How A Recession Could Impact The Workforce
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How A Recession Could Impact The Workforce

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Recessions can be a scary time financially. This article will discuss how the 2022 recession could affect you as a freelancer or traditional entry-level worker.

By now, you might have heard that the U.S. economy has entered into a recession. According to Forbes, recessions occur when a nation’s GDP (gross domestic product) remains negative for an extended period of time or when other signs of economic downturn/lack of growth are present. You may have seen creators on social media discussing what this could mean for your finances or your job, but you might be noticing a lack of conversation around what it means to be a freelancer or entry-level worker during a recession. 

Luckily for you, there is a world of options available for maintaining your income and growing your skills, even during a recession. If you’re an employer seeking information on how to hire during the 2022 recession, feel free to skip to the end of the article to find out about the financial benefits of hiring Pangeans!

Reviewing the basics

Before we discuss the nitty-gritty details of what to expect during a recession, let’s review what freelancing even is and how to get into it. According to Investopedia, freelancing is a type of job where a person “earns money on a per-job or per-task basis, usually for short-term work.”

Given the fact that freelancing jobs often don’t require years of experience, they can be very appealing to college students looking to supply their resume with more experience or dip their toes into a new profession. 

That’s where freelancing platforms like Pangea come in. With Pangea, college students can search for paid freelance gigs that value their time and work. Have you ever been scrolling through a job posting that sounds perfect for you, only to find that the position requires years of experience in exchange for the “gift of professional growth” as compensation?

It’s beyond frustrating, which is why Pangea only allows paid gigs on our website.

Using Pangea to search for entry-level work

By applying to one of the many paid entry-level freelance positions on Pangea’s website, you can get a primer for a new career path and gain valuable skills, all while still attending school. Though, you might be wondering, “What exactly are entry-level jobs?”

The Balance Careers, one of my personal favorite sites for career growth information, describes entry-level jobs as the perfect option for those just starting out in their careers or for those looking to pivot into a new role. These jobs typically don’t have lofty expectations regarding your education or experience levels before they hire you, and a large supply of them can be found in most career fields. 

However, some entry-level positions may still require a bachelor’s degree in a related field. Additionally, while some entry-level jobs require absolutely no prior experience in the field, that isn’t always the case. This is why The Balance Careers stresses that it is important to survey various entry-level positions of interest based upon whether they cater to your personal skills, growth, passions, and career goals.

Using Pangea to search for high-paying entry-level gigs

Luckily, clients on Pangea post projects in an array of fields, many of them being entry-level with room for growth (even if you have no prior work experience). So, whether you’re interested in marketing, writing, UX design, video editing, or something else, there’s a place for you here.

Even better — many of the positions commonly posted on Pangea’s website rank as some of the highest-paying entry-level positions out there, paying rates upwards of $40,800 per year. According to data and research from Indeed, the fifteen highest-paying entry-level jobs are: 

  • Bookkeeper
  • Social media specialist
  • Manager trainee
  • PR assistant
  • Marketing associate
  • Installer
  • Firefighter
  • HR specialist
  • Customer service representative
  • Paralegal
  • Claims adjuster
  • IT technician
  • Sales representative
  • Web development
  • Real estate agent

While you may not be finding a large reserve of firefighting jobs on Pangea’s website, many of the other listed positions are being posted here often and are regarded as some of the best first freelancing jobs to have as a student.

Working entry-level jobs in an unstable economic market

During an economic recession, picking a job that is in an essential industry provides more job security and lessens the likelihood of experiencing financial uncertainty. 

According to an article by Invoice Ninja, this remains true for freelancers, as well. While their article was authored during the pandemic, much of its advice remains relevant to the 2022 recession. They state that, by developing “recession-proof” skills and focusing on the least-affected industries, such as tech, marketing, sales, and/or healthcare, freelancers can set themselves up for better financial security as they work through the recession. 

This does not negate the likelihood that young entry-level workers, freelance or traditional, will be at higher risk of facing financial difficulty during the 2022 recession. According to data from the policy and research website Demos, the Great Recession of 2008 brought higher rates of unemployment among young workers than any other affected demographic

The recession’s disproportionate impact on young workers: short and long-term

According to a report by CareerMinds and a study led by Indrajit Mitra, younger workers are two times more likely to be let go during an economic recession. Since younger workers are the most likely group to work in the entry-level job market, this directly impacts an entire sector of the economy. It doesn’t stop at layoffs, though. Recessions uniquely impact young workers in other ways, too:

Reason #1: The myth of “unskilled” labor contributes to companies having lower expectations of younger workers.

In a period of economic decline, employers are far less likely to take a risk on an employee they deem to be inexperienced or to only have experience performing “unskilled” labor cue eye roll. According to CareerMinds, this often leads companies to skip over younger hires and invest in “prime-age workers”, or workers aged 25-54, instead. 

Reason #2: Younger workers must accrue more debt during a recession.

Since many young people lack access to higher education and are unable to build their fiscal assets when the economy is slow, they are often forced to take out loans and go into major debt in order to attain a degree. In fact, according to Demos, the combination of underemployment (not receiving the amount of hours one needs), unemployment, and lower salaries in the Great Recession caused a 24% growth in debt among young people compared to the rates of debt in their 2004 counterparts. This trend could easily be repeated among young workers in 2022’s economy, especially with the current student loan crisis and the effects of inflation.

Reason #3: Young people disproportionately have trouble becoming homeowners in a recession.

It is no secret that housing costs in 2022 have become outright exorbitant in many places across the U.S. This is reminiscent of the national trend in 2008, where, according to Demos, the number of homeowners under 30 declined more sharply than the number of homeowners in older demographics.

The price young people pay when the economy is slow

It’s easy to see how a recession has a ripple effect on the very livelihood and career trajectory of  young entry-level workers. If we take a look back at the study conducted by Indrajit Mitra, we also learn that young workers often receive their most substantial pay bumps early in their careers, so without this momentum, it takes “longer and longer to move up” from those entry-level positions. 

While the article by CareerMinds goes on to state that recessions don’t last forever and that governmental policy change can prevent a volatile job market for entry-level workers in future recessions, this offers little solace to young people actively searching for ways to support themselves financially through the 2022 recession.

Benefits of freelancing during the 2022 recession

This is where freelancing proves to be a better financial alternative for those with entry-level experience. According to a blog post by Invoice Ninja, many companies are actually beginning to prefer freelancers over traditional workers due to the pay-per-task structure they offer. 

Additionally, they state that freelancers can utilize their toolbelt of skills to thrive in slow job markets, just as many did during the pandemic and economic downturn that followed it. Below, you’ll find some of the many benefits that can work to your financial advantage as a freelancer during a recession:

Benefit #1: Freelancers often work in essential industries.

The post by Invoice Ninja notes that some of the most stable industries during a recession tend to include sales and marketing, IT, healthcare, and finance. Luckily, these are fields of interest for many freelancers. Even better, Pangea hosts a large reserve of clients looking for freelancers within nearly all of these industries!

Benefit #2: Freelancers can work remotely.

Invoice Ninja also suggests moving to a more digital focus in your freelancing work, which is an area where the Pangea platform comes in handy. Remote work has truly advanced since the pandemic, and it continues developing even more in 2022. By focusing on the growth of your virtual services, you could expand your avenues of income exponentially as a freelancer.

Benefit #3: Freelance businesses tend to take smaller fiscal losses if something does go wrong.

This LinkedIn blog post about thriving as a freelancer in a recession also brings up an important distinction between freelancers and traditional entry-level workers: if a freelancer loses a client, they can somewhat easily find another client (or two) who display interest in their services. 

If a traditional worker loses their job, it can be extremely difficult to find another, taking time that isn’t always an option when the bills are due. Between job searching, interviewing, onboarding, and finally getting brought onto a team, traditional entry-level workers face a far greater, more time-consuming obstacle if their employment is affected due to economic downturn.

Benefit #4: Freelancers can promote the growth of their businesses and services as the national job market changes.

Freelancers are uniquely positioned to be able to modify their rates and services to the needs of an ever-changing market. To do this, Invoice Ninja suggests marketing a “well-presented and affordable” service package to consumers. The package should include several essential services that customers in your industry are consistently seeking.

Think of it as the gift box you buy for a friend who’s impossible to shop for; you may pick it out because of the cute mug inside that your friend would love, but the person who put the basket together probably included several other related gifts that you hadn’t even considered buying. In the same way, packaging your related services together with set, affordable prices will increase exposure for those services and solidify your brand concept in the minds of your target audience. 

Need assistance with setting rates for service packages? Check out this helpful article on naming your price by Pangea contributor Remi Rosmarin.

Freelancing promotes growth in the U.S. and global job market

Inflation, debt, layoffs, underemployment, and stagnant wages can have a global impact on all sorts of businesses during a recession, freelance or traditional. With that being said, freelancing has been developing the way we work for years, and more Gen Z’ers are turning to it than ever before, even in the wake of 2022’s economy.

Young Gen Z workers understand the worth of our labor and knowledge, and we make a point to demand that employers value it, too. That’s why, rather than endlessly scrolling on job boards with postings that devalue our experience or time, many of us have turned to freelancing, where work-life balance is prioritized and our labor is valued. Because of this, freelancing could not only be a source of economic growth in a recession, but also a catalyst for changing global labor standards and work expectations in the 2022 job market.

Women increasingly join the workforce as freelance business owners across the world

For instance, the growth of freelancing has caused a rapid expansion in women becoming business owners. In fact, a report by Unleashcash states that women are now nearly “twice as likely as men to become self-employed” globally. According to their research, this growth is likely due to the fact that companies in many countries are increasingly seeking specialized workers with higher flexibility.

Unleashcash also mentions that some companies, such as WeWork, are now including parental leave and healthcare coverage for their independent contractors, attracting freelancers in an extremely competitive market.

And competitive, it is. According to data from Unleashcash, freelancers now make up 36% of employed people among all industries in the national job market. On a global scale, The Middle East and North Africa have the highest percentage of freelancers in the world, and Asian, Latin American, and Caribbean regions trail closely behind. 

Additionally, a study performed in collaboration with the founder of Upwork found that one in three Americans now freelance! We think it’s safe to say that freelancing is no longer an unconventional alternative to the 9-5; it’s a trailblazing way to work that has captured the interest of workers in countries across the world.

Freelancing could combat future economic downturn and help our current economy grow

Data from the same article also found that the global economy is actually displaying growth due to the decreased cost of finding workers through online platforms. Gone are the days where an employer has to search far and wide, pay an exorbitant amount of money to market an open position, and conduct countless interviews to search for a candidate. 

Now, companies can join a platform like Pangea, find college talent from all over the world, and hire various freelancers whose service packages and rates meet their needs. It may not seem like this would make a huge global impact, but a report written by McKinsey & Company found that online job marketplaces “could add $2.7 trillion to global GDP, and begin to ameliorate many of the persistent problems in the world’s labor markets”. 

Investment in freelancers reduces spending drastically for U.S. and global companies

Could freelancing be a piece of the puzzle to encourage global economic growth in 2022 and beyond? Possibly, and the benefits don’t stop there. Data shows that, for companies, hiring a freelancer can be much more cost-effective than taking on a new full-time employee. 

Toggl Hire’s report breaks down the average hiring costs to take on a new employee, and it’s a major undertaking. According to their data, your spending costs could average around $16,999 total: 

  • “HR Manager 30 hours effort – $7,700
  • 1-month job ad on Monster – $249
  • Basic background check – $50
  • IT equipment – $600
  • Training courses – $400
  • Employee support 20 hours effort – $6,000
  • New employee signing bonus – $2,000”

If you have multiple hires for each different niche within your company, you can plan to double or triple those prices. Meanwhile, clients on Pangea can expect to pay freelancers reasonable rates to perform work they likely are already skilled in at a certain level or can quickly learn at a much lower price.

Developing your team without breaking the bank in 2022

If you were to search for advice about hiring during a recession, you’d find that much of the data points to broadening horizons to other countries and making an investment in the areas of your company where there is room for development. One example is Indeed’s list of advice for employers hiring during economic downturn, which truly drives home the benefits of hiring a freelancer on Pangea: 

Confidence will encourage the growth of your business 

Indeed’s first piece of advice is to use hiring to set your company apart from the crowd:

“By growing your workforce, you’re signaling confidence to both employees and job seekers that your business will be there for the long haul.” 

They use data and research regarding the growth of some of the biggest companies in the world, such as Apple, to back this statement up.

If potential hires (or investors) see that you’re battening down the hatches and hibernating during a recession, it could be a negative sign that turns them away. If you instead show that you’re here for the long haul, demand for the position will be much higher than average.

Make a point to consider global candidates

Next, Indeed’s article suggests erasing geographic boundaries. Indeed notes that this was one major lesson gleaned from the pandemic; this time around, the businesses of 2022 have a much firmer grasp on the benefits of hiring candidates from other countries and are less likely to skip over them or reserve the position for in-person employees. By making a point to hire global candidates from all over the world, you will likely have a better chance of finding the most advanced and qualified person for the job.

Search in spaces where the position is in high demand

Indeed also suggests looking for workers who are desiring a career change. While a large portion of entry-level freelancers consist of young college students who are just entering the workforce, there is also a large supply of freelancers who are ready to progress in a completely new industry in 2022. 

This benefits you two-fold: you gain team members who are excited to enter the field, and they are likely to soak up any new knowledge about the position like a sponge, displaying growth you may not find in candidates who are less passionate about the work.

Make a sound financial decision by hiring Pangeans

Finally, Indeed recommends keeping your long-term goals in mind when taking on a new team member. They begin by stating that hiring during a recession might seem like a loss, but as we learned before, hiring a freelancer (or two) can greatly decrease hiring costs. 

Even better, hiring on Pangea will allow you to find quality candidates without worrying about the typical stressors associated with hiring in-person or on other freelance sites, including:

  • Figuring out complicated tax paperwork and policy on your own (or paying someone extra money to do it)
  • Creating and marketing multiple job ads on different platforms
  • Spending rates of more than $10,000 on the hiring process for a traditional employee 

By instead working with Pangeans, you’ll avoid breaking the bank, and you will face far less financial stressors related to hiring in the 2022 economy.

If you’re ready to make the investment, check out this article by Pangea writer Natalie Migliore for tips on interviewing a freelancer.

Freelancing For The Win

In 2020, we saw remote work serve as a revolutionary response to the pandemic, completely changing how many companies functioned on a global scale. Similarly, the 2022 recession is rapidly expanding our definition of what work is. Conventional 9-5 jobs are no longer the only viable option for making a living, and freelancing is quickly entering the mainstream across the world. 

The U.S. economy is turbulent right now, but we hope that this article has shown you how many options you still have to experience career growth and make major fiscal wins as a client or freelancer on Pangea in 2022 and beyond.

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