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Consulting Firm Sizes Up the Gig Economy: It Is Larger Than You Might Think, and Growing Quickly


Many industry experts have estimated the size of the contingent workforce in the US, with some predicting it could approach 40% of the total workforce, or more, by 2020. Recently, no less an expert than the renowned consulting firm McKinsey & Co published a study that came to a simple conclusion: the number of people freelancing is much larger than you might think, and it is growing quickly.

The extensive report, published by the McKinsey Global Institute, is titled: Independent Work: Choice, Necessity, and the Gig Economy (NOTE: this 3.8 Mb PDF document is free to download). For many independent workers who already do project-based solo work this topic really is non-news. In today’s economy, we all know consultants, freelancers, contractors, and temporary workers who do not have a traditional job.  McKinsey calls all of these workers and the companies who depend on their services the Gig economy, and it is much larger than you think.

For the team at TalentWave, research like this validates our core purpose: we operate in the middle of the independent workforce ecosystem helping contractors and the clients who need their skills, to work together safely and efficiently. The thousands of contractors and hundreds of enterprise clients that we interact with each day are living proof of the vitality of this growing segment of the workforce.

A few selected highlights from this excellent report:

20% – 30% of workers are independent workers

When defined by three criteria of “a high degree of autonomy, payment by task, and short-term relationships between the worker and client”, McKinsey estimates that 20-30% of the working age population are freelancers in the US and Europe. According to their research, this translates to approximately 162 million people.

Segmentation of the independent workforce

As you might expect from a consulting firm like McKinsey, they chose to illustrate their segmentation findings via a 2×2 matrix. As shown in the infographic below, McKinsey used two dimensions to show segmentation:

  1. Is it primary or supplemental income?
  2. Is it the preferred or non-preferred way of working.

McKinsey segments the gig economy

They break the total independent workforce down into four sub-segments:

  • 30% free agents who choose independent work; full-time; it is their main source of income
  • 40% casual earners who choose independent work to supplement income from other sources
  • 14% reluctants who would actually prefer traditional working arrangements (i.e. they would rather be an employee of a company)
  • 16% financially strapped who do this work out of financial necessity

Most people choose to work independently

More than 70% of people are doing independent work because they want to, not because they have to. Furthermore, this group is also happier than their traditionally employed counterparts are. McKinsey also found that 1 in 6 traditionally employed workers would prefer to work independently.

Digital platforms enable freelance work

It should come as no great surprise that technology is an enabler, making it easier to match talent supply and demand. In today’s innovative and fast-moving economy, there are a number of different technology and services solutions available in the marketplace, including TalentWave’s TalentBridge solution.

However, technology enabled independent talent procurement is still in its infancy. Of the 162 million independent workers, McKinsey estimates only 9 million (or 5.5%) have earned income from a digital platform. The vast majority of independent workers are providing their labor directly to clients, without a digital platform as an intermediary.

Everything old is new again!

It is interesting to note that working independently is not a new dynamic in the U.S. If you go back a little over 100 years and examine self-employment rates from the prior turn of the century, we can see that independent work was once very common – reaching 45% of the workforce in 1900. As our economy became more industrialized, and the labor movement picked up political steam, traditional company employment started to become the norm. McKinsey concludes that this trend has clearly started to reverse, and in the next 100 years, we will see the independent workforce start to grow again.


With many Baby Boomers leaving the fulltime workforce, there are relatively fewer Gen X workers available to backfill those vacated senior positions. This talent shortage is further exacerbated by the fact that a growing number of skilled and experienced professionals from each generation in the workforce—Baby Boomers, Gen X, Gen Y, and the newly emerging Gen Z—are choosing to become independent workers.

A significant number of these independent workers are highly skilled professionals, including many in the STEM fields, who simply do not want a fulltime, traditional job. Instead, they are choosing to go the independent route, engaging on short-term contracts that enable them to move from project to project according to their needs and preferences.

This research by McKinsey shows that the independent workforce is large, and growing. With this backdrop, it is clear that companies must rethink how they find and engage workers. Enterprises who need to attract and retain top talent in order to get vital work done and stay ahead of the competition must look beyond traditional employees and embrace the independent workforce. TalentWave, as the industry’s most experienced independent workforce compliance and engagement solution provider, is well positioned to help companies safely and efficiently engage this valuable segment of talent.

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