The gig economy didn’t just spring into existence with the touch of an Uber app. A significant share of the workforce in advanced economies has always been self-employed, dating back 100 years to when farming and craftsmen were the predominant occupations.
Today the options for making a living without a “regular” 9-to-5 job are far more varied—and as a result, a large slice of the labor force doesn’t fit neatly into government statistics. It’s been hard to get a handle on how many people work independently, what they do, and what motivates them to go it alone. To fill in these gaps, the McKinsey Global Institute (MGI) asked 8,000 people across six countries about their working lives. Their responses provide some surprises. Here’s what we found:
The independent workforce is bigger than you think
About 10% to 15% of the working-age population in the United States and Europe make their primary living through independent work, MGI estimates. And another 10% to 15% do some kind of independent work on a supplemental basis. All told, that’s 162 million people working outside of formal payroll jobs across the U.S. and 15 nations across the European Union. This isn’t just a quirk of the US economy; the relative size and makeup of the independent workforce looks strikingly similar across the European countries that were surveyed.
The prevalence of independent work is not just a symptom of a bad economy
There’s no sign that the independent workforce is shrinking as the Great Recession fades into the rear-view mirror. In fact, the largest segment consists of “casual earners” who do work on the side by choice; while some take on extra work to boost their income, others are pursuing a personal interest.
Furthermore, independent work may actually have macroeconomic benefits. It’s often a lifeline that helps the unemployed stay afloat. And given that its key features are flexibility and low barriers to entry, it boost labor force participation among caregivers, seniors, and others among the 100 million inactive adults that report they want to work more in the U.S. and Europe.
Most independent workers are not just marking time until a “real” job comes along
It’s a popular myth that most gig workers want traditional jobs but are shut out of them. Roughly 70% of the independent workers MGI surveyed report working on their own by choice.
Those who earn their primary income independently and do so by choice—the so-called “free agents”— report higher levels of satisfaction with their work lives than respondents with traditional jobs. They cite the flexibility, the chance to be their own boss, better opportunities for advancement, and the ability to focus on work they enjoy. For many people, autonomy clearly has inherent value.
Independent workers aren’t all millennials stuck in precarious, low-wage work
The independent workforce spans all ages, education levels, incomes, and occupations. While more than half of those under age 25 participate in all countries, they make up less than one-quarter of the independent workforce. At the other end of the spectrum, the senior segment bears watching as waves of baby boomers continue to retire. Half or more of those over age 65 who work already do so by freelancing.
While independent work is prevalent in lower-paying fields such as household services and transportation, it’s also preferred by many highly paid professionals, including doctors, therapists, lawyers, accountants, and designers.
The independent workforce may grow—and grow more digital—in the future
Digital marketplaces could accelerate a broader shift from payroll jobs to independent work. Today only 6 percent of the independent workers who make money by offering their own services do so through platforms like Uber, Blablacar, TaskRabbit, or Upwork. But this share has the potential to take off. These types of digital marketplaces are still building awareness, and new ones are being launched to offer other types of specialized services.
Consider that eBay has been around for 20 years already—and today two-thirds of those who sell goods independently do so in an e-commerce marketplace. Building on the ubiquity of mobile devices, digital platforms can reach enormous pools of workers and customers, harnessing real-time information to make more efficient matches. This model makes it easy for people to get started and find work quickly without relying on word of mouth.
Will they actually do it? The MGI survey asked people how they want to work in the future—and how likely they are to pursue those aspirations. Some 68% of independent primary earners plan to continue, and for every one of them who would prefer a traditional job, more than two traditional workers hope to venture out on their own. Additionally, almost a third of casual earners envision turning their side gigs into full-time occupations.
Combining these responses with the large inactive populations stating a desire to work, it’s conceivable that the independent workforce could double in size in the years ahead. But a lot depends on whether the right frameworks are put in place to ease the way. In countries around the world, courts and regulators are grappling with questions surrounding these new working models. It’s becoming clear that tens of millions of people don’t want to spend their entire working lives as someone else’s employee. Their ability to become their own bosses depends in large part on whether policy makers and the private sector are ready to make this path feasible.
James Manyika and Jacques Bughin are directors of the McKinsey Global Institute where Susan Lund is a partner.
