Freelancers provide a glimpse into our AI-driven future

The rise in the contingent workforce has been one of the most significant trends in the labor market in the last few decades. The notion of the on-demand workforce was first brought to popular attention by Dan Pink in 2001 when he published Free Agent Nation, in which he predicted a future dominated by independent workers.

It was a few years from the publication of that until sharing economy behemoths such as Uber and Lyft emerged alongside gig economy platforms such as UpWork and Etsy, but they have grown at a tremendous pace, with their ascendency causing ripples throughout the world.

Whilst the notion of contingent labor has been around since Manpower was created in 1948, it’s probably fair to say that the Internet has changed the game considerably. When Pink first highlighted the “free agent” concept back in 1997, he suggested that around 25 million Americans were working in such a way.

Flexibility at a cost

While the flexibility inherent in this form of working is often what appeals, it also makes working in this way precarious, with few of the protections afforded to more traditional labor models. Last year, research from Imperial College London looked at the impact generative AI was having on gig work from platforms like Upwork.

The results aren’t promising, as the introduction of ChatGPT led to a 30% fall in the number of writing jobs, with a slightly smaller drop in software and web development jobs. The researchers also found a similar drop in demand for graphic design and 3d modeling freelancers after the introduction of tools like Midjourney and DALL-E 2.

A second study from Wharton takes a fresh look at the situation to see if anything has changed. The research examines job listings on Upwork before and after the launch of ChatGPT to try and assess any changes.

Subtle change

The results show that there hasn't been a widespread disruption of jobs, at least in the sense that vast swathes haven't vanished overnight. What has happened is a subtle change in the way freelancers behave.

The data shows that income was fairly steady, but that established freelancers were submitting around 55% fewer job applications. For some, this was due to a drop in demand, with this especially so for those most vulnerable to automation, such as translators. These people tended to move horizontally into other fields that weren't quite so vulnerable.

In other areas, such as data and software development, there was a huge increase in the number of bids. This increase was especially pronounced among international freelancers, which the researchers put down to the use of AI allowing them to overcome language barriers. For established freelancers in these fields, they were forced to bid for lower-value jobs as a result of the greater competition.

No protection

Traditionally, high skills might offer a degree of protection from competition, but this doesn't appear to be the case. In this instance, high-skilled workers were forced down the value chain, with many having to reposition themselves to a different part of the market. It's an example of how AI has narrowed the skills gap and allowed lower-skilled workers to compete with higher-skilled peers.

In response, some online marketplaces have begun introducing AI tools designed to support freelancers in navigating these changes. These tools aim to either match talent with jobs more effectively or to automate parts of the work process. Upwork’s “Mindful AI,” Uma, for example, acts as a virtual work companion, helping freelancers craft proposals and manage projects, while simultaneously aiding clients in identifying the right talent.

“The platforms are very aware of the fact that many freelancers rely on this income,” the researchers explain. “There’s an understanding that we can’t hide from AI — we need to adapt.”

Still, the researchers emphasize that the burden of adaptation shouldn’t fall solely on freelancers or platforms.

“There is definitely a role for governments here,” they say. “We might think tech change is a net positive and helps us grow, but there’s this idea of creative destruction. Governments can help mitigate this friction and help people move on to other work.”

Despite the structural shifts, there is some cause for optimism. The overall health of the platforms remains largely intact. While bidding patterns and job categories have changed, the number of contracts and the total earnings have remained largely stable.

“It may just be a change in composition rather than a hollowing out,” the researchers explain. “We don’t necessarily see decreases in demand across the platform.”

Adapting, Not Vanishing

The study suggests that it's perhaps unlikely that entire roles will disappear, but that there will be a significant need to adapt nonetheless. In other words, freelance work won't vanish, but the nature of demand for it will change.

Freelancing has always required a high degree of adaptability in order for workers to survive, and the data shows that this is certainly happening amidst the emergence of AI-based competition. Some are changing the services they offer, while others are adjusting their rates.

As proverbial canaries in the mine for the labor market more broadly, they're perhaps illustrative of the nature of the changes that other sectors of the workforce will likely need to engage in over the coming years for their services to stay relevant and in demand.