The State of the Self-Employed: Emerging Insights on Freelancer Finances During COVID19

How exactly is the ongoing pandemic impacting freelancers? What can be learned from this situation, and what kinds of support can and should freelancers be able to access more readily during times of crisis? 
Team Lance

There are over 60 million freelancers, solopreneurs, and side hustlers in the US today, accounting for 35% of the nation’s total workforce.‍ Many of the self-employed lost clients and income during the early stages of the COVID19 pandemic, as corporate and individual clients alike were impacted. Federal and state government agencies have been caught off guard and ill-equipped in their ability to understand freelancer needs and distribute appropriate financial aid resources. Independent contractors, much like any other sized business, are left uncertain of how their financial footing will change in the weeks and months ahead. 

How exactly is the ongoing pandemic impacting freelancers? What can be learned from this situation, and what kinds of support can and should freelancers be able to access more readily during times of crisis? 

This report is an early look into answers to these crucial questions and illustrating how freelancers operate and contribute to the US economy. Unfortunately, much of the current research and reporting methodology that currently guides decisions on government support and commercial offerings for freelancers is grossly inaccurate. The current data from BLS and other resources significantly underestimates vital economic statistics, such as how much money the self-employed make and from how many clients, and doesn’t account for today’s payment cycles and everyday working schedules. For example, the government currently assumes the average annual income for sole proprietors is just $33,600 and that income is derived from just one job type or client. In fact, on average, freelancers across the country come close to earning twice that income. 

Lance is Bridging the Gap

The gap in data between what the government understands about freelancers and how they’re actually working today exists because there is a lack of cohesive and coherent information about freelancers. Currently, no government database or third-party platform today that aggregates real, holistic data on the types and number of jobs freelancers work, their financial accounts, cumulative income and expenses, benefits, and iterative fluctuations. 

Lance is a financial technology platform trusted by freelancers across the country to make sense of their business structuring and finances. The company is working to correct for this current data gap by publishing a more real-time and all-encompassing account of the state of freelancers, which can be used to better inform crucial government programs and commercially available products, especially during times of crisis.

To accurately report freelancers’ business and financial data — as well as some early impacts of COVID19 — Lance reviewed the data of 1,000 active customers on its platform. The team analyzed the financial data of each customer across multiple banking accounts and income streams from FY2019 through April 20, 2020. This is a first publication of the team's research, with additional updates to be published on an ongoing basis. 

Freelancers on  Average Earn 177% More than Government Estimates

Government research notes freelancers earn an average of $33,600 in annual income. This estimate is far below what the self-employed actually make annually. Our analysis shows a completely different picture with an average income of $59,615 nationwide for freelancers in 2019.

Average US Freelancer Monthly Income in 2019, Lance 

In urban cities, like New York, freelancers earn far above the reported national average. In these areas, they’ve also been impacted the most by the COVID19 crisis. Here there’s an even more dramatic discrepancy between the government estimate and the true average income. In 2019, New York freelancers earned $95,287 on average.

Average Monthly Freelancer Income in New York in 2019, Lance 

Where does the gap come from?

What government estimates of freelancer income don’t account for is that freelancers today juggle an average of three jobs and multiple clients at any given time. This gap between what is reported and real world may very well in part be the result of outdated government forms and processes, which haven’t been updated for decades and are built with full-time employees in mind, rather than today’s dynamic multi-hyphenate worker. 

As part of the federal Coronavirus Aid, Relief, & Economic Security (CARES) Act, the government tried to - for the first time in US history - recognize the range of freelancers and underemployment as deserving of financial aid. However, those good intentions quickly broke down. Part of the failure in processing freelancer and self-employed unemployment benefits claims can be attributed to the outdated state of Employment Development Department (EDD) forms across the country. The Pandemic Unemployment Assistance (PUA) program was then rolled out in late April as freelancers were largely denied for the standard UI benefits publicized as available to them. Unfortunately, this system is just as challenging and ill-equipped to account for and allocate funds to fill freelancers’ loss of business and income. 

Some attempts to document the average number of jobs - and resulting income streams - per freelancer have been made. Lance’s data indicates that only 11.1% of freelancers have a single income stream. Most have two streams of income (38.9%), while 27.8% have three. Another 16.7% of freelancers have four income streams, and 5.6% have five or more. Lance has noted that in its own initial surveys, when freelancers were asked what they do, respondents would typically only enter a primary income source. Another question was added that clearly stated all income streams should be noted for the benefit of survey results. 

Number of Income Streams Per Freelancer in 2019, Lance 

Diving Deeper into Freelancer Income Streams

The vast majority of freelancers earn at least $35,000 a year from their primary income stream alone. That means, with all of their income streams combined, total earnings far exceed today’s government data. 

The largest share of freelancers (44.4%) earn $35,000 to $50,000 each year from their main source of income, while another 11.1% earn $50,000 to $100,000 annually. The same proportion (11.1%) earn between $100,000 to $250,000 per year from their primary income stream. 

For reference, the Bureau of Labor Statistics reports that in the fourth fiscal quarter of 2019, the median income for a full-time wage or salary worker in the US was $933 per week, which comes out to $48,516 per year. This means that nearly one-quarter of freelancers (22.2%) earn more from a single income stream than the median full-time salary in the US.

Freelancer Earnings from Primary Income Stream in 2019, Lance

When calculating freelancers’ total annual incomes — including all lines of work and participating in multiple business ventures — it is clear freelancers are earning far more than the US government takes into account. It’s important to note here that given extensive qualitative research conducted by Lance, the accounting for fewer jobs on the part of freelancers is not intentional or evasive in nature. The current methodology employed by federal and state governments often does not enable the input of multiple job types - and where it does, the context or direction is unclear for freelancers. This is an area of data collection primed for significant education and improvement into the future for the government, clients and freelancers. 

As a result, at least one-third of the self-employed (33.3%) earn above the median income for full-time US workers across all their income streams. Of that amount, 22.2% earn between $50,000 and $100,000, and 11.1% earn between $100,000 and $250,000 in total revenues per year.

Freelancer Earnings from All Income Streams in 2019, Lance

Underestimating Freelancer Income Puts the Self-Employed at Risk

The government’s lack of accurate data about today’s freelancers - along multiple vectors - is problematic for several reasons. 

First, the lack of data significantly underestimates the impact freelancing work has on the overall economy - and its use as an indicator of the financial health of American workers. As momentum behind the gig economy and discussion around the future of work continues to build, the number of freelancers continues to grow beyond its current 35% of the total workforce. If today’s unemployment benefits applications are taken into account, there will be a sizable acceleration in freelancing growth, as with prior recessions. With nearly $1 trillion in annual income (almost 5% of US GDP), freelancing income adds more to the economy than long-standing industries, such as construction and transportation. Arguably, the freelancer workforce spread across multiple industries has a GDP comparable to that of the information sector.  

Second, the current gap in data prevents federal and state agencies from accurately determining the true impact of lost business for freelancers and, subsequently, how much and how to distribute aid. As experienced through the COVID19 crisis, there is a critical lack of aid infrastructure for a sizable and growing segment of the American workforce. Despite efforts from the federal and state governments to provide financial aid to the American employers and workforce, much of the financial aid has been stifled by first the lack in current data and then by an outdated system used by the Employment Development Departments., The majority of states have traditionally excluded freelancers, the self-employed, gig workers, and independent contractors from claiming unemployment insurance (UI) benefits, even as this segment has grown to exceed a 35% of the overall active workforce. 

As COVID19 spread across the US and tightened its grip on the economy, it became clear UI for the self-employed would be crucial, leading federal lawmakers to add provisions for it into the CARES Act. As a result, state departments of labor scrambled to amend their UI claims processing systems and funnel aid to all of those in need. 

If a UI benefits system had already existed for the self-employed, giving them necessary financial support, there would not have been as much disruption and continued confusion in March and April. The CARES Act would have been applied readily to an entire workforce of people and wouldn’t have necessitated the equally disjointed Pandemic Unemployment Assistance (PUA) Program. 

Understanding The Swift & Profound Impact of COVID19 on Freelancer Finances

To understand the impact of COVID19 on freelancer finances to-date, Lance analyzed user data to learn how their income and expenses changed since March 16, when the White House began ordering social distancing guidelines, and in a year-over-year context. 

Within just one month, revenues took a serious hit. Nationwide, freelancers in the US saw a steep decrease of 25% in revenue for the month of April, compared to the same time period in 2019.

Average Freelancer Income in the US: April 2019 vs. April 2020, Lance

Not surprisingly, the impact in New York was even greater, with a decrease of 43%. Freelancers in the state had been earning far more than the current national average but, for those who lost most or all of their clients, the drop in income was even more dramatic. 

By early April, New York was already experiencing thousands of new daily Coronavirus cases, and on April 6, Governor Cuomo announced he would extend the statewide lockdown through April 29. The stress for businesses large and small continued to build, as it became increasingly unclear when companies would be able to resume normal operations.

Average Freelancer Income in New York: April 2019 vs. April 2020, Lance

Freelancers nationwide reacted to the sudden decrease in income by lowering the total amount of their expenses. Freelancers reduced their total expenses by an average of 13% in April, compared to what they spent in January and February, 2020. This drop represents an even greater decrease of over 26% from April 2019. 

Freelancer Expenses: March and April 2019 vs. 2020, Lance

Monthly Expenses: January-April 2020, Lance

New Yorkers were quick to react to lost income by substantially reducing their expenses. Lance saw total expenses plummet by 26% in an effort to offset losses. 

Aggregate Expense Transactions by Freelancers in the US: 2019-2020, Lance

Nationwide, the total number of transactions freelancers made declined by 21% between March and April 2020. In New York, the decrease was even steeper. Freelancers there cut their transactions by 40%.

Aggregate Expense Transactions by Freelancers in the US: 2019-2020, Lance

Single Freelancers Experienced More Significant Drop in Income

Another interesting trend Lance discovered is that declines in income were worse for single freelancers than those who are married. While married freelancers’ income dropped by an average of 11%, single freelancers experienced a decrease of 21%. 

Comparing Single & Married Freelancer Income in March and April 2019 vs. 2020, Lance

However, single freelancers were much faster to adapt to the new reality and dropped their expenses by 30% while married freelancers managed to minimize expenses by 19%. The quick adaptability of single freelancers kept them in the black while married freelancers actually lost more money in April. 

Comparing Single & Married Freelancer Expenses in March and April 2019 vs. 2020, Lance

These trends in our data surprised us. Why do single freelancers seem to have lost significantly more income in the midst of this crisis? And why are they more responsive in terms of  reducing expenses?

The team can’t make any definite conclusions. However, there are some questions about whether this data is impacted by a majority of married couples likely managing a joint bank account. In a UCLA study of 1,000 married couples, nearly two-thirds reported pooling 100% of their money into one shared account. If it can be assumed that roughly two-thirds of married Lance users have a joint bank account, the impact of lost freelance business for one partner or across two people is likely to be less significant.

On the other hand, for a single person who is responsible for earning their total household income, lost clients or shuttered income streams will have a much more significant effect. The same might explain single people’s ability to quickly change their spending habits during times of need. On the other hand, married couples that earn two incomes might not feel the need to or have the ability to drastically reduce their expenses.


There is a critical need for more reporting to be collected across freelancers’ finances and jobs, that hasn’t been accounted for in any platform today for many reasons. Governmental agencies are antiquated in their tracking of a worker’s single or primary income stream, while most freelancers work across several jobs. Client marketplaces and workflow management systems that have cropped up for freelancers over the past dozen years largely track slices of income from within vertical industries. Similarly, financial institutions only gain a view into one or two accounts types of the half dozen or so freelancers juggle today. Any one bank doesn’t also gain visibility into payments platforms and vice versa. 

This report should prompt government officials and workforce thought leaders to take a deeper look into the dynamics at play and impacts of freelancing on the broader US economy. Lance also hopes that this initial reporting encourages freelancers to take a closer look - as the team has seen many start to - at their financials and how they’ve begun to structure their business management. 

If you are a freelancer, we encourage you to take a look at the free Lance app to get a better handle on your business and financial picture today. And if you’re interested in contributing to more aggregate data going forward, consider completing the Lance freelancer financial survey

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  1. Number of Freelancers in the US 2020: Demographics, Platforms, and Trends
  2.  Based on the standard income given to a sole proprietor to calculate self-employment tax.
  3. Usual Weekly Earnings of Wage and Salary Workers First Quarter 2020, BLS
  4. Freelancing in America 2019, Upwork
  5. California advances bill that would 'lead the world' on gig worker rights, The Guardian
  6. Klobuchar returns to Iowa with plan for a changing economy, 3WWMT
  7. Coronavirus unemployment benefits. Here's who qualifies and how much they get, NBC
  8. Coronavirus Guidelines for America
  9. Covid-19 Data, NYC Health
  10. No Time to Be Lax:’ Cuomo Extends New York Shutdown, NJ Deaths Top 1,000
  11. Joint Bank Accounts Make for Happier Couples