Highly Skilled Self-Employed Driving the Growth of the Gig Economy

The Resolution Trust, a left leaning U.K. think tank, released a study showing that 60 per cent of the growth in self-employment in Great Britain since 2009 has been in what they call the "privileged" sector.

By "privileged" they mean self-employed workers who are relatively highly skilled and well paid. The fastest growing sectors employing these privileged workers include finance, banking, management consulting, advertising and information technology.

They contrast this with what they call the "precarious" sector, which they define as the self-employed working in lower skilled, lower paying sectors. 

The report chart below (click to enlarge) illustrates how they split sectors into privileged and precarious.

Interestingly enough, we've found similar results over this time frame in the U.S. 

The chart below show the growth of U.S. independent workers who report annual earnings of $100,000 or more. While this doesn't exactly map to the Resolution Trust's definition of "privileged", it is similar.

Between 2011 and 2016 the total number of U.S. full-time independent workers (those working more than 15 hours per week in an average work week) grew about 1 million. This means 100% of the growth of full-time independents comes from the high earning group.

Including part-timer independent workers (those working less than 15 hours per week in an average work week) and occasional independents (those working at least several time a month in an average month) the independent workforce grew by about 3.5 million over this time frame. This means the high earning independents contributed about 28% of the overall growth.

The Resolution Trust claims the growth of high earning independents is mostly driven due to self-employment tax advantages in the U.K. 

This is not the case in the U.S. where the tax laws clearly don't favor independent workers.

We also don't think this is the main driver in the U.K., although the tax laws there do favor higher earning independent workers.  

As we cover in more detail in the 2015 MBO Partners State of Independence report, the drivers of the the growth of high earning independent workers are:

• Consistent economic growth is creating more opportunities for independent workers in all industries, but particularly for those in high-growth industries such as technology, biosciences and finance.
• The shift to contingent workers by companies large and small is creating more work for independent professionals who serve businesses. 
• Corporate “wars for talent” - demand for highly skilled and/or specialized talent – in high-growth industries such as technology and healthcare, and in-demand job categories is leading to higher fees and increased revenue for many Independents.

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