In some ways, 2015 was the year of the gig economy, with the scale and diversity of the freelance workforce not just expanding, but attracting more mainstream notice as well. By our own recent estimates here at Upwork, some 54 million Americans are now freelancers.
Still, that’s just the most noticeable trend among several that will reshape the nature of work in the next five years. In fact, shifts in technology, connectivity, and the expectations of both employers and employees are on track to bring about bigger changes than the freelance economy can on its own. Here are four.
1. The Rise Of Second-Tier Cities
The 20th century saw big, cosmopolitan cities boom. The best jobs and top talent were concentrated in a few “first-tier” urban centers like San Francisco, New York, London, Tokyo, Los Angeles, and Paris. If you wanted a job, you had to move to one of those places.
That’s already changing. The major urban hubs have largely exhausted their stores of opportunity. The cost of living is now outpacing salaries in many of those places. In Los Angeles, rents are rising twice as fast as inflation; in San Francisco earlier this year, rents grew a massive 15%. As a result, residents’ purchasing power is shrinking.
I recently heard about a case in East Menlo Park—one of the few low-income neighborhoods remaining in Silicon Valley—where the owners were renting 12 bunk beds in a broken-down house for $1,000 per month apiece. There’s just so much demand that absurd rates like this are now commonplace.
This is one reason that the fastest-growing cities of the past 10 years have included such “second-tier” places as Houston, Austin, Raleigh, Seattle, and Denver. It’s just cheaper to live and do business there.
Meanwhile, technology is making it far easier for people to live in places other than the largest hubs and still have access to jobs they otherwise wouldn’t. Dropbox, Google Hangouts, Skype, and other key tools in the remote worker toolkit make it possible to be productive from just about anywhere, no matter where your employer or clients are based.
This is especially true for freelancers. In a recent study co-sponsored by my company Upwork and the Freelancers Union, one-third of freelancers say they were able to move as a result of the flexibility freelancing offered them.
Michelle Decker lives in Atlanta and has been freelancing since 2011. She and her husband are both working at home, so they have more time to raise their family—without having to spend time commuting or paying for day care—and says she’s making more than she would in a local job. They dream of moving to Europe and living in an RV with their children as “digital nomads,” a lifestyle choice that would’ve been unthinkable a decade ago.
Many businesses are becoming more flexible, too. It’s in no one’s interest to have a substantial part of the workforce spend two hours each day navigating traffic when there are simple, easy-to-use alternatives that in many cases work better.
It’s getting ever more apparent that companies that take a hard line on working in the office, like Yahoo did in 2013, risk losing the most talented workers. A recent study showed that 70% of employees would switch jobs if it gave them more flexibility.
Differentiated labor is a basic building block of complex societies and has been around far longer than the Industrial Revolution that accelerated it. But technological change is ensuring that ever greater specialization continues into the 21st century. Particularly in technical fields like software engineering, security, hardware design, and product management, the skills required are simply too numerous for any one person to master.
If the need for greater specialized expertise is growing, it’s at least partly because the demand for those skills is changing more rapidly than ever. But paradoxically, we aren’t becoming ever smaller widgets; no one is a “specialist for life” in any one thing any longer. You always have to be ready to switch from Java to Objective C, from PHP to Ruby, from statistical analysis to big data, from media relations to social media management.
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