Small Business Labs

Independent Workers Feeling More Secure

One of findings that most surprised us when we first started researching independent workers was how many think independent work is more secure than traditional jobs. 

Back in 2011 when we first starting asking about this in surveys, we assumed the vast majority of independent workers would view self-employment as being less secure than having a traditional job. 

But as the chart below shows (the data is from the MBO Partners State of Independence study series), we were wrong.

In 2018 49% of full-time independent workers feel working independently is more secure than having a traditional job. This is up from 41% in 2012.

There are several reasons about half of independents feel independent work is more secure. 

The main reason given by independents is having multiple sources of income and/or customers provides more security than having a single employer.

Independents also point out that being charge of their work lives makes them more able to adjust to changing economic conditions, which makes them more secure.

They also say traditional jobs are no longer as secure as they once were, making independent work relatively more secure.

The data is trending up for several reasons.

First, the improving economy has made it easier for independent workers to find work. This is particularity true for independent workers with sought after skills and experience. 

The strong economy is also allowing reluctant independent workers - those that would prefer a traditional job- to go back to traditional jobs.

Reluctants, on average, report feeling independent work is much less secure than traditional employment. So as they leave independent work, it raises the share of independents who feel more secure working independently. 

The growing infrastructure of products and services that make being an independent easier is also making independent work more secure. 

These include low-cost, Internet-based tools and services for everything from billing and project management to marketing and sales. It also includes things like the ACA (Obamacare), which makes it easier for independents to get health insurance. 

But being independent is still not secure enough, especially for those without in-demand skills.  We'll have more on this topic in the near future. 

We contribute to the MBO Partners State of Independence report series.

Biofabrication - Manufacturing With Mushrooms

Biofabrication is the use of biomaterials such as cells, proteins and organisms as building blocks in a manufacturing process.

Probably the best known example of biofabrication is the use of 3D printers to create tissue used in treatments for damaged joints and organs. This is still in the experimental stage.

But biofabrication is a much broader field with current, commercial applications, especially in the area of manufacturing. 

For example, there's a whole industry creating packaging and other products using mushrooms - more specifically mycelium, which is the root structure of a mushroom. 

The packaging is "grown" by culturing fungi on a medium of husk, hulls and woody biomass of agriculture waste, such as rice, soy and cotton. 

The packaging material produced from this process is light, strong, durable and is naturally biodegradable. It's being used today by a variety of companies, including Ikea and Dell.

And it's not limited to packaging. Mushroom biofabrication can be used to make all kinds of products, with an example being the table shown below.

Ecovate, one of the leaders in mushroom biofab manufacturing, even has a store where G.I.Yers (grow it yourself) can purchase the materials needed to grow their own products as well as a range of already grown products.

Another interesting product being biofabricated is leather.

This is done using colonies of yeast bacteria which grow collagen that is then assembled into a fibrous material. It's then tanned and processed in a similar manner to regular leather.

Modern Meadow makes a biofabed leather they call Zoa. It looks and feels like leather, but can be custom ­designed to be stiff or stretchy, thick or thin, textured or glossy.

Thanks to advances in genetic engineering and biotech, biofabrication has moved from science fiction to practical, real world applications over the past decade. Expect to see more advances and more use of biofabed materials in the near future.

Google's Shadow Workforce

Bloomberg's Inside Google's Shadow Workforce covers the use by Google of what they call TVCs, or “temps, vendors and contractors". According to the article about half of Google's workforce is comprised of TVCs. 

The article caused quite a stir on social media with many people expressing surprise at the numbers, especially the fact that Google is using so many TVCs. 

But the growing use of non-employee labor by large corporations (and small ones too) has been an open secret for years. 

We've recently covered a number of studies confirming this. These include:

• A SAP/Fieldglass study showing that 44% of workforce spend at large corporation is on external, non-employee talent (see chart below).
• A Randstad study showing that more than half of global human capital leaders expect to transfer one-third of their permanent positions to contingent roles in the near future.
• A Deloitte study showing that corporations are increasing their use of "off-balance sheet talent", which is their term for non-employee labor

And it's not just big companies. 

A November, 2017 SCORE study found that small business owners reported a 37% increase in hiring gig workers over the prior six months. They also reported more than half of surveyed small business owners plan to increase their use of non-employee talent over the next year.

There are a variety of reasons companies are increasing their use of non-employee labor. These include access to hard to find talent, improving business flexibility and agility and, in some cases, lowering costs. 

We cover these reasons and the corporate use of non-employee labor in more detail in our Contingent Workforce section.

We'll have more on this topic in the near future.

Is Coworking's Surge Leading to Market Saturation?

According to the Reuters article 'Coworking' surge in Manhattan raises asset-liability quandary:

"The amount of office leasing by “coworking” firms in Manhattan is nearing 10 percent of all new leases, a sign of growing demand for short-term contracts by companies seeking workspace ..."

As the article chart below shows, coworking's share of new office leases in Manhattan has grown 4x over the past 5 years.

This surge is leading to questions about whether coworking is reaching a saturation point.

For example, Savills Studley’s Q2 2018 Manhattan Office Report says:

“Like other new innovations the ultimate market share of shared office space is not known, but this growth path seems unsustainable. Even without a recession, coworking will reach a saturation point in the next several years, forcing some level of retrenchment in the footprint of these trailblazers.”

But despite the strong growth of coworking in New York, it’s still lags well behind London in terms of market penetration.

The chart below comparing the two cities comes from Cushman & Wakefield’s report Coworking 2018 – The Flexible Office Evolves. Based on this data, New York has room for more coworking space.

We think coworking in nowhere near the saturation level.

But as we point out in our most recent coworking forecast, we're expecting coworking’s growth in the U.S. and Europe will slow over the next 5 years.

This is simply what happens when an industry get larger.

See our forecast article for details.

Staying Unbiased in These Partisan Times

Since the founding of Emergent Research nearly two decades ago, our mantra has been follow the data to where it leads us.

This requires us to minimize the impact of potential biases in our work.

As part of this effort, we've identified and analyzed a variety of potential biases, including two key biases: survivor bias and confirmation bias.

We've also put in place policies and procedures to minimize the impact of bias on our work. 

But the current state of U.S. and global politics has us looking deeper at another bias - partisan political bias (which is a form of confirmation bias). 

That the political discourse in the U.S. and elsewhere has become increasingly polarized is obvious.

A good example is the view of American's of President Trump. As the chart below (click to enlarge) from a recent Gallup poll shows, the view varies dramatically by political party affiliation. 

Views on government policy at the national, state and local levels also vary substantially by party affiliation. 

Emergent Research and our Small Business Labs blog are strictly nonpartisan.

But our job - identifying, tracking and forecasting the trends and shifts impacting the future of work and small businesses - requires us to evaluate government policies. 

This is not easy in today's heated political environment.

Anything construed as being even remotely critical, or supportive, of the president or his policies is quickly attacked by one side or the other as as being biased.  

As industry analysts and forecasters, we're used to being criticized. It's part of the job. 

So we will continue to evaluate the impact of government policies on small businesses and independent workers. We will also stay strictly nonpartisan. 

And we will continue to follow the data to where it leads us. 

1 in 5 Independent Workers Have Customers Outside of the U.S.

One of the interesting findings from the MBO Partners State of Independence study series is a growing number of independent workers (freelancers, solopreneurs, gig workers, etc.) have customers outside of the U.S.

There are several reasons for this:

1. Online platforms and marketplaces have made it much easier to find and conduct business overseas. This is true for both product and service companies.

2. Outsourcing has made international shipping and logistics much easier. 

3. Rapidly growing developing countries have increased demand.

4. More service firms are productizing their offerings, which make it easier for them to export.

About 22% of independent workers report that their primary business is product based. Many of these use sites like Amazon, Etsy and eBay to sell their products outside of the U.S.

Also, a growing number of services businesses are creating products.

This is especially true for training firms of all kinds, including fitness trainers, business coaches, music instructors, etc. who are creating materials and classes that they can sell like products. These independents also are finding it easier to export.

And, of course, even traditional services businesses can more easily find and serve international customers thanks to the Internet and platforms like Upwork, Fiverr, etc.

We've written in the past about the boom in U.S. small business exports. And this boom should continue with independent workers being a major beneficiary of growing export markets. 

The major risk is, of course, trade wars leading to reductions in global trade. But for now the products and services provided by independent workers have not been targeted for tariffs by the U.S. or its trading partners. 

This could change. And you could easily see platforms like Amazon and Etsy targeted by our trading partners.

But hopefully the clear logic that no one wins a trade war will win out. 

MBO Partners is an Emergent Research (that's us) client.

Use of Online Talent Marketplace by Independent Workers Continues to Grow

According to the 2018 MBO Partners State of Independence study, the use of online talent marketplaces by independent workers has substantially increased since 2012.

As the chart below shows (click to enlarge), in 2018 about 1 in 5 (22%) full-time independent workers reported using online talent marketplaces to find work over the past year, up from just 3% in 2012.

Relatively few (6%) report using online talent marketplaces as their primary source of work (word of mouth continues to be the primary source of work for most independent workers). 

But online talent marketplaces have become important secondary and tertiary sources of work. Independent workers use them to fill in gaps in their work schedules, explore new markets and find new clients. 

Online talent marketplaces are also used to learn new skills and build expertise.

Not surprisingly, Millennials are the most active users of online talent marketplaces. Having grown up as digital natives, they are more comfortable with this technology than the older cohorts.

Millennials, because they are younger, also generally have less developed networks and a greater need to turn to online talent marketplaces to find work.

Overall, independent workers plan to expand their use of online talent marketplaces next year.

24% report planning on using them over the next year and over a third of those using them (35%) plan to expand their usage. Only 8% of users say they plan on using them less, with the rest (53%) saying they will use them roughly the same amount.

Emergent Research (that's us) contributed to the 2018 MBO Partners State of Independence study. 

"Everything, it seems, is a shared office these days"

The title of this post is a quote from the NY Times article Sorry, Power-Lunchers. This Restaurant Is a Co-Working Space Now.

The article covers Spacious, a startup that transforms unused space - especially restaurants outside of meal times - into shared workspaces. Key quote:

"Everything is now a co-working space, one of those shared offices that are popular among freelancers, small companies and other workers who want a change of scenery. Coffee shops are co-working spaces. Gyms are co-working spaces. Social clubs are co-working spaces. And now restaurants — but only before dinnertime."

This is another example of shared workspaces expanding into a wide range of specialized niches.

We've long covered this trend, with our most favorite recent example being a combo coworking space and spa in Kansas City. 

Allwork's GENERALISATION WILL GET YOU IN TROUBLE”: THE CASE FOR NICHE WORKSPACES also covers this trend and points out a variety of specialist shared workspaces. Key quote:

 "With hundreds of new spaces opening every month, independent operators are urged to “focus on a particular customer segment”

Interestingly, drop by workspaces such as restaurants don't meet our definition of a coworking space. 

This is because they don't offer activities and facilitation that encourage networking and community. 

But they are still very useful places to work that also reduce social isolation and loneliness. And while these spaces may not provide support for networking, it still happens naturally. 

So while they don't meet our definition of coworking, they are valuable additions to the shared workspace industry.

The trends driving the growth of niche and specialized workspaces - technology enabling distributed work, more people working outside of traditional offices, the blending of work and life, etc. - continue to strengthen. 

Which means more spaces will become shared workspaces.

MBO Partners’ 8th Annual State of Independence Report

MBO Partners released their 2018 State of Independence report this week.

This is the 8th annual report in this series, making it the longest running look at independent work. Emergent Research (that's us) contributes to this study.

The study's top line finding is despite low unemployment and a strong traditional job market, the number of independent workers increased to 41.8 million, up from 40.9 million in 2017. 

The increase was driven by a the continued growth of Occasional Independent Workers. These are people who work as independents at least once per month in average month, but don't regularly work as independents in an average work week.

The number of Occasional Independents increased from 12.9 million Americans in 2017 to 14.9 million in 2018. The main driver behind the growth is more people are looking for highly flexible work to supplement their income.

The number of Full-Time Independents fell in 2018 to 15.8 million, from 16.2 million in 2017. This was the third year in row the number of Full-Time Independents declined. 

The main reason for this decline is the strong labor market is pulling independent workers back to traditional jobs.

This is especially true for what the report calls Reluctant Independents.

These are independent workers who would prefer a traditional job (cluster analysis is used to identify this group).

As the study chart above shows, the percentage of full-time Reluctant Independents has fallen consistently since 2012 due to the improving economy creating opportunities for reluctants to return to traditional employment. 

Despite the overall decline in Full-Time Independents, the number of independent workers reporting making $100,000 or more continued to increase.

The strong economy and talent shortages mean highly skilled independent workers are more in demand and can charge more for their services (click to enlarge the chart below)

This year's findings continue to confirm a number of important points about independent work. These include:

• Most independent workers (63%) choose independent work 
• Most independents workers (72%) are satisfied with independent work
• Most independent workers plan on staying independent (64%) or building a bigger business (12%), only 11% said they plan on seeking a traditional job over the next 2-3 years.

And probably most important, 79% of full-time independent workers say they are happier and 68% say they are healthier working on their own than if they had a traditional job.

We'll have much more on this study in coming weeks.

Survey: Almost 4 in 10 Americans Have a Side Hustle

Bankrate recently released a survey showing that 37% of Americans have some sort of side job. 

The survey was of adult Americans, of which there are about 250 million. This means the survey found about 92 million Americans have side hustles. 

We don't have access to the survey questions, so we' don't know how they defined "side job". But it must have been a broad definition to get to 92 million. 

That the question was broad is backed up by the study chart below. It shows only about 11% out of the 37% work in their side hustle weekly. Most do it only a few times a month or less. To capture people working on a 2nd job less than once a month requires a broad definition. 

 

The report also has data on the most popular side hustles. These findings are consistent with our work in this area. 

 

The Bankrate study is yet more confirmation of the growing role 2nd jobs and supplemental income are playing for many Americans.