February 2, 1999 (The Editor’s Desk is updated each business day.)

Independent contractors differ from traditional workers

In February 1997, 8.5 million people worked as independent contractors. This was 6.7 percent of all workers—a proportion that was essentially unchanged from 1995. Independent contractors were the largest group of workers among those in alternative employment arrangements, accounting for roughly two-thirds of such workers.

[Chart data—TXT]

Independent contractors differed from traditional workers in many significant ways. For example, two-thirds of independent contractors were men, compared with slightly more than one-half of traditional workers.  Nearly 4 out of 5 independent contractors were at least 35 years old, compared with 3 out of 5 traditional workers. Thirty-four percent of independent contractors between the ages of 25 and 64 had a college degree, almost 5 percentage points higher than among traditional workers.

About 88 percent of independent contractors were self-employed. Thus, the higher levels of experience and schooling of independent contractors may be a result of the significant human and financial capital often required to run one’s own business.

These data are produced by a supplement to the Current Population Survey.  More information can be found in "Workers in alternative employment arrangements: a second look," Monthly Labor Review, November 1998.  A summary of CPS data on such employment arrangements is available from news release USDL 97-422, "Contingent and Alternative Employment Arrangements, February 1997."  The "independent contractors" category includes workers identified as independent contractors, independent consultants, or freelance workers, whether they were self-employed or wage and salary workers. Other categories of alternative employment arrangements are on-call workers, temporary help agency workers, and workers provided by contracting firms.