Emerging Issues: Capital Region Demand for on-Demand (Freelance) Services

Region’s ranks of nonemployers grows slower than NY, US

While businesses nationwide are increasingly utilizing on-demand services provided by independent contractors to perform work traditionally reserved for employees, new U.S. Census Bureau data indicates workers and employers in the eight-county region remain to favor traditional employment arrangements.

Between 2012 and 2015, the region’s ranks of nonemployer establishments, which include independent contractors (e.g., freelancers), increased by 1.8 percent to 68,505. In contrast, nonemployers were up 4.6 percent statewide and 7 percent nationwide. 

Nonemployers

Nonemployers are usually are self-employed individuals who have no employees but are subject to federal income tax. They tend to operate unincorporated businesses or partnerships, though some alternatively form C- or S-corporations or individual proprietorships, according to the Census Bureau.

A 2016 Mckinsey Global Institute study found that 44 percent of the working-age population that engages in independent work relied on freelancing as their primary source of income, with the rest turning to it for supplemental income. However, a third of those who rely on freelancing for their primary income do so reluctantly and would prefer to have traditional work arrangements with an employer.

Nonemployer Sector Growth

In the Capital Region, professional, scientific, and technical services, other services (except public administration), real estate and rental and leasing and construction account for more than half of the region’s nonemployer establishments. The real estate and rental and leasing sector generated the most receipts in 2015, totaling $715.4 million, followed by the professional, scientific, and technical services and construction sectors, at $517 million and $406 million, respectively.

The Capital Region’s fastest-growing nonemployer sector between 2012 and 2015 was educational services, increasing 13.9 percent to 2,431. In contrast, the state’s and nation’s fastest-growing nonemployer sector was transportation and warehousing. The counties that added the greatest number of nonemployers to their ranks during the 2012-2015 period were Saratoga, Albany and Columbia counties, increasing by 677, 222 and 195, respectively.

Support for Independent Contractors

Even though nonemployers are not growing as rapidly locally as they are nationally, they do account for a sizeable amount of the Capital Region’s economic activity. Capital Region nonemployers reported $3.2 billion in receipts in 2015, up 10.1 percent from 2012. That is why entrepreneurial ecosystems, collaborative workspaces and marker spaces have emerged in the region. They include the Troy Innovation Garage, Saratoga CoWorks, Beahive  and the Tech Valley Center of Gravity (COG). CEG last year secured a $75,000 grant from FuzeHub to help the COG serve manufacturers with a Rapid Prototyping Center (RPC).

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