Coping with the skills gap: How freelancers can help

This week Mary Meeker released her annual Internet Trends report and, within her investigation of today's online forces, revealed an insight into today’s workforce--freelancers are nearly twice as likely to have upgraded their skills in the past six months than traditional employees. In fact, one in five freelancers had participated in skill-related education in just the past week, versus only six percent of traditional employees.

This chasm between the amount of re-skilling freelancers do versus employees is shocking that it’s so vivid. What’s going on? To understand it requires understanding the powerful forces shaping our global economy today, especially the skills gap.

Mind the Gap

Businesses are in dire straits trying to find the people they need to get work done. There are more jobs than workers right now, a state that media have reported in headline after headline as the unemployment rate has fallen over the last few years.

McKinsey’s 2017 report—Closing the Skills Gap—finds “almost 40 percent of American employers say they cannot find people with the skills they need, even for entry-level jobs. Almost 60 percent complain of lack of preparation, even for entry-level jobs.”

At a time when many lament lack of job opportunities, isn’t it ironic that there is no actual shortage? What there is a shortage of is effective pairing of opportunities with people who have the actual skills. And that is the skills gap, a painful rift that is not only bad for business but also threatens our long-term overall economic growth.

Last year, the Brookings Institution even put a number on real costs of our skills gap: “Our inability to resolve the digital skills shortage is bleeding the U.S. economy of approximately $1 trillion annually.”

What’s Going on?

Mutually reinforcing factors help explain much of the gap we are seeing between work and workers.

First, the market for certain skills is changing faster than ever. In 2016, for example, the World Economic Forum predicted that “five years from now, over one-third of skills (35%) that are considered important in today’s workforce will have changed.” And according to Freelancing in America (FIA) 2017, more than half of the U.S. workforce isn’t very confident their work will exist in 20 years.

My own company’s data suggests that prediction might even be understated. Each quarter Upwork takes a look at the Top 20 fastest-growing skills demanded by companies on the platform. The most recent results are instructive: 15 of the top 20 fastest-growing skills in the first quarter of this year—think Tensorflow, Amazon DynamoDB and React Native--weren't even on the list half a year ago.

And second, the increasing specialization of work is being driven by the growth of new technologies and the changing nature of work itself. Harvard Business Review (HBR) understandably calls our era “the Age of Hyperspecialization.”

One reason jobs are becoming more specialized is because companies themselves are becoming more specialized, according to Rand’s Future at Work report.

In addition, traditional work boundaries such as time and place create enormous friction in the job market. These restrictions are born of the Industrial Revolution, when the majority of work was manufacturing and people needed to be in person at factories in order to get work done. With the majority of work today knowledge-based, it can increasingly be done from anywhere. Thus, shortages in local talent pools and the skills businesses need can be overcome.

Coping Strategies

Faced with ceaselessly changing and hard-to-find skills plus other frictions in the job market like location, companies are turning to freelancers.

Consider the results of Deloitte’s Human Capital Trends 2016 report.

It found that 51 percent of executives in its global survey plan “to increase or significantly increase” their use of freelance workers over the next three to five years. Only 16 percent expected a decrease.

“Companies in all sectors—from transportation to business services—are tapping into freelance workers as a regular, manageable part of their workforces,” wrote the global consultancy, which said cost isn’t executives’ only consideration here.

“The availability of talent is another factor,” Deloitte concluded. “Data scientists, for example, may not be willing to move to a company’s remote headquarters but could be engaged remotely and temporarily.”

Technology, particularly the Mobile Revolution, is accelerating this trend. Inexpensive communication costs, the proliferation of project management tools and the increasing popularity of online talent platforms have eased, if not erased, the friction of finding the right person for the job regardless of geography.

Closing the Gap

The growth of freelancing goes beyond technology, though. It also has to do with talent. Per findings in FIA 2017, and as cited by Mary Meeker in this week's report, freelance professionals are nearly twice as likely as traditional employees to proactively take reskilling upon themselves.

As technological change and the knowledge economy continue advancing, so will jobs requiring more skills. Many of today’s jobs will disappear as the world’s needs change and automation progresses. Professionals, whether they’re freelancers or not, will have to continuously update their skills. Economic growth, not just their own well-being, depends on it.

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