I'm trying to square two seemingly contradictory trends. First, as we've known for several years, geographic mobility in the United States is today half of what it once was. This applies to interstate, intrastate, and intra-county moves. At the same time, apparently, we are living in a new era of freelancing and independent work, such that 58 percent of Millennials surveyed called themselves an entrepreneur because of freelancing work. That Forbes article also references an Intuit study purporting to find that 40 percent of US workers will be freelancers in 2020, only seven years from now. That seems astoundingly high, and would seem contrary to the steady downward trends in mobility, which predate the recession.
So what's going on here? One possibility is that the data are wrong. It seems unlikely that decades of Census data, based on IRS records, are incorrect. Self-reported survey responses seem a likelier candidate for error. It's important to note, too, that the Intuit report identifies "contingent employees" and contractors as the source of this freelancing growth, which is not necessarily the same as what we typically associate with freelancers. The latter term has a certain romance about it and conveys a sense of independence and control which, not surprisingly, are the attractions identified in the Millennial survey.
Identifying oneself as a "contingent employee" doesn't really have the same ring to it and, in fact, probably highlights some economic forces at work here. I was speaking to someone the other day whose twenty-something daughter is a freelance illustrator who wants nothing more than a steady job. Companies utilizing the services of freelance illustrators, according to this one source at least, solicit samples based on a proposed project--with the condition that the company owns the resulting intellectual property. What inevitably happens is that scores of freelancers submit bids, one is chosen, and the company is free to use the other "free" bids.
Contingent employees and contractors are not owed benefits and so are perhaps a more attractive option for companies in certain sectors. A few years ago, the IRS made noise about cracking down on companies' classification of workers as freelancers and contractors, but I'm not sure where that ended up. In any case, we should take care when celebrating the increase in freelancing because it's not always the romantic notion we assume it be. And it's notable that such large percentages of people in the aforementioned survey said they wanted to leave their job to be independent--no word on the subsequent revealed preferences and resulting satisfaction. Self-employment rates have not risen alongside the reported increases in freelancing, with the exception of a one percentage point increase in the incorporated self-employed.
(Worth another blog post: lots of people seem to equate freelancing with being an entrepreneur. That's one of the points of the Forbes article, that "being an entrepreneur" today is more about freelance work than starting and building a company. That's highly debatable.)
But the larger puzzle remains: if freelancing is really on the rise and set to rise further, why has geographic mobility been falling, and will that suppress the expected increase in freelancing?
It could be the case that people reporting themselves to be freelancers still hold a steady day job and engage in supplemental work through places like Etsy. So perhaps we are missing large chunks of economic activity. Perhaps a rise in freelancing actually explains falling mobility? If you are a freelancer/contractor/contingent employee, depending on the sector, you need to be in a location with a dense concentration of relevant companies. The illustrator mentioned above would probably have more difficulty in Helena, Montana, than New York City. This presumes that the physical density of some industries has been rising; I don't know to what extent that is true.
Alternately, the opposite could be true: perhaps the severing of the relationship between physical location and work means these footloose workers choose a place to live based on quality of life because all they need is an Internet connection to manage their freelance/contingent career. That would also presuppose a narrowing of the places that are attractive to freelancers. In its last State of Metropolitan America report, the Brookings Institution pointed out that while the country as a whole is aging, certain metro areas are actually "younging" because they have become magnets for twenty- and thirty-somethings. If it's true that Millennials are more predisposed to the contingent career than older Americans, this could mean a close link between freelancing and immobility. (At the same time, however, self-employment rates are generally much higher among older age groups.)
So I don't know what to think. Geographic mobility is undoubtedly down; we know that. Perhaps this "boom" in freelancing is a combination of self-reported classifications and people engaging in more freelance activity on the side, while they continue to hold down a job. And I suppose that with more companies using contingent labor--perhaps facilitated by the Affordable Care Act's exchanges--these two seemingly contradictory trends could continue to coexist. Or maybe all freelancers and contractors and contingent workers will simply move to the states that set up those health exchanges.