According to a Bureau of Labor Statistics report in 2016, the last year in which the agency collected data, there are over 15 million self-employed professionals in the U.S—about 10 percent of the total working population.
This number may seem large, but is far behind some estimates. In 2018, FreshBooks reported that 27 million Americans were considering a shift to self-employment by 2020. However, they’ve estimated that only 2 million took that career leap.
The question is, why?
FreshBooks identified some of the barriers that prevented these hopefuls from making the transition to self-employment. Of those asked, 35 percent reported being worried about an inconsistent income, 27 percent reported a lack of a business plan and 20 percent didn’t want to give up their health benefits.
Those aren’t unreasonable concerns. Of the 15 million self-employed workers counted by the BLS in 2016—which includes freelancers, independent contractors, and entrepreneurs—about two-thirds were unincorporated, meaning they do not receive the benefits of being associated with a corporate structure (such as limited liability and certain tax deductions).
It’s likely for these reasons that the majority of this relatively small demographic, assumed to be reserved for youthful risk-takers, is actually more attainable and more manageable than one might think.
In fact, according to the BLS report, self-employment rates are higher for older workers than for younger workers. They credit a possible reason for this as “younger workers rarely have accumulated the capital and the managerial skills required to start a business, whereas many older workers may be able to acquire these resources through their own efforts or through access to credit.”
This trend is reinforced by another data point. According to the Freshbooks Self-employment Report, nearly 60 percent of self-employed professionals aged 50-65 want to continue to work instead of retiring. The report also found that self-employed professionals experience more career satisfaction than those with traditional jobs.
It’s not hard to see why this is the case. With the many resources offered online, the digital age has made it even easier to make the transition to self-employment. Today, there are online tools for specific aspects of self-employment. Among these resources, the AARP Foundation Self-Saver tool, which calculates taxes, itemizes expenses, automatically withholds the right amount of tax, and submits quarterly filings to the IRS (AARP Foundation is offering the tool free to anyone who signs up before April 15, 2020).
Between the proliferation of online tools and the rise of the gig economy (thank you companies like Lyft, Inc. (NASDAQ: LYFT), Uber Technologies Inc (NYSE: UBER), Etsy Inc (NASDAQ: ETSY), Fiver International Ltd (NASDAQ: FVRR), and GrubHub Inc (NYSE: GRUB)), it’s not hard to imagine a future where an increasing portion of the workforce opts for self-employment.