How Much Money Do Freelancers Make? This question will certainly be above the minds of anyone who wishes to become independent. With the Covid-19 pandemic showing little sign of ebbing anytime soon, self-employment is emerging as the biggest source of income for many around the world.
This self-employment is here to stay and thrive is indicated by statistics collected from myriad, myriad sources. These numbers would help to understand why self-employment is rapidly gaining ground in the United States and elsewhere.
- More than 16 million of the total US workforce of 157 million, are self-employed, a report from the Pew Research Center says.
- More than 57 million Americans took up freelancing in 2019, indicating a steady increase of about 3.8% per year since 2015, according to a joint study conducted by Freelancers Union and the freelance portal Upwork.
- With 57 million workers, the United States has the largest population of freelancers in the world.
- India has the second largest independent workforce in the world, with 23 million.
- At the end of 2019, there were 11 million self-employed people in Europe, representing around 5% of the workforce in 10 EU states, namely UK, Germany, France, Spain, Ireland, Italy, the Netherlands, Luxembourg, Belgium, Portugal and Switzerland.
- More than five percent of the gross domestic product (GDP) of the United States, or roughly $ 1 trillion, was pulled by freelancers in 2018-19. This contribution is expected to increase exponentially after 2020.
- US freelancers pay 15.3% tax to the government under the self-employment tax category. Of this amount, part goes to social security and health insurance.
- Over 53 percent of freelancers come from the 18 to 22 age group, 40 percent from millennial or 23 to 38, 31 percent from Gen X or 39 at 54 and 29 percent are baby boomers or 54 years old. old and senior, finds Statista, Germany’s portal for world statistics.
- Men outperform women in the odd-job economy: About 40% of freelancers in America are women, while 59% are men out of a total of 46% women and 53% men who make up the whole of the American workforce, reports Statista.
- The majority of US freelancers do not get any benefits from employers unlike their full-time counterparts. Therefore, they could be severely affected by the economic downturn and other effects of the current Covid-19 pandemic, according to Fortune magazine.
It is undeniable that the Covid-19 pandemic will radically change the way people work and work. With increasing numbers of people working from home and businesses going bankrupt overnight, freelance work is expected to become a way of life in the United States and beyond, according to reports from various and independent sources.
Dependence on freelance money
Dependence on freelance income differs across ethnicities in the United States. The biggest dependence on side concerts and their income is on the white American population.
Among white, Hispanic and Latin American populations, 69% of workers cite the extra money as a reason for freelancing. For the remaining 31%, freelance is the main source of income.
The freelance writer is the primary source of money for 44% of African Americans in the United States, while 56% are self-employed for a secondary income.
More than 67% of Americans of Asian origin and other ethnicities engage in freelance as a source of additional income, while only 33% are freelancers for a living. Asian Americans have higher median incomes than other ethnic groups in the United States. As a result, their dependence on freelance as their main source of income is less.
Freelance in the United States by ethnicity
There is something interesting about the money freelancers make. Earnings depend on the ethnicity of the freelancer.
Among the white population of America, 62% of workers have a parallel job or are full-time freelancers, out of a total workforce of 66% of white Americans. Next are Latinos and Hispanics who make up 16 percent of the independent population, out of 15 percent of the workforce. This means that there is one percent more Hispanics and Latinos in the odd-job economy than the regular workforce.
About 12 percent of the African American community are freelancers while the labor force participation is 2 percent lower, at 10 percent. Asians and Asian Americans make up almost 10% of freelancers, while their labor market participation is also 10%. And four percent of all other ethnicities in America are in the independent economy, while only three percent make up the regular workforce.
Gender income gap among freelancers
Like most parts of the world, independent women in the United States face severe gender income gaps. This means they earn around 56% less than their male counterparts, according to a report by the Organization for Economic Co-operation and Development (OECD).
In contrast, women from various fields earn significantly more than their male counterparts in the UK. These areas involve creativity and design. In fact, self-employed women in the UK earn between 8% and 12% more than men in the same field.
Self-employed women in Europe also experience a gender pay gap. Self-employed women across Europe earn between 20 and 35 percent less than men. In some countries, the gap is as high as 46%. However, Estonia, a Baltic nation in Eastern Europe, is different: independent women earn as much or more than men.
In Asia, freelance and regular workers earn a sad 61 percent less than self-employed men and regular workers, according to the International Labor Organization. One of the main reasons cited for the decline in self-employment earnings for Asian women is their concern for domestic work and, in some countries, the taboos and stigma attached to female work.
Research indicates that the gender income gap can vary between 7% and 37% on online platforms, depending on the industry or sector where women compete with men for self-employment.
One of the main reasons for this gaping income inequality between the sexes is that women settle for less money when they take on self-employment, according to HoneyBook.com’s 2019 Gender Gap Report. Most affected are working mothers and single mothers, the report adds.
However, major freelance portals such as Upwork, FlexJobs.com, and Freelancer.com claim that posting freelance rates online is helping women close the gender income gap, gradually but steadily.
This brings us to the question of which countries require the most work from freelancers. Knowledge is essential because countries like Belgium have a strict policy on payments to freelancers: there can be no discrimination based on gender when hiring freelancers in Belgium. This means that a freelance writer receives the same salary as her male counterpart.
Top 10 countries recruiting freelancers
The actual income of freelancers depends on the country. This means that it depends on the country in which the buyer lives as well as the country in which a freelancer operates.
The top 10 countries where businesses and individuals hire freelancers are as follows.
- United States
- United Arab Emirates
- The Netherlands
- New Zealand
These countries contribute the bulk of the $ 1.5 trillion in revenue to the global freelance industry. Of this total, the United States accounts for almost 50% of Canada’s share.
Freelancing industry in China
In recent years, China is also a next buyer of independent services, although the volume of purchases has declined significantly with trade and other restrictions imposed in the country.
The share of China’s contribution to the independent market remains unknown as it is widely believed that it outsources its services on different fronts.
At the same time, the number of freelancers in China is also growing rapidly, reports the international recruitment company, Hays. However, much about the fields in which Chinese freelancers operate also remains largely unknown. Interestingly, the secrecy surrounding freelance writers in China is also rightly reflected in an article in Communist Party spokesperson Global Times.
Freelancing industry in Europe
The independent industry in Europe is very unique. Although there are around 11 million freelancers in 10 countries, the number is evenly split between women and men, although a small percentage of jobs – around 0.5% – are also held by the LGBT community. . However, there is a shortage of independent women in the information technology (IT) sector, says MALT, an independent portal and organization that operates across the continent.
Unlike the rest of the world, the majority of freelancers in EU states – around 57 percent – are Generation X – around 57 percent. And more than 53% of all freelancers hold a master’s or doctorate degree. Around 77% of the 11 million freelancers in Europe have chosen to work from home because of higher salaries and better working conditions.
Freelancers in Europe benefit from an average of 27 public holidays per calendar year. Most of them work Monday through Thursday while observing a long Friday through Sunday weekend, according to a Freelancer report. On average, a European self-employed person works 44 hours per week.
Freelance Industry in India
The number of freelancers in India grew 11% from the third quarter of 2018 to the third quarter of 2019, notes a report from Payoneer.com, a global payment gateway. However, freelance income increased only 29%, the report adds.
India has around 22 million freelancers. However, this figure could be much higher as a large part of Indian freelancers also work on offline jobs or do not bid for projects on freelance portals.
Top 10 freelance destinations
Another factor that determines the income of the freelance writer is the location of the freelancer. Several factors such as the demand for a specific skill and currency exchange rates play a major role in determining income.
The list of countries in which self-employment is performed is as follows.
- United States
According to reports from PayPal, the largest payment system used by freelancers and its closest rival, Payoneer.com, these countries receive around 70% of freelance wages online.
Countries with the fastest growing self-employed income
Now that we know the top 10 freelance buyers and sellers, let’s see where all the money is going. The 2019 report known as the “Global Gig Economy Index” published in mid-2020 by Payoneer.com contains some very interesting revelations.
The report notes that while the United States maintains the top spot, some countries are showing mushroom growth while others have actually slipped into the top 10.
The revenue increase for freelancers in the third quarter (Q-3) of 2019 is as follows:
- United States: 78 percent
- United Kingdom: 59 percent
- Brazil: 48 percent
- Pakistan: 47 percent
- Ukraine: 36 percent
- Philippines: 35 percent
- India: 29 percent
- Russia: 20 percent
- Serbia: 19 percent
The fact that the United States maintains its highest position is no surprise, as it is a powerhouse of the global freelance industry, which accounts for almost 50% of all freelance work worldwide. . Pakistan’s rise to power is attributed to investments by the country’s government to strengthen IT infrastructure and provide digital skills to young people.
India’s shift to No. 8 as a destination for self-employment income occurs for two main reasons. Firstly, the country has launched an ambitious project to encourage startups and Make in India industries.
These in turn have reduced reliance on labor from foreign sources, as many opportunities now exist in the country. However, India contributes one in four freelancers globally to date.
The Philippines is pursuing their dream with superior IT infrastructure combined with growing awareness of people in digital skills acquisition. In fact, the Philippines is rapidly emerging as one of the world’s leading back offices for digital marketing services, primarily for e-commerce businesses. And this trend is expected to continue as the Covid-19 pandemic makes e-commerce and online shopping a necessity rather than a convenience
How Much Money Do Freelancers Really Make?
After seeing the different models and income growth in various countries famous for their freelancers, we finally come to this million dollar question: How much money do freelancers really make?
The answer might surprise you.
Globally, the average income for a freelancer is only $ 19 an hour. That’s well below the US national average of $ 25 an hour. At the same time, the amount of $ 19 per hour is not really a norm. Freelancers in Europe earn much more than their American counterparts. While in Asian countries, the exchange rate of the dollar against local currencies makes freelancing very attractive.
Industry pay scales for freelancers around the world
The median salary ranges for freelancers around the world are somewhat related to those in the United States. Indeed, the United States is the largest buyer and seller of independent services.
Here are some median salary ranges by industry for freelancers.
- Computer and programming: $ 49 / hour
- Design and multimedia: $ 41 / hour
- Writing and translation: $ 47 – $ 48 per hour
- Sales and Marketing: $ 44 / hour
- Engineering and manufacturing: $ 56 / hour
- Finance and management: $ 49 / hour
- Legal services: $ 60 per hour
- Administration and customer support: $ 29 per hour
- Micro-tasks and deliveries: $ 18 per hour
- General services: $ 18 per hour
While these figures seem very tempting, the reality on the ground can be very different, as some media report.
Shockingly, most freelancers are underpaid. This means that they don’t really earn as much as the median salary suggests. This is because every website, like Payscale.com and Salary.com, among others, collects data from various freelancers to arrive at a median salary. Therefore, the lower rate of $ 19 an hour is what most freelancers would get in the United States and the rest of the world, it is believed.
However, the situation in Europe is entirely different. The EU follows strict employment standards, and as a result, most freelancers who work in European Union member states earn significantly more than their US and other counterparts.
Freelance pay scales in Europe
Generally, you could say that every freelance writer in Europe earns a lot more money than their American and other counterparts. Here’s an indication of what freelancers do in Germany:
- Systems, Applications & Products (SAP): 111 € / hour
- Consulting & Management: 110 € / hour
- IT & Infrastructure: 94 € / hour
- Engineering: 83 € / hour
- Development projects: 83 € / hour
- Design, content and media: € 69 per hour
- Others: 89 € / hour
These pay scales for freelancers in various industries in Germany and other parts of Europe make them the most profitable to work. However, the main obstacle to working for European clients as a freelance writer is the language. All EU Member States have their own official languages and require native speakers as freelancers. As a result, there are very few jobs that Europe outsources to other countries. At the same time, countries like the United States and others are outsourcing their work from Europe.
Freelance Pay Ranges in India
With India remaining the number one destination for freelance projects, mostly in IT, writing and accounting, as well as a few other areas, here are some indicators of freelance compensation in this country.
- Women make up only 20 percent of India’s independent workforce and earn only 87 percent of the money than their male counterparts.
- On average, an Indian freelance writer earns 2.01 million rupees per year, or about 175,000 rupees per month, according to a PayPal earnings report for calendar year 2019.This is much higher than the salaries an individual earns. can be expected by working full time in several positions.
- At the same time, over 23% of Indian freelancers report income of more than Rs 6.1 million per year, the PayPal report adds. Most of them come from IT and related industries.
- The median salary of most Indian freelancers however remains as low as Rs. 22,057 per month. That’s well below the global average of $ 19 an hour.
- Most Indian freelancers have chosen freelance work or freelance work because it gives them the opportunity to work for several large projects at the same time.
The Truth About Freelance Compensation
While American, European, and global freelance personalities can seem quite tempting, it’s also important to know that most freelancers are underpaid. This happens because freelancers don’t want to lose clients by offering high prices in an already very competitive market.
The second reason is that freelancers themselves sell their skills at a low price because they prefer flexible working hours and enough free time away from work rather than higher pay. Stay-at-home moms and single moms are the largest community in the world known to undercut the prices of their labor.
Problems Affecting Freelance Compensation
In 2020, the biggest problem affecting freelance compensation is the Covid-19 pandemic. European and other freelancers are increasingly facing pay cuts because buyers bargain hard at a time of rampant unemployment around the world, according to a study from the University of Oxford.
In Europe, freelance organizations have unanimously decided to cut their rates from five to 10 percent to help businesses tackle the economic downturn caused by the Covid-19 pandemic, despite the growing demand for self-employment.
In other situations, freelancers themselves believe in keeping their prices to a minimum to attract more clients while hiring new ones. This trend is hurting freelancers around the world, as anyone who asks for more risks losing their job and their client.
Other than highly respected freelance portals, a freelancer has no guarantee that a client will pay for the work. Large portals like Upwork.com, FlexJobs.com, and Fiverr.com, among others, hold the money in escrow accounts and ensure that a freelancer gets paid for the work. However, this is not the case with many other portals and job sites and takes no responsibility for paying freelancers.
In most countries of the world, organizations such as Freelancers Union do not exist. Hence, freelancers do not have a unified voice against lost wages or other issues arising from working for remote clients. In fact, Freelancers Union is one of the very few organizations in the world to sue clients for defaulting freelance payments.
Millions of freelancers around the world prefer to work only four days a week or a maximum of 40 hours because they want more free time for other activities.
Others see self-employment as side activities and, therefore, never really establish themselves in the self-employment industry.
Scams affecting freelancers all over the world
Freelancers around the world lose millions of dollars every year in scams.
The most common scam affecting freelancers is to post high paying jobs, work and run without paying. This affects freelancers who find work from questionable sources and sometimes also respectable job sites.
The other is more serious and involves identity theft. A customer will look for details like bank account number, Social Security details, and Inland Revenue Service documents as part of identity verification before payment. These details are used to steal identity while a freelance writer never gets the job or loses money.
There are different types of frauds and scams that freelancers should be aware of if they are to make any money and protect themselves and their families. The Federal Bureau of Investigation also issues opinions on online scams that can affect freelancers who work online most of the time.
Difference between Freelance and Side-Gig
In recent years, there has been a lot of talk about the difference between parallel work and true self-employment. While experts struggle to find a clear distinction, the following definition is broadly acceptable.
A backup worker is someone who freelances only occasionally for money and not with the intention of pursuing a career. On the other hand, a professional freelancer is someone who develops their career despite working on multiple projects for different clients at the same time.
Regardless of the difference, freelance work and side gigs are here to stay, average experts.
The coming years present many challenges for the entire independent sector around the world. One of them is posed by the changing dynamics of forced labor by the current Covid-19 pandemic. As businesses around the world go bankrupt or go out of business for good, the demand for freelancers could decline in the years to come.
At the same time, the trend towards working from home and the demand for remote workers could bring some dynamism to the independent market. Although projections before 2020 indicated that self-employment will flourish and explode, the pandemic seems to have put a word in the wheels, both in terms of the number of people who are likely to be self-employed and the money that the self-employed workers can make. freelancers earn.