A recent survey by Skillshare reports that more Americans are freelancing than ever, currently adding up to 57.3 million people. But is it also easier than ever to be a freelancer?
Research by Edelman Intelligence highlights that freelancers are both more aware of the upcoming changes in the labor market, and more willing to take active measures to prepare for the future than full-time non-freelancers. An estimated 49% of freelancers indicate that they’re already witnessing the impact of automation on their work, as opposed to just 18% of full-time employees, while 65% of self-employed workers are already updating their skills to cope with the changes, as opposed to 45% of full-time employees. Looking at how well freelancers cope in the current housing and labor market paints a clear picture of what workers can expect from the shifting workforce.
CommercialCafe did a study that compares average monthly housing expenses and a variety of coworking options that self-employed workers might incur in different cities. How many hours per week would you need to work to afford living and working from a private office in Brooklyn? What hourly rate would you need to charge your clients to earn enough during a 40-hour week to live in San Francisco? Keep reading to see some of the highlights of our study and make sure to check out the complete visual breakdown of our results and more details regarding our methodology.
Highlights:
Working a 29-Hour Week in KCMO Will Get Your Very Own Private Office
Want to Be a Freelancer in Silicon Valley? You’d Better Start Looking for a Roommate
Average-Earning Freelancers Would Need to Work 79 Hours per Week to Support Themselves in Boston
Customize expenses and working hours with our calculators
Working a 29-Hour Week in KCMO Will Get Your Very Own Private Office
The Sun Belt has been making the news as one of the big winners in terms of working-age population gains, as it has managed to attract a growing number of young Americans. Census data shows states like Texas, Florida, Nevada, Utah and Colorado’s population growing by double-digits since 2010. In Texas, six counties―Harris, Tarrant, Bexar, Dallas, Denton and Collin―are among the top 10 net gainers in terms of numbers. North Carolina registered a 7.3% population growth, while South Carolina has grown by 8.4%.
An impressive 37% of U.S. freelancers said they were based in the South. Atlanta, Houston, Plano, Nashville and Charlotte are among the best picks for those wishing to have access to a private office at an affordable price. Given an average hourly income of $38, a freelancer living in any of these cities wouldn’t even have to work a full 40-hour week. You could afford a private office in Charlotte after a 35-hour work week or have a dedicated desk membership in Houston after a 31-hour work week. Of course, if you’re looking for the best deal, consider moving to Kansas City, Mo., where you can rent a private office after a leisurely 29-hour work week.
When we look at the top 10 cities where self-employed workers would need to significantly increase their hourly rates to afford rent and membership at a coworking office, nine out of 10 entries are cities from California and New York City. Freelancers who plan to move to a bedroom community like Pasadena, earning an average $38 per hour rate would need to boost their income by 47% to afford a hot desk membership plan in the city. Looking to secure a spot in Manhattan or San Francisco? Rent and coworking costs might set you back $4,586 or $4,092 per month, respectively. In terms of earnings, you’d be looking at a whopping 108-133% increase to your average $38 hourly rate. Although freelancers have reported increased incomes since 2014, only the top 5% earn the $150,000 or more that would allow them to live in the most expensive U.S. cities.
Want to Be a Freelancer in Silicon Valley? You’d Better Start Looking for a Roommate
As California and New York become increasingly unaffordable for average-income freelancers, those who still long to live in these vibrant, exciting places find ways around mounting housing prices by reimagining and adopting new communal living solutions.
Most co-living spaces have popped-up along the coastal regions, partly because of the growing demand for more affordable housing, and partly as a quick-response to residential development issues. Despite its appeal to millennials, communal living is by no means a new phenomenon in the American social landscape. Before the hippie communes of the 1960s, in the late 19th and early 20th century there was a whole range of flexible and communal living arrangements, such as boarding houses, rooming houses, lodging houses and flop houses. Rents were affordable and highly flexible: you could rent for a night, a week, a month, or a season. You could choose to rent a room, or if you had more modest means, just a bed.
Today’s co-living communities strive to offer much more than just a place to crash after a hard day’s work, with scheduled programs including meditation and yoga sessions, morning dance parties and potluck dinners. And while many young people might be excited about living in a more community focused accommodation, most people who choose this arrangement are looking for a way to cut their housing costs, first and foremost. Splitting costs with a roommate can actually help freelancers gain a foothold in cities like Los Angeles or Seattle, where they can lease a private office without spending more than 30% of their wages on rent and coworking costs.
Sharing rent means freelancers can live and work from a dedicated desk in San Jose, Bellevue, Chicago or Washington, D.C. While Manhattan is still out of reach in this scenario, self-employed workers who want to live and work in the Big Apple can find accommodation in Queens and Brooklyn.
Need more information to help you choose your ideal workplace? Visit CommercialCafe.com for details about coworking office amenities, location and asking price throughout all major U.S. cities.
Average-Earning Freelancers Would Need to Work 79 Hours per Week to Support Themselves in Boston
Communal living isn’t for everyone, so there’s another way we can look at these costs. For instance, if working at a dedicated desk is the right fit for your business needs, Philadelphia is just over budget for freelancers earning the average hourly rate, but not for those willing to put in an extra hour of work per week. The extra effort would be sufficient to cover the average $1,549 per month housing rent in the city. However, if you’re eyeing Boston as your home base and earn roughly $38 per hour, you are looking forward to a grueling 79-hour work week, the equivalent of holding two full-time, year-round jobs.
Renting an apartment by yourself in Minneapolis, for an average of $1,552 per month, Portland ($1,503 per month), or Austin ($1,349 per month) and opting for a dedicated desk membership would keep you within the 40-hour work week limit.
For those who pay a visit to their preferred coworking hub to break up the monotony of working from home, hot desking is a great way to meet future collaborators and clients. If you are a freelancer who is just starting out and still earning below $38 per hour, there are several places where you can find affordable housing and coworking options. You can rent an apartment by yourself and pay for a hot desk membership while earning between $23 and $31 per hour in Kansas City, Mo., Detroit, Fort Worth or Dallas. If you decide to go fifty-fifty with a roommate, you can afford to live in an apartment for rent in San Diego, with an hourly income below the $30 mark. Queens, New York, Burbank, Calif. or Miami are other viable options at this rate.
According to a recent study, Seattle had the highest net influx of millennials last year, gaining 7,300 more young residents than it lost. Considering the average monthly rent of $2,066, freelancers might find it difficult to make ends meet and have their own private office, unless they already earn at least $52 per hour or put in 50 hours of work per week. Sharing housing costs means you can then pick and choose whichever coworking arrangement you prefer, communal or private.
Have a go at customizing housing and coworking costs for your own location. Using our calculators, find out how much you’d need to charge per hour and how many hours per week you’d need to put in to avoid spending more than 30% of your income on these expenses.
Conclusion
Cities with a lower cost of living can play an important role in helping U.S. workers ride the waves of the changing labor market. As remote working and flexible hours become something both employees and employers value, a lower cost of living can encourage freelancers to gravitate towards emerging urban centers to avoid the difficulties raised by housing shortages in coastal areas.
The Sun Belt looks like a particularly welcoming option for self-employed Americans, offering not only more affordable housing, but also a vibrant startup scene, a business-friendly environment and increasingly diverse list of social, cultural and entertainment options to choose from.
Methodology
Reports focusing on housing affordability across major U.S. cities use a 30% rule of thumb to determine whether wages within a certain range are rent-burdened, defined as 30% or more of a person’s income being spent on rent and utilities.
As the present study focuses on freelancers, we’ve adjusted the rule to include work-related expenses. Whereas regular employees need not worry about costs associated with their day-to-day activities in the office ―from office leases to utilities bills and stationery supplies―self-employed workers must consider at least some of these when they negotiate hourly rates with their clients. A 2017 survey revealed that the average hourly rate charged by U.S. freelancers is roughly $38, just below Canada’s $40 average and almost $10 lower than what U.K. freelancers usually get.
Self-employed workers have a series of options in terms of when and where they can work. They might choose to work from home, go to their local library or favorite coffee shop to avoid distractions. Some might even work while travelling the world, while others might choose to work from a coworking office. Our research looked at the average rates for the most widely-used coworking membership options: hot desks, dedicated desks and private offices.
Although the national scene has witnessed several new entrants looking to attract new customers by appealing to niche audiences―creating female-focused or pet-friendly coworking spaces, for instance―WeWork remains one of the largest coworking office space providers, with a significant presence both in the U.S. and internationally. So, we’ve used the New York-based company’s starting prices for their available locations. Where several pricings were available, we calculated the average rate for that particular city.
For housing costs, we’ve referenced RENTCafé’s August 2018 Apartment Rent Report, which lists 252 of the largest cities in the U.S. The report is based on a rental stock of at least 2,900 apartment buildings with 50 units or more, excluding fully affordable properties. You can read the executive summary and the full methodology here.
Housing rates were then matched with coworking rates at locations where WeWork had at least one operational office at present. Our final research covered the following cities: Arlington, Va., Atlanta, Austin, Bellevue, Boston, Burbank, Calif., Charlotte, Chicago, Costa Mesa, Dallas, Denver, Detroit, Fort Worth, Houston, Irvine, Calif., Kansas City, Mo., Long Beach, Los Angeles, Miami, Minneapolis, Nashville, New York (Manhattan, Brooklyn and Queens), Oakland, Pasadena, Philadelphia, Plano, Portland, San Diego, San Francisco, San Jose, Seattle and Washington, D.C.
