Thursday, 29 August 2019

Freelancers and Financial Well-Being

One of the ongoing questions around independent/gig work is its impact on the financial well-being of independent workers (freelancers, gig workers, self-employed, etc.). 

To better understand this issue, a series of financial well-being questions were added to the MBO Partners State of Independence study survey this year (Emergent Research works with MBO Partners on this ongoing study).

The new questions included a set developed by the U.S. Consumer Financial Protection Bureau (CFPB), which the CFPB uses to create an individual’s financial well-being score.

This score provides a standard metric that allows comparisons of financial well-being across individuals or groups.

The chart below (click to enlarge) is from the study's research brief, The Financial Well-Being of Independent Workers.

It shows that, on average, independent workers and those with traditional jobs report similar levels of financial well-being. The CFPB's 2017 study also had similar findings. 

Well-being scores

However, as the research brief points out, "average scores don't tell the whole story."

Although the averages are the same, the score distribution for independent workers is wider than the distribution for traditional jobholders. 

In other words, a greater percentage of independent workers have both relatively higher and relatively lower scores than traditional jobholders. Key quote on what this means:

One of the broader findings of the MBO Partners SOI study series is that independent workers with in-demand skills and a tolerance for the risks associated with independent work are thriving. The well-being scores from this study reinforce this.

But the scores also reinforce the study findings that independent workers without these attributes ... often struggle financially.

See the research brief for more details. 



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