Freelancing is ‘very valuable’ to businesses now more than ever: chief economist

Upwork Chief Economist Adam Ozimek joins Yahoo Finance Live to address the state of the gig economy during the pandemic and break down whether or not remote work is actually good for the global economy.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live here. A focus on the freelancing economy here as, of course, we've seen some pretty interesting impacts in terms of the shift of labor in the economy here in the US as we battle the pandemic. Interesting report from Upwork showed that freelancing has been growing in popularity, adding about 2 million freelancers since 2019, representing more than a third of all of the US workforce.

What are the trends playing out right now as we see cases rising once again? Joining us now for more on that is Adam Ozimek, Upwork's chief economist. Adam, appreciate you taking the time to chat here. I mean, your guys' report showed that this was growing. How much of that stems from the idea of American workers looking for more flexibility here to kind of work on their own terms?

ADAM OZIMEK: I really think it's both sides of the marketplace. I think workers value flexibility all the time, and they value flexibility now more than ever. A lot of them have home care responsibilities, they have kids at home, you know, there's a lot of uncertainty in the world right now. And it's difficult to find a full-time job, but it's, you know, it's easier to find a single client than it is to find a full-time job. So that really makes freelancing very valuable to individuals.

And I think also right now, it's very valuable to businesses who are facing a lot of quick-moving challenges. They have to be very dynamic in this environment. There are a lot of new things that they have to deal with, for example moving a lot more sales online, e-commerce, having a lot of in-person events shut down, having to figure out new marketing strategies. So I think that there's really a lot more interest right now from both sides of the marketplace.

ZACK GUZMAN: On the workers' side, though, we've seen a pretty swift move away from cities. Reggie Wade was highlighting a new Glassdoor survey talking about some of that here. How much of that is being driven by freelancers looking for more flexibility, not having to be tied to an office anymore, be able to work in maybe some more affordable regions of the country? What have you seen on that front?

ADAM OZIMEK: Well, it's tough to say how much of the movement is freelancers I think that the movement is both freelancers and regular employees who are going remote. We found that, you know, somewhere between 7% and 11% of adults are planning on moving out of the area that they lived in because of their greater ability to work remote. And it's definitely true that freelancing always has been, and certainly today still is, much more remote than traditional work. So you know, people who are looking to find remote workers are disproportionately likely to find them as freelancers.

AKIKO FUJITA: Adam, what do you think this shift to remote working means from a cost perspective for companies? You know, early on in the pandemic, Facebook was heavily criticized after they said, look, you can work from anywhere, but we're going to start to adjust our pay scale depending on where you're working from right now because you don't have to pay the high rents that would come with living in the Bay Area. I mean, it seems like a lot of businesses have seen this as an opportunity to potentially reassess their footprint.

ADAM OZIMEK: Yeah, I think that that's really important, and I think that that's absolutely true that, you know, in the run-up to the pandemic, we were entering increasingly tight labor markets. Not quite at full employment yet, but getting there. And a lot of companies were finding it harder and harder to hire in their local labor markets. And if you go fully remote and you become comfortable hiring and working fully remote, your labor market is effectively the entire United States, and even the entire world.

So I think that that's really powerful for businesses. And it's important to not focus on this as sort of a zero sum thing, where either, you know, pay goes down as work goes remote and, you know, the businesses win, or pay stays the same and the workers win. It's really-- the gaps between labor costs in, you know, these super expensive cities and the rest of the country and gaps in cost of living, they're so high that there really is the opportunity for win-win here, where the company has lower labor costs, but when you account for cost of living differences, the worker is much better off, as well.

So and that's what we find in our research. When work does go remote, it tends to be-- pay tends to be somewhere in between the low-cost area and the high-cost area, creating win-win opportunities.

ZACK GUZMAN: Yeah, I think that the win-win is important to highlight, too, when you think about maybe not being binary moving forward. Glassdoor, when they were looking internally, it was kind of surprising to see the expectation there among their workers that they might be able to split time between work from home and coming into a local office in the future. About 70% of their own employees were positioning for that, versus just 25% saying they wanted to just solely work from home.

But when you think about maybe the influx of people looking to freelancing, it does raise questions about maybe what that looked like back in the Great Recession. And I'm curious to know if you've seen some of those people who have maybe been in more traditional jobs, in the nine to five, shifting to freelancing as perhaps a sign of more underemployment than anything, or are these people who were out of the workforce looking for flexibility to start a job now?

ADAM OZIMEK: So yeah, that's a great question. Sometimes I think people, you know, they think about freelancing as sort of like just a side job or just something you do until you can find a regular job, but what we found in our research is that a lot of freelancers, more than half of them, want to freelance because this is the way they prefer to work.

And a lot of them, freelancing provides flexibility that they need to work. So you know, when you're talking about people with child care needs or people with disabilities, the flexibility that freelancing provides them, it's something that you can't really replace with a traditional job. And you know, for others, they just-- they don't necessarily need that flexibility, but it's just the way that they want to work.

Now, this isn't to say that everyone is going to be a freelancer or everyone wants to be a freelancer. For a lot of people, the nine to five job is-- it's what they want, and you know, that's going to remain the most common way of working. But for a significant share, you know, they want to work freelance. They want that flexibility, and then some actually, you know, they need it. And so absent the opportunity of freelance, a lot of those people, I don't think they would be working at all.

ZACK GUZMAN: All right. Adam Ozimek, the chief economist there at Upwork, highlighting all the changes that we're seeing play out on that freelancing front. Appreciate you taking the time to chat.

ADAM OZIMEK: Thanks for having me.