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Why Freelancers are the Secret Ingredient for Our Economy

Updated on February 22nd, 2023
freelance economy

Freelancers may have had a reputation for being lazy writers living in their parent’s basement in the past, but times have changes. Fortune 500 companies and startups alike regularly outsource important projects to freelance writers, designers, and developers to ensure a quality product completed within budget in a short period of time. Freelancing has become a source of economic growth around the world and could be a secret ingredient for our economy.

Here are some reasons freelancers will continue to buoy the economy for decades to come:

They create jobs

By the nature of what they do, freelancers are job creators. Each time a freelancer leaves a larger company to begin working as a freelancer full-time, they have created a new job.

That transition has multiple positive changes in the economy. First, they are creating their own job that can be higher paying than their old one and operates independently of other businesses. Second, they open up a position to someone else who prefers working for an employer. They doesn’t have the skillset to go out on their own.

In a sense, they have created a job and opened up a job for someone else at the same time. This leads to two jobs filled for every new full-time freelancer.

Secret Ingredient for Our Economy – They save businesses money

Hiring a full-time employee requires paying a full-time paycheck, taxes, and benefits. Hiring a freelancer on a contract basis means only paying for the cost of the job. This means no ancillary costs of employment.

This gives businesses additional free cash flow to spend on growth that can ultimately lead to hiring or profits that can be spent to further fuel growth in the local economy.

[Related: 3 Ways Business Leaders Can Help with Boosting Local Economies]

They are expert specialists

Economic theory suggests that specialists are better than generalists, as they create a competitive advantage that leads to creating a higher quality product or service with fewer resources.

For example, a company may have an employee who has fair Microsoft Excel skills that can finish a financial analysis project in two weeks. Based on an average financial analyst salary, that would cost the company around $1,500-$3,000. The company can outsource that same project to a specialist freelancer. They could complete the project in half the time at a lower cost. This helps support the freelancer’s business and allows the business to invest elsewhere or keep the savings as profits.

They buy products and services

Freelancers are a business, the same as many others. While there are fewer employees, freelance businesses require computer equipment, travel, and other professional services to complete their job.

Sometimes, freelancers collaborate or outsource on their own to reach higher profits and success than they could independently. Again, this supports other businesses and jobs in the economy locally or around the world.

They can bring jobs to any community

By the nature of the job, freelancers can live and work anywhere. Freelancing has led to the emergence of digital nomads who work and travel regularly. This allows freelancers to live and spend money in inexpensive small towns, in locations abroad, or anywhere else they choose.

This helps distribute economic activity outside of the biggest cities. It can spur growth in economies in metropolitan areas and small communities alike.

There is one certain outcome from the growth in the freelance economy. It helps grow the economy overall. Freelancers will build that economy wherever they are located — well into the future.

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a personal finance expert. He received an MBA in Finance from the University of Denver in 2010. Since graduating he has been blogging about financial tips and tricks to help people understand money better. He is a debt master, insurance expert and currently writes for most of the top financial publications on the planet.

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