December 19, 2014

Research Roundup: Independent Contractors and Consumer Retail Spending

retail spending

Everybody loves lists — or at least, everybody who reads blogs, so we are told. I don’t do lists very often because it never seems that the information I write about fits well into the format.  This month’s Research Roundup post breaks the mold.

Lists take up a lot of space, though, so I’m only going to give you two of them. On the other hand, they’re two good ones. Besides, it’s pleasant to offer you some research that is not all about how badly we small business owners are doing.

The Rise of the Independents

Ego fodder is always a good thing and a recently released study by MBO Partners documents and quantifies a whole slew of things I first wrote back in 2004 in my white paper The Entrepreneurial Economy.

The MBO study is all about independent contractors, and my only beef with this study at the moment is the way MBO seems to underestimate their numbers. MBO says there are 16 million independent contractors; the Census says there are more than 21 million nonemployer businesses.

Can anybody tell me what the difference is between a nonemployer business and an independent contractor?  I didn’t think so.

In any event, here are MBO’s key findings:

  • 75 percentof independent contractors say that doing something they love is more important than making a bucket of money;
  • 74 percent of independent contractors say that making a difference in people’s lives through their work is more important than making a bucket of money;
  • 79 percent of independent contractors say they are satisfied or highly satisfied with their work situation;
  • 55 percent of independent contractors say it was a proactive choice rather than a case of not being able to find a traditional job that made them become indies;
  • 63 percent say they will continue to work as independent contractors, while only 12 percent plan to grow into employer firms;
  • Indies are spread across generations: Seniors (over 65) make up 10 percent of independent contractors, Baby Boomers (50-64) account for 30 percent of them, GenX (30-49) are the largest group, making up 48 percent of them; and Millennials are 12 percent of independent contractors;
  • Independent contractors are most seriously challenged by uncertain income streams (56 percent), concerns about retirement (46 percent) and concerns about lack of job security (41 percent); and
  • MBO predicts that the number of independent contractors will increase by 25 percent  within the next two years.

Makes me eager to see what the nonemployer numbers do over the next couple of years.

‘Tis the Season for Ca-Ching

One of the nice things about research, data and numbers is that sometimes, in addition to telling you things about yourself and your peers, research tells you useful things about your customers.

If, for example, you are a retailer, then you don’t need me to tell you how critical this time of year is for your bottom line. And, as usual, there are all sorts of predictive numbers out there that you might find useful from our friends over at the National Retail Federation.

  1. The average shopper is expected to spend $704 this holiday season on gifts and related stuff;
  2. In November and December, retail sales are expected to post a reasonably healthy $465 billion;
  3. Overall, holiday retail sales are expected to increase this year by 2.8 percent over 2010 numbers;
  4. Half of all gift receivers say they would prefer to receive a gift card rather than a gift (so you might be helping yourself quite a bit by figuring out a way to approximate the handy-dandy gift card for your retail outfit);
  5. 152 million holiday shoppers are expected to visit stores and websites on Black Friday weekend;
  6. Expect more spending in so-called “discretionary” categories this holiday season, including home furnishings and decor, sporting goods and leisure items, personal care and beauty products, electronics and computer accessories, apparel, toys and food. (What’s left?)
  7. Americans plan to spend money this holiday season, but they don’t seem to want to go into hock to do it. Forty-four percent say they will use debit cards, 24 percent will use cash and 3 percent will use checks. Everybody else (29 percent) will use credit cards;
  8. Online holidays sales are expected to grow by around 15 percent this holiday season;
  9. In addition to all those gifts, the average holiday shopper is expected to spend $130 or so taking advantage of seasonal sales and promotions to buy things for themselves; and
  10. Retailers beware: The retail industry is expected to lose approximately $3.48 billion to return fraud.


Image from Dmitriy Shironosov/Shutterstock

4 Comments ▼

Dawn R. Rivers


Dawn R. Rivers Dawn R. Rivers, an award-winning small business journalist, regularly reports and analyzes small business policy and research as the publisher of the MicroEnterprise Journal. She also publishes research at the Microbusiness Research Institute and she blogs at The MicroEnterprise Journal Blog.

4 Reactions

  1. Dawn: Nice summary of the MBO State of Independence Study. I’ve long followed your work and agree this study puts numbers behind trends and shifts you identified and wrote about years ago.

    We partnered with MBO on this study and I wanted to answer your question about the number of independent workers. For this study we were looking to identify independent workers (consultants, freelancers, temps, etc.) that worked at least half-time as an independent worker. We did this to better understand the folks who are deriving a substantial part of their income of independent work.

    As you know, the non-employer stats include part-time and hobby businesses where the owner works less than half-time. These were excluded from our study.

    Another difference is we included temps and other workers who don’t have traditional full or part-time jobs, but are paid via W2s. They don’t show up in the non-employer stats.

    So while the two datasets overlap a lot, they don’t overlap 100%. If we added in those working less than half-time, we would get to about 32-33 million independent workers. This is much higher than the non-employer number because of the folks like temps and contract workers that are paid via W2s.

    • Hi Steve. I really appreciate your clearing that up and what you say about your methodology makes it even better because of the way includes so much of the contingent workforce (like temps) that usually get left out of the research.

      At the same time, I can see that some ethnographic research is needed to look into the so-called hobbyists and part-timers. I think it would be worthwhile to quantify how many of them really are “hobbyists” and how many of them are struggling to get their little firms up and running before they quit their day jobs.

      In any event, thanks for the explanation. That 32-33 million person figure is particularly intriguing because it really does look like some profound changes are taking place in the labor force. It’ll be interesting to see what the labor market morphs into eventually.

  2. We think the workforce is morphing into a situation where about half will be employed in traditional jobs and about half will be contingent (freelancers, contractors, temps, etc.).

    We think companies big and small will maintain a core set of employees, but increasingly augment them with a wide range of contingent workers.

    Our work indicates somewhere between a quarter and a third of the current US workforce is contingent. Others claim it is currently as high as 40%.

    We think we will hit the 50-50 level at some point over the next decade or so, and then see a leveling off in this range as companies balance their needs between core and contingent workers.

    It’s both an exciting and scarey prospect. For those with the right skills and abilities, contingent work will be very attractive. For others, much less so.

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