In search of job security, millions turn to freelancing

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Unemployment may be low, but Tony Faustino, 50, isn't betting his future on a traditional job. Faustino, a father of two, left his six-figure corporate marketing career to start his own marketing firm in Overland Park, Kansas, in April of 2015.

Given the regulatory pressures squeezing the pharma and biotech companies he served, the long-term future didn't look promising. An article he'd read years ago about men getting downsized from corporate jobs at age 50 kept haunting him.

"So many people are in denial about what is happening in corporate America right now," he said. "I wanted to have more control of my professional destiny."

Study after study shows that traditional jobs are fading around the globe. A much discussed recent report from the World Economic Forum, for instance, showed that the 15 top global economies could lose 5.1 million jobs in the next five years, thanks to trends such as robotics.

But experts say work in itself isn't disappearing. What is declining, they say, is how it is packaged. Rather than employ people in traditional jobs, more employers are choosing to hire contractors.

Fifty-four percent of the talent in businesses today is made up of traditional workers, but by 2017 that percentage will be down to 41 percent, according to a study released in October by research and advisory firm Ardent Partners and partially underwritten by Fieldglass, an SAP-owned company that provides vendor-management solutions. That is because almost 70 percent of organizations are expected to hire more contingent workers in the next 12 months, Ardent Partners found.

Today, work once done mainly by people in traditional jobs can easily be done through other means, such as outsourcing to freelancers, said David Creelman, CEO of Creelman Research, a human resources analytics firm in Toronto that serves many U.S. clients, and co-author of the book Lead the Work: Navigating a World Beyond Employment. "Because of that, we'll see fewer jobs," he said.

With corporate America providing less income security, many Americans are acting in self-defense by joining the free-agent economy, whether as full-time independent contractors or by using work found through platforms like Uber to supplement their pay. "One [job] protection is to go freelance," said trends expert Daniel Levine, director of The Avant-Guide Institute in New York City.

By all accounts, the number of free agents has been ticking up since the recession. In research released in 2015, the U.S. Government Accountability Office found that 40.4 percent of U.S. workers had a contingent work arrangement in 2010 — meaning they were small-business owners, freelancers, contractors, temps, on-call workers, contract company workers and traditional part-timers.

With many companies giving employees a lot of autonomy anyway, traditional employees often already work in ways that are hard to distinguish from freelance workers, notes Nathan S. Gibson, the Woburn, Massachusetts-based vice president of independent contractor compliance for Randstad Sourceright US, a talent solutions firm. "The line gets blurrier and blurrier," he said.

Some experts now predict that even more than 40 percent of the U.S. population will be freelancing in some capacity in the near future. Creelman says it's hard to predict but says the percentage of free agents could rise as high as 60 percent in the next 20 to 30 years. It is a trend that became deeply rooted during the recession.

"After the 2009 and 2010 bust cycle, you didn't really see the reversal of the trend," said Mike Ettling, president of SAP SuccessFactors, which provides human resources solutions. "That whole rise of contingents is separating itself from the economic cycle. It's happening across all sectors — blue collar, white collar, everything."

Many of the new crop of freelancers didn't out start out wanting to freelance. They are joining the free-agent economy on a part-time basis because of stagnating wages and the decline of middle-wage jobs, said Steve King, a partner at Emergent Research, a company in Lafayette, California, that studies the independent workforce. "The real growth is in the number of people doing side gigs," he said.

That trend has prompted the growth of sites like Moonlighting, which helps users find side work. Moonlighting has raised $3.1 million in financing, with the most recent, $1.2 million round led by media firm The McClatchy Company, in February.

"Wages have not gone up in 10 to 15 years," said CEO and founder Jeff Tennery, a former corporate executive and father of five. "I set out with moonlighting to solve a wage gap."

A global boom

The U.S. economy isn't the only one seeing a boom in side gigs.

In a survey of 1,103 people released in November 2015, Selz —a platform that helps small businesses sell products through their own blogs and websites — found that 16 percent of working adults in the United States, the U.K. and Australia are actively engaged in a side business.

The majority said they were doing so to make more money. Among the respondents, 59 percent work full-time in another job, and 47 percent are married with children, the survey found.

Despite their other responsibilities, many are doing quite well in their side businesses. The respondents, who had a mean household income of $74,500, were pulling in an average of $24,500 of their pay through a side business and work an average of 14.5 hours per week.

Martin Rushe, CEO and co-founder of Selz, found that many of these small-business owners no longer want to rely on their full-time employers for economic security.

"The trust in corporations continues to deteriorate," he said. "So many of the people who start these businesses do so because they hope it will become their main source of income, at which point they will be able to escape the daily grind."

Invoice2Go, a provider of invoicing software based in San Francisco, also serves a number of moonlighters. In a recent survey, the company found that 22 percent of customers report they use the service to prep invoices for a side gig. Although half said they run their side business to make extra money, more than 93 percent agreed they wouldn't give up their microbusiness even if they could focus exclusively on their main job.

Greg Waldorf, CEO of Invoice2Go, says he tries not to be sentimental about the economy of the past, because technology is making it much easier for individuals to start a business today. "This brings so many more people to the forefront of opportunity," he said.

The millennial route

With traditional careers offering less security and flatlining compensation, some millennials are opting out of four-year college degrees and career-track jobs.

Disappointed that his associate's degree led only to a series of low-wage jobs in industries from day care to retail, Allen Walton, 28, started his own online spy-camera store, SpyGuy Security, in May 2014 — abandoning the idea of working for someone else altogether. Today the company brings in more than $1 million in revenue and employs three people. "In the end, I could only trust myself to make the kind of money I want," he says.

Kathryn Cockrell, 21, started Happy Hound Pet Sitting, a pet-sitting business in Fairhope, Alabama, bypassing a college degree even though her parents — both pharmacists who have worked for the same hospital for years — encouraged her to get one. She felt that running her own business gave her plenty of economic security.

"In the past, it's always been, 'Go to school to get a law degree,'" she says. "They had set degrees that locked you into a certain career. What I think is really cool about this day and age is people can have multiple passions. You don't have to go to school to become who you want to be and do what you want to do."

A new model of education

Some experts say schools need to update their offerings to prepare young people and career-changers to work successfully in the world of the future.

Tony Wagner, expert in residence at The Harvard Innovation Lab and co-author of the book Most Likely to Succeed: Preparing our Kids for the Innovation Era, says that thriving in the fast-changing new economy will depend not on mastering a specific skill, like coding, but instead to learn creative problem solving, which depends heavily on the ability to collaborate. "That's where I'd place my bet," he said.

Graham Doxey, an entrepreneur based in Salt Lake City, is teaching collaborative problem solving at Knod, a cloud-based virtual school that works with employers to prepare its students for jobs the employers need to fill. The students are able to earn an undergraduate degree through New Charter University, a private not-for-profit university in San Francisco, for $5,000.

Doxey aims to update education to reflect the more fluid way people work today so they can get good jobs.

"The old model was designed for the industrial age," he said. "It was an assembly-line kind of process."

But some experts say preparing to be better employees may not keep workers in demand in the future — because they need to know how to operate as a freelancer, too.

"Most people now are told to go to school and get a good job," says Creelman. "What's missing for young people is the training and mind-set to be a good free agent."

— By Elaine Pofeldt, special to CNBC.com