Why The Freelancer Economy Is Preparing For Long-Term COVID-19 Impacts

The COVID-19 pandemic has hit freelance and full-time workers hard. Concerns about financial stability, job security and when or if workers will receive their next paychecks remain high for all personnel, including those in nonessential or newer roles and gig workers with less-regular incomes.

The gig economy is huge, encompassing rideshare drivers, freelance photographers, self-employed business owners and many other participants — and the virus’s short-term effects have proven equally diverse. Those who have found work have reported that clients are asking to slash rates, for example, and some contractors are chasing down late payments.

COVID-19’s long-term freelancing impacts could be much different than those arising in the short-term, however. The outbreak is revealing how integral gig workers already are, Marlon Litz-Rosenzweig, co-founder and CEO of online freelance hiring platform WorkGenius, noted in a recent interview with PYMNTS. Essential workers in the U.S. include freelance delivery drivers, order fulfillment workers and grocery clerks, who are all helping get necessary items to consumers and ensuring families can weather stay-at-home directives and quarantines.

More traditional companies that have had to switch to remote operations may also be turning to freelancers as they find themselves working with tighter budgets and potentially with fewer team members following bottom line-saving measures like layoffs. These factors could lead to a future in which the remote, freelance model is more attractive to firms, Litz-Rosenzweig explained.

“With COVID-19, [our company has seen] more demand than ever,” he said. “Companies are shifting to remote workforce models, and they are realizing that, ‘Oh, for a lot of the work we thought we needed people on premises. We don’t really need people on premises.’”

He believes that shift will last well past the stay-at-home period that COVID-19 has brought about, and that freelancers could find more opportunities as companies search for talent without taking location into account. Regularly hiring freelancers will require shifts in how these entities find, work with and pay contractors, however, and may lead to a rise in online freelance platforms.

Debating Freelancing’s Future

The COVID-19 pandemic’s influence will likely not result in companies replacing full-time workers with gig economy participants, but it may create an atmosphere in which firms’ freelancer awareness increases and gig opportunities rise. Figuring out how that would look means examining the virus’s short-term impacts, as not all workers are seeing professional disruptions. One effect has been the same for both freelancers and full-time employees, however: Social distancing and stay-at-home protocols have decreased the number of workers on-site.

“When people are saying, ‘Oh, the freelance world is getting harmed [by COVID-19],’ they are probably referring to on-premises gig work, which is like Uber and Lyft … or maybe hospitality gig work,” Litz-Rosenzweig said. “On-premises work is currently on hold, where everything needs to shift remotely, [but] you still need to get the work done.”

The virus’s outbreak has not changed companies’ necessary tasks, but it may have reduced the time frames and resources firms have to complete them. Some companies may be stretched due to costs from shuttering physical storefronts or sick employees’ healthcare expenses, making it difficult to hire on additional full-time workers to keep operations running as normal.

Collaborating with freelancers could provide a solution by giving firms access to talented pinch hitters who can help complete projects without requiring companies to allocate funds for salaries and benefits. It may also help them realize certain roles may be better suited to freelancers, Litz-Rosenzweig argued.

“[Companies] are realizing that being on payroll and being [in-office] for certain functions is not necessary, and I think now they have started to sort of embrace the freelance world a little bit more,” he said. “Then they turn to a [freelance staffing] company … that really provides the technology to make that experience seamless, because if you are trying to do manual freelancing as a company you incur so much overhead.”

Companies invest approximately 11 hours for every 40 hours of freelance work they purchase when hiring internally, Litz-Rosenzweig said. Removing friction from hiring is thus key to creating the experiences companies confronting COVID-19-related budgetary constraints are looking to find — and a main reason they are using marketplaces.

“Companies [may have] stopped hiring because you cannot have anybody start on-premises, which makes sense,” Litz-Rosenzweig explained. “All you can do is do remote work, so instead of hiring new people and … turning to staffing firms, [companies] now need to find freelancers [who] do that type of work for [them]. … We think that change is here to stay. It will get entrenched.”

Companies looking to hire gig workers are utilizing online aggregation platforms during the outbreak, as are freelancers searching for more work. These platforms may occupy a greater role in the gig economy after COVID-19, meaning such solutions may see more competition over time.

Future Freelance Platforms

WorkGenius is one of numerous marketplaces pairing companies with talent, employing algorithms to match its approximately 400,000 freelancers with appropriate jobs. Workers build up their profiles by completing simple jobs in their fields, and their opportunities increase with their experience, Litz-Rosenzweig said. This allows all parties more visibility into skill and experience, which is critical for quick onboarding.

Companies can attract top talent by making sure payments are as quick and easy as possible. Work- Genius has automated that process to keep its contractors coming back. Workers are paid in their local currencies through a partner 24 hours after projects are completed, removing the frictions involved in waiting for or tracking down late payments. Such moves could prove crucial to onboarding and retaining talent, especially as gig workers’ financial stabilities are more in flux during the pandemic.

The COVID-19 pandemic is still in full gear and predictions about its effects will likely continue over the next several months. Freelancers may offer flexibility and beneficial services to firms during this period, but an increase in opportunities also means competition among top talent is on the rise. Easy communication tools, online support and payments are as critical for companies seeking out talent as they are for the freelancers they hire. These firms will need to keep all these factors in mind regardless of the outbreak’s long-term impacts on the gig economy space.