Talent   //   February 15, 2024

Feeling betrayed after layoffs spree, more workers flock to freelance

Nate is a Brooklyn-based graphic designer who was laid off from his creative director’s job during the pandemic. Since then, he has managed to carve out a new identity: that of a happy, highly sought after freelancer. 

“Initially when I got laid off, I found myself almost unhirable because of my salary requirements, because I had worked in smaller companies but was paid very well,” he said. “None of the big companies felt I had the experience they wanted, and no small companies felt like they could afford me.”

Not seeing an obvious path to a traditional work arrangement, he opted instead to take on freelance projects with a variety of companies, including large employers that would’ve never considered him for a full-time role. 

“I realized having lots of clients was more secure than having one employer, and I never looked back,” he said, explaining that since he’s gone to work for himself, he better prioritizes his personal needs, has more time to see friends and family, even takes better care of his health, including more regular visits to the doctor.

“It’s all at my pleasure now,” said Nate. “Life is good.”

Last year, one of the most buzzed-about trends was The Great Betrayal, defined by employees having grown to feel that workplace stability and employer loyalty are a fantasy, and that workers who bet on themselves and rent out their skills across a range of clients tend to be better off. 

A recent survey of 1,000 knowledge workers by the members-only product builders network A.Team found that those sentiments are becoming even more entrenched following the recent wave of layoffs, particularly at tech companies, leading many to go from merely complementing their full-time jobs with side gigs to ditching the staff job altogether. 

Nearly three-quarters (73%) of those in the survey said recent layoffs in the news made freelance work more desirable than before, with more than 6 in 10 (64%) losing trust in the stability and security of full-time employment.‍

Among workers who have been furloughed, about half said they were searching for a job in the same field, while another one-quarter were pivoting to a new line of work. The remainder said they were switching to freelance or starting their own businesses. 

“Workers are finally waking up to the fact that the stability of full-time work is an illusion.”
Raphael Ouzan, CEO of A.Team.

The ascent of generative AI is making freelance work even more attractive, meanwhile. More than 6 in 10 (67%) said the emergence of such tech tools has made freelance life more appealing, while for those already freelancing, that number rises to 7 in 10 (74%).

Echoing the motivations of our freelancer Nate, the large majority of those surveyed (86%) signaled a desire to have more control and flexibility over their work schedules than what’s afforded by a traditional full-time job.

“Workers are finally waking up to the fact that the stability of full-time work is an illusion,” said Raphael Ouzan, CEO of A.Team. “As traditional job models adapt to new realities, we’re witnessing the emergence of a dynamic, AI-powered freelance economy. This new landscape offers work that is more personal, flexible and aligned with the modern worker’s evolving aspirations.”

A.Team’s findings mirror those of other companies that track employment trends, which likewise found that the pandemic had an overwhelming impact on those opting for self-employment. While there were too few freelance workers available prior to the emergence of Covid-19, their numbers surged once the pandemic hit, resulting in 90% more full-time freelancers and a 130% bump in full-time employees with side gigs.

The number of freelancers in the U.S. has ballooned, reaching an estimated 72.1 million, or nearly half (45%) of the entire workforce. 

Many of these are not disillusioned corporate employees but, rather, people just beginning their work lives. “The ability to do fractional work can help a newer graduate learn what they want to do and provide experiences to compare against each other,” explained Shereen Shermak, founding member of the angel investor group TBD Angels. 

Meanwhile, many companies have strived to provide valued employees more flexibility so they’ll be happy staying put in their jobs versus venturing into entrepreneurship. This is especially true of smaller companies with fewer workers, where turnover can be particularly problematic. 

“When everything around them seems fragile, employees will be drawn towards solid ground, and that’s what small businesses, even as just a side hustle, are offering people right now.”
Rushi Patel, co-founder and CRO of Homebase.

“When everything around them seems fragile, employees will be drawn towards solid ground, and that’s what small businesses, even as just a side hustle, are offering people right now,” said Rushi Patel, co-founder and CRO of Homebase, a platform which works with small businesses to manage their hourly teams. 

Jay DiPietro, COO of the business-to-business marketing agency The Ricciardi Group, stressed the importance of business leaders putting the needs of their people first. “Leaders need to reaffirm their values and make clear whether or not they are opportunity-first or people-first organizations,” he said. “When employees are heard, when values are not just spoken but lived and when financial discipline is a part of your leadership culture, retention should be high.”

Despite the promise of flexibility and independence that freelance affords, some warn that self-employment can have its downsides.

“The grass always seems greener,” said Mack McKelvey, founder and CEO of the strategic marketing firm SalientMG. “Freelancing may provide significant life control for people choosing to go that route, but freelancing can be feast or famine.”

When companies pull back, freelancers are often the first roles that are cut or reduced, she pointed out—and it can happen quickly. “Freelancers must build a financial cushion should their contract be terminated, because unlike being employed full-time, there won’t be severance or, in many cases, notice,” she advised.

McKelvey recommends that those who do opt for a freelance life lay a solid foundation, devoting at least 30% of their time to building and nurturing a new business pipeline. They should also bake in the costs and time working with accountants and lawyers so they have strong contracts, a financial infrastructure, access to credit lines, insurance and a clear understanding of state compliance laws.