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The Independent Workforce in America

American workers finding greater flexibility with expanded labor markets powered by growth in connectivity

MOUNTAIN VIEW, CA -- (Marketwired) -- 11/30/16 -- While self-employment has long existed, increasing connectivity is creating new opportunities for the self-employed and their clients to find each other and generate more work opportunities. So says a new study released today by Paul Oyer, Fred H. Merrill Professor of Economics at the Stanford Graduate School of Business. The study, commissioned by Upwork, the world's largest freelancing website, provides the most in-depth look available at how and why more people are choosing to join the independent workforce (IW) and the resulting impacts.

"Independent work expands opportunities for both buyers and sellers of services," said Professor Oyer, the author of the new study. "Companies, especially smaller businesses, can use independent workers to find specific services that they cannot get through traditional employment. Meanwhile, independent workers find a wider and more lucrative range of work opportunities with a high degree of flexibility."

As demographic shifts impact labor supply and demand, interstate commerce and international trade have grown, and increasing connectivity has made it easier for people to find independent work. This groundbreaking study conducts economic analysis of data found in the annual "Freelancing in America" (FIA) survey to define and profile the growth and diversity of the U.S. independent workforce. It examines the economic drivers, impacts, and facts around the growth of work performed by America's self-employed professionals. By combining independent workforce survey data from "Freelancing in America" with transaction data from buyers and sellers using Upwork's website, the study provides new facts and results that are valuable for policymakers and thought leaders studying this growing segment powering the American economy.

Here are a selection of the study's main findings:

  • Online labor platforms expand markets. Online platforms make labor markets "thicker," which creates the potential for better matching of the specific skills a member of the IW offers and the specific skills a client is looking for.
  • The IW is growing. The IW has grown by more than half from 2005 to 2015(1), with an annualized growth rate of approximately 5%.
  • Increasing connectivity is enabling IW growth. As many as 20 million of the American IW found clients online in 2015.
  • The IW enjoys greater flexibility. 68% of IW respondents to the FIA survey reported that schedule flexibility is a reason they freelance.
  • Online labor platforms spread wealth. 96% of transactions through the Upwork marketplace happen between parties more than 50 miles apart, spreading wealth within the U.S. from relatively affluent areas to more typically middle-class areas.

"This study dramatically increases understanding of the sizable impact the independent workforce is having within the wider American economy," said Upwork CEO, Stephane Kasriel. "Professor Oyer's findings are essential reading for any policymaker studying this vibrant and diverse segment of our economy."

Kasriel and Oyer will be joined by representatives of the R Street Institute, Progressive Policy Institute, and the freelance community for a greater exploration of the study's findings, to debate its consequences, and provide further areas of study today at the National Press Club in Downtown Washington. The study is available now at https://www.upwork.com/i/us-independent-workforce/.

About Upwork
Upwork is the world's largest freelancing website. As an increasingly connected and independent workforce goes online, knowledge work --like software, shopping and content before it -- is shifting online as well. This shift is making it easier for clients to connect and work with talent in near real-time and is freeing professionals everywhere from having to work at a set time and place.

Freelancers are earning more than $1 billion annually via Upwork. Upwork is headquartered in Mountain View, Calif., with offices in San Francisco and Oslo, Norway. For more information, visit our website at www.upwork.com, join us on Twitter, Facebook and LinkedIn.

About Professor Oyer
Paul Oyer is the Fred H. Merrill Professor of Economics and Faculty Co-Director of the Center for Entrepreneurial Studies at the Stanford Graduate School of Business. He is also a Research Associate with the National Bureau of Economics and the Editor-in-Chief of the Journal of Labor Economics. Professor Oyer does research in the field of personnel economics including studies of how initial "luck" on the job market affects careers, the use of broad-based stock options, and how executives and salespeople play games with their compensation systems. In addition, he is the author of three books that explain how economics apply to everyday life (in areas such as online dating, sports, and small business management). Before moving to Stanford in 2000, Oyer was on the faculty of the Kellogg School at Northwestern University. In his pre-academic life, he worked in management consulting and high technology. He holds a BA in math and computer science from Middlebury College, an MBA from Yale University, and an MA and PhD in economics from Princeton University.

(1) Katz and Krueger 2016

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