.
d. Economy and risk: It is obvious that a changing economy will require a changed fiscal backdrop as well as an evolved business eco-system. With jobs disappearing, tax withholdings, health insurance, retirement planning and a lot of other existing fiscal concepts will begin to face extinction. To help the new age worker mitigate risks, the economic landscape will change to accommodate and help:
1. Freelancers or entrepreneurs sell goods and services
2. Train to improve their businesses through education and training initiatives
3. Provide funnels to recognize new opportunities and help run their businesses with the provision of comprehensive services in the eco-system that will evolve
e. You will define success: As a freelancer, you are free of an underpaying employer, but remember that you are the master of your own success. To be successful in the new and emerging economy:
1. You need to constantly think about that next project or assignment, the requirement of manpower or talent, value addition, training, skill upgrades or education required
2. Until such time that you were employed and filled up those never-ending forms about your growth path, KRA’s etc. you had a rough direction about your growth trajectory and finances. As a freelancer, you don’t have those anymore, which means, you will need to be savvier than you ever were. It is obvious that life will get more complicated, thinking simple and straight is what will make you smarter
3. Success is never an accident. As a freelancer, you will need to make some tactical changes in planning and execution and move onto the entrepreneurial thinking mode. Life will certainly become more rewarding and the rewards will be a result of your hard work and not of loyalty, which was the thought process when you were an employee
As you can see, life is only going to get better and better for you as a freelancer. The economic shift that is already underway will make freelancing more lucrative than it is. And expectedly, the world will follow the trend. It is time you braced and planned for the smart ride ahead.