How much money do freelancers make? This question will definitely on top of the mind of everyone that wants to freelance. With the Covid-1...
How much money do freelancers make? This question will definitely on top of the mind of everyone that wants to freelance. With the Covid-19 pandemic showing little signs of ebbing anytime soon, freelancing is emerging as the single largest source of income for a lot of people around the world.
Statistics about Freelancing
That freelancing is here to stay and flourish is indicated by statistics garnered from multiple, myriad sources. These figures would help comprehend why freelancing is fast gaining ground in the US and elsewhere.
- Over 16 million of the total American workforce of 157 million, are self-employed, says a report by Pew Research Center.
- Over 57 million Americans took to freelancing in 2019, indicating a consistent rise of about 3.8 percent annually since 2015, finds a joint study conducted by Freelancers Union and freelancing portal, Upwork.
- With 57 million workers, the US has the largest population of freelancers in the world.
- India has the second largest freelance workforce in the world, at 23 million.
- By end of 2019, Europe had 11 million freelancers, which constitutes about five percent of the workforce in 10 European Union states, namely UK, Germany, France, Spain, Ireland, Italy, the Netherlands, Luxemburg, Belgium, Portugal and Switzerland.
- Over five percent of Gross Domestic Product (GDP) of the US or about $1 trillion was driven by freelancers in 2018-2019. This contribution is projected to rise exponentially post 2020.
- American freelancers pay 15.3 percent taxes to the government under the category of Self Employment Tax. Of this, a part goes towards Social Security and health insurance.
- Over 53 percent freelancers come from age group of 18 years to 22 years, 40 percent from the millennial or 23 years to 38 years, 31 percent from Gen-X or 39 years to 54 years age group and 29 percent are Baby Boomers or 54 years old and above, finds Statista, the global statistics portal from Germany.
- Men outrank women in the gig-economy: About 40 percent of freelances in America are female while 59 percent are male of the total of 46 percent female and 53 percent male that make the entire US workforce, reports Statista.
- Majority of American freelancers do not enjoy any benefits from employers unlike their fulltime counterparts. Hence, they could be badly affected by the economic downturn and other impact of the ongoing Covid-19 pandemic, says Fortune magazine.
It’s undeniable that Covid-19 pandemic will change working and business patterns drastically. With increasing number of people working from home and companies going bankrupt overnight, freelancing is expected to become a lifestyle in the US and elsewhere, according to reports from assorted and independent sources.
Dependence on Money from Freelancing
Dependence on earnings from freelancing differs among every ethnic race in USA. The largest dependence on side-gigs and its income is among the white American population.
Among the white American as well as Hispanic and Latino populations, 69 percent workers cite extra money as the reason for freelancing. For the remaining 31 percent, freelancing is the main source of income.
Freelancing is the main source of money for 44 percent of African-American people of USA while 56 percent freelance to have a side income.
More than 67 percent of Asian Americans and other ethnicities engage in freelancing as source of extra income while only 33 percent freelance for earning a living. Asian-Americans have higher median earnings than other ethnic groups in USA. Hence, their dependence on freelancing as main source of income is lower.
Freelancing in USA by Ethnicity
There’s something interesting about how much money freelancers make. The earnings depends upon ethnicity of the freelancer.
Of the white population of America, 62 percent of workers have a side-gig or are fulltime freelancers, of the total workforce of 66 percent white Americans. This is followed by Latino and Hispanics who constitute 16 percent of the freelance population, from the 15 percent workforce participation. This means, there’s one percent more Hispanics and Latinos in the gig-economy than the regular workforce.
About 12 percent of the African-American community are freelancers while the workforce participation is two percent lower, at 10 percent. Asians and Asian Americans form nearly 10 percent of freelancers while their workforce participation also stands at 10 percent. And four percent of all other ethnicities in America are in the freelance economy while only three percent constitute the regular workforce.
Gender Income Gap among Freelancers
Like most parts of the world, women freelancers in the USA face severe gender income gap. Meaning, they earn about 56 percent lesser than their male counterparts, claims a report by Organization for Economic Cooperation and Development (OECD), reports.
In stark contrast, women in various fields earn a lot more than their male counterparts in the UK. These fields are ones that involve creativity and design. In fact, female freelancers in the UK earn between eight percent and 12 percent more than males in the same field.
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Women freelancers in Europe also experience gender pay gap. Freelancing women across Europe earn between 20 and 35 percent lesser than males. In some countries, the divide is a high as 46 percent. However, Estonia, a Baltic nation in Eastern Europe is different: women freelancers earn equal or more than men.
In Asia, women in the freelance and regular workforce earn a dismal 61 percent lower than male freelancers and regular workers, says International Labor Organization. One of the main reasons cited for lower freelance pay among Asian women is their preoccupation with domestic work and in some countries, taboos and stigmas attached to women working.
Research indicates that gender income gap can range between seven percent and 37 percent on online platforms, depending upon the industry or sector where women vie with men for freelance work.
One of the main reasons for this gaping gender income inequality is because women settle for lesser money when taking freelance work, finds the 2019 Gender Gap Report by HoneyBook.com. The worst affected are working moms and single moms, the report adds.
However, major freelancing portals such as Upwork, FlexJobs.com and Freelancer.com claim that publishing freelancing rates online is helping women to close the gender income gap, gradually but surely.
This brings us to the question about which countries require most work from freelancers. Knowing this is essential since countries such as Belgium enforce a strict policy on payments to freelancers: there can be no discrimination on basis of gender while hiring freelancers from Belgium. This means, a woman freelancer gets the same pay as her male counterpart.
Top 10 Hiring Countries for Freelancers
The actual income of freelancers depends according to the country. This means, it depends upon the country where the buyer lives as well as the country where a freelancer operates.
The top 10 countries from where companies and individuals hire freelancers are as follows.
- USA
- Australia
- United Kingdom
- Canada
- United Arab Emirates
- Singapore
- Israel
- Germany
- The Netherlands
- New Zealand
These countries contribute most of the $1.5 trillion turnover to the global freelance industry. Of this, the US accounts for nearly 50 percent of the share with Canada.
Freelancing Industry in China
In recent years, China is also an upcoming buyer of freelance service, though the volume of buying has dropped considerably with trade and other restrictions imposed over the country.
The share of China’s contribution to the freelance market remains unknown because it’s widely believed they outsource services using various fronts.
At the same time, the number of freelancers in China is also growing rapidly, reports international recruitment firm, Hays. However, a lot of things about areas where Chinese freelancers operate also remains largely unknown. Interestingly, the secrecy surrounding freelancers in China is also reflected aptly by an article in the Communist Party’s mouthpiece, Global Times.
Freelance Industry in Europe
The freelance industry in Europe is very unique. Though there’re about 11 million freelancers across 10 countries, the number is equally divided between women and men, though a small percentage of jobs- about 0.5 percent- are also taken by the LGBT community. However, there’s a shortage of female freelancers In the Information Technology (IT) sector, says MALT, a freelancing portal and organization that operates across the continent.
Unlike rest of the world, majority of freelancers in EU states- about 57 percent- are from Gen-X – about 57 percent. And more than 53 percent of all freelancers hold a Master or Doctorate degree. About 77 percent of the 11 million freelancers in Europe chose to work from home because of higher pay and better working conditions.
Freelancers in Europe enjoy an average 27 holidays during a calendar year. Most of them work from Monday to Thursday while observing a long weekend from Friday to Sunday, say a Freelancer report. On average, a European freelancer works 44 hours a week.
Freelancing Industry in India
The number of freelancers in India rose by 11 percent from third quarter of 2018 to third quarter 2019, notes a report by Payoneer.com, a global payments gateway. However, revenues from freelancing rose only by 29 percent, the report adds.
India is home to an estimated 22 million freelancers. However, this figure could be much higher since a bulk of Indian freelancers also work on offline jobs or do not bid for projects from freelancing portals.
Top 10 Freelancing Destinations
Another factor that decides freelancing income is the location of the freelancer. Several factors such as demand for a specific skill and currency exchange rates play a major role in deciding the income.
The list of countries where most freelance work is done are as follows.
- USA
- India
- Ukraine
- Pakistan
- United Kingdom
- Russia
- Canada
- The Philippines
- Romania
- China
These countries roughly get 70 percent of the online freelance work pay, according to reports by PayPal, the single largest payments system used by freelancers as well as it’s nearest rival, Payoneer.com.
Countries with Fastest Growing Freelance Income
Now that we know about the top 10 buyer and sellers of freelance work, let’s look at where all the money is going. The 2019 report known as ‘Global Gig Economy Index’ released in mid-2020 by Payoneer.com has some very interesting revelations.
The report notes, while USA maintains the topmost ranking, some countries are showing mushroom growth while others have actually slid down the top-10 list.
The increase in freelancer incomes during third quarter (Q-3) of 2019 are as follows:
- USA: 78 percent
- UK: 59 percent
- Brazil: 48 percent
- Pakistan: 47 percent
- Ukraine: 36 percent
- The Philippines: 35 percent
- India: 29 percent
- Russia: 20 percent
- Serbia: 19 percent
That US maintains its topmost position isn’t a surprise since it’s a powerhouse of the global freelancing industry accounting for close to 50 percent of all freelance work in the world. Pakistan’s rise is attributed to investments made by the country’s government on strengthening the IT infrastructure and providing digital skills to youngsters.
India’s slide to No-8 position as destination for freelance work income is occurring due to two main reasons. Firstly, the country has launched an ambitious project to encourage startups and Make in India industries.
These have in turn reduced the dependence for work from foreign sources since ample opportunities now exist within the country. However, India does contribute one out of every four freelancers in the world till date.
The Philippines continues its dream run thanks to superior IT infrastructure combined with increasing awareness among people to acquire digital skills. In fact, the Philippines is rapidly emerging as a top global back-office for digital marketing services, primarily for ecommerce companies. And this trend is expected to continue as the Covid-19 pandemic makes ecommerce and online buying a necessity rather than a comfort.
How Much Money do Freelancers Really Make?
Having seen the various patterns and income growth in various countries famous for their freelancers, we come down finally to this million Dollar question: How much do money do freelancers really make?
The answer might surprise you.
Globally, the average income of a freelancer is US$19 per hour only. This is far below the US national average of $25 per hour. At the same time, the amount of $19 per hour isn’t really a standard. Freelancers in Europe make much more than their American counterparts. While in Asian countries, the Dollar exchange rate to the local currencies makes freelancing very attractive.
Pay Scales by Industry for Freelancers Worldwide
The median pay scales for freelancers worldwide are somewhat pegged to the ones prevailing in USA. That’s because the US is the largest buyer and seller of freelance services.
Here’re some median pay scales by industry for freelancers.
- IT & Programming: $49/ hour
- Design & Multimedia: $41/ hour
- Writing & Translation: $47- $48 per hour
- Sales & Marketing: $44/ hour
- Engineering & Manufacturing: $56/ hour
- Finance & Management: $49/ hour
- Legal Services: $60 per hour
- Administration & Customer Support: $29 per hour
- Micro-tasks and Deliveries: $18 per hour
- General Services: $18 per hour
While these figures sound very tempting, the ground reality can be very different, as some media houses report.
Shockingly, most freelancers are underpaid. Meaning, they don’t really make as much as the median pay indicates. That’s because every website such as Payscale.com and Salary.com among others, collects data from various freelancers to arrive at a median pay figure. Hence, the lower rate of $19 per hour is what most freelancers would get in the US and rest of the world, it is believed.
However, the situation in Europe is entirely different. The EU follows strict employment standards and therefore, most freelancers that take work within the European Union member states earn much more than their American and other counterparts.
Freelancer Pay Scales in Europe
As a rule, one could say, every freelancer in Europe makes much more money than their American and other counterparts. Here’s an indication of what freelancers in Germany make:
- Systems, Applications & Products (SAP): € 111/ hour
- Consultancy & Management: €110/ hour
- IT & Infrastructure: €94/ hour
- Engineering: €83/ hour
- Development Projects: €83/ hour
- Design, Content & Media: €69 per hour
- Others: €89/ hour
These pay scales for freelancers in various sectors in Germany and other parts of Europe make it the most profitable to work. However, the main hurdle in working for European clients as freelancer is the language. All EU member states have their own official language and require native speakers as freelancers. Hence, there’re very few jobs that Europe outsources from other countries. At the same time, countries such as US and others outsource their work from Europe.
Freelancer Pay Scales in India
With India remaining the topmost destination for freelance projects, mainly in IT, writing and accounting as well as few other fields, here’re some indicators of how much a freelancer in that country makes.
- Women form only 20 percent of the freelance workforce of India and earn only 87 percent of the money as their male counterparts.
- On average, an Indian freelancer makes Rs.2.01million per annum or about Rs.175,000 per month, says an income report by PayPal for calendar year 2019. This is much higher than salaries that an individual can expect working fulltime jobs at several positions.
- At the same time, over 23 percent of Indian freelancers report incomes of more than Rs.6.1 million per year, the PayPal report adds. Most of these are from the IT and related sectors.
- The median pay for most Indian freelancers however remains as low as Rs.22,057 per month. This is far below the global average of $19 per hour.
- Most Indian freelancers chose independent work or self-employment because it provides them an opportunity to work for several large projects at the same time.
The Truth about Freelancer Pay
While American, European and global freelancing figures may sound tempting enough, it’s also important to know that most freelancers are underpaid. This occurs because freelancers don’t want to lose clients by quoting high prices in an already fiercely competitive market
The second reason is that freelancers themselves sell skills cheap because they prefer flexible work hours and enough free time away from work over higher pay. Stay-at-home moms and single moms are the single largest community worldwide who’re known to underquote prices for their work.
Problems Affecting Freelancer Pay
In 2020, the biggest problem affecting freelancer pay is the Covid-19 pandemic. European and other freelancers are increasingly taking pay cuts because buyers are bargaining hard at a time when rampant unemployment is plaguing the world, finds a study by the University of Oxford.
In Europe, freelancer organizations decided to unanimously slash their rates by five percent to 10 percent to help companies counter the economic downturn wrought by the Covid-19 pandemic, despite the demand for freelance work increasing.
In other situations, freelancers themselves believe in keeping their prices to the minimum to attract more clients while bagging newer ones. This trend harms freelancers worldwide since anyone that asks for more risks losing their work and client.
Other than highly respected freelance portals, a freelancer has no guarantees that a client will pay for the work. Large portals such as 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, that’s not the case with several other portals and job boards and assume no responsibilities for paying freelancers.
In most countries of the world, organizations such as Freelancers Union doesn’t exist. Hence, freelancers don’t have a unified voice against loss of pay or other problems arising from working for remote clients. In fact, Freelancers Union is one of the very few organizations worldwide that litigates clients for defaulting on freelancer payments.
Millions of freelancers around the world prefer to work only four days a week or maximum 40 hours since they wish to have more leisure time for other activities.
Others view freelance work as side-gigs and hence, never really establish themselves in the freelancing industry.
Scams Affecting Freelancers Worldwide
Freelancers worldwide lose millions of Dollars annually on scams.
The most common scam affecting freelancers is posting jobs that pay high, getting work done and fleeing without paying. This affects freelancers who find work from dubious sources and sometimes, also respectable job boards.
The other is more serious and involves identity theft. A client will seek details such as bank account number, Social Security details and Inland Revenue Service documents as part of identity verification before payment. These details are used for stealing identity while a freelancer never gets the work or loses money.
There’re different types of frauds and scams that freelancers need to be aware of if they wish to make money and protect themselves and their families. The Federal Bureau of Investigation also issues advisories on online scams that may affect freelancers who work online most of the time.
Difference between Freelance & Side-Gig
In recent years, there’s been a lot of discussion about the difference between a side-gig and genuine freelance work. While experts are hard-pressed to find a clear distinction, the following definition is widely acceptable.
A side-gig worker is someone who does freelance work only occasionally for money and not with the intention of pursuing a career. On the other hand, a professional freelancer is someone that develops their career despite working for several projects for various clients at the same time.
Regardless of the difference, both freelance work and side-gigs are here to stay, aver experts.
Closing Thoughts
The years ahead hold a lot of challenges for the entire freelance industry worldwide. One of them is posed by changing work dynamics forced by the ongoing Covid-19 pandemic. As companies around the world file for bankruptcy or close for good, the demand for freelancers might spiral downwards in coming years.
At the same time, the trend of working from home and demand for remote workers might bring about some buoyancy in the freelance market. Though projections before 2020 indicated that freelancing will flourish and boom, the pandemic seems to have put a spoke in the wheels, both in the number of people that might work freelance and the money that freelancers make.
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