Empowering the Freelance Economy

Aged 40+? Your salary is about to plateau. What can you do to change that?

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Wisdom comes with age and experience, goes the adage, so remuneration should be commensurate. That is not the case for the global IT worker, according to data that shows that salaries of IT candidates over the age of 45 become “stagnant and often decline”. The Freelance Informer asks why is this the case and what can be done to turn that trend around?

IT recruitment site, Hired, highlighted in its 2020 State of Salaries report that this phenomenon is happening not just in the UK, but echoing in other markets, such as the US.

There are several factors contributing to the salary plateau, Hired CEO Mehul Patel tells The Freelancer Informer. “As far as what’s causing salaries to become stagnant and decline for candidates over age 45, part of that is likely due to the fact these candidates are often already in the most senior positions within an organization, and in that case they’re already earning the highest salaries that company offers,” says Patel.

“In other situations, it can be attributed to unfortunate learned behavior on the employer side. If they’ve been able to successfully close an older candidate with a lower salary than that candidate initially asked for, the company could then turn that into common practice,” he says. 

If a job will be handled remotely, the candidate’s location will have some bearing on salary expectations. For example, UK IT workers have traditionally made less in terms of salary than their US counterparts.

“There are a number of factors that could contribute to UK IT workers earning less than their US counterparts, but I’d say a lot of it boils down to the differences in each country’s economic structure,” says Patel.

“Employers in the US know that their employees have to pay for things like healthcare, childcare, and higher education with very minimal government assistance, so they have to offer salaries that account for those costs of living,” the recruitment CEO says. 

Salary data transparency is one solution to address stagnant salaries. “To turn this trend around,” says Patel, “it’s important that we empower candidates of all ages with transparent salary data so they know exactly what compensation they should ask for, and they can then point to hard numbers to justify what their skills and years of experience are worth.”

That could be easier said than done, as some companies ask employees to sign non-disclosure agreements about their salary and packages to avoid potential employee backlash. The reasoning is also that less accomplished candidates could expect like for like packages when the company does not expect them to achieve target results. They can see that candidate as a risk that they would prefer to compensate after they have a proven track record at the company.

However, bias is also at play. “It’s also important that employers make conscious choices to remove all bias from their hiring practices and focus on offering a fair salary regardless of race, gender, or age,” suggests Patel.

The Hired platform, for example, has a Salary Bias Alert feature notifies employers when they are making a salary offer that is lower than it should be based on existing data, noting that there could be bias at play. 

Self-preservation in COVID-era

The self-employed workforce is ageing fast, according to UK think tank, International Longevity Centre UK (ILC). The ILC says the propensity to be self-employed has tended to increase over time and older workers are remaining in the workforce for longer.

A shift to self-employment in later life may partly be driven by a desire for flexibility and control at work but may also be a response to a lack of other suitable work, due to age discrimination, inflexible hours, and other barriers faced by older workers, ILC research reveals.

12% of workers under 50 (2.7 million) and 21% of workers aged 50+1 (2.2 million) are self-employed (ILC).

A significant proportion of older workers are self-employed in the UK and among these, a sizeable number were ineligible for any government support the ILC had reported at the start of the pandemic in April 2020.

“This could unintentionally disincentivise longer working lives and further disadvantage the retirement incomes of the self-employed,” says the ILC.

Full-time self-employed workers aged 55+ earn less than younger workers (aged 24 or over), and over £100 a week less than their employed counterparts (ILC).

“As a growing number of workers transition to self-employment in their later years, we need to ensure they are not forgotten, and feel supported to work for longer and have sufficient savings for retirement,” says ILC Research Fellow Sophia Dimitriadis.

“Failing to support workers of all ages to stay afloat in these unprecedented times could not only put individuals’ livelihoods at risk but also exacerbate the effects of a coronavirus-driven recession,” she says.

‘Grey’ New Deal ahead?

The impact of longevity on society by 2040, will see older people spending 63p in every pound spent in the UK, according to ILC. Moreover, by 2040, older workers could be contributing 40% (£311 bn) of total earnings to the UK economy, adding 2% to GDP every year if older people are supported to stay healthy and in work for longer.

As part of ILC’s “Grey New Deal”, the think tank is calling on the UK government to maximise the economic benefit of an ageing society.

Its research has highlighted that older consumers could drive economic growth in the post-pandemic recovery, but business is failing to meet their needs.

Based on ILC’s projections for spending power and self-employment, older generational workers will have targeted and valuable input not only for their sector experience but also in shaping a product’s usefulness and user-friendly interface for the 60-plus consumer.

Older consumers spent £319 billion (54% of all UK consumer spending) in 2018, a figure set to increase as the population ages and this group spends more money.  But older people are underspending their wealth, says ILC. 

This gap in the market both presents a market opportunity and value-add of multi-generational teams in the workplace, which could be crucial in creating game-changing technology-led products and services targeting the 60- plus consumer group.

ILC argue that to maximise the “longevity dividend”, the unspent fixed income of older generations that sheltered during the lockdown, the government should:  

  • Invest in preventative health; 
  • Inclusively design products and places; 
  • Help people to get a better understanding of how long they’re likely to live and create financial products that offer financial security for their whole life. 

Making multi-generational teams work

A word of warning though from a web developer that has worked with multi-generational teams. There has to be an equal amount of give and take, especially when it comes to product development.

Succeeding in tech is not an easy feat. Competition can be fierce between developers, especially for a woman, according to Emmanuelle Desirliste, Engineering Manager at Scaleway, an online Software as a Service French Cloud computing and web hosting company.

“Everyone wants to be right, to defend their own solution to the problem at hand, and debates can sometimes be heated!” Desirliste writes on a post on 50inTech, the forum that connects women in the tech sector with committed peers, investors, and companies.

“You have to stand your ground and learn not to be silenced by older colleagues and their previous experiences at different companies and positions,” says Desirliste.

The engineering manager believes it can be easy to underestimate the skills of a coworker based on his or her age and to know how to distinguish between knowledge and experience, which can be two different things.

“Your resume should not be the sole deciding factor of your legitimacy: you should always have a chance to prove on the spot that you know what you’re talking about,” says Desirliste.

IT infrastructure must address this massive opportunity in the areas of Fintech, Mobility Services, and Healthcare to name a few. Contractors and freelancers in the IT, Marketing, Content, Healthcare, and Legal, for example, could hone in on this opportunity by reinventing their pitch as contractors in their specialist area that have done their research on ‘grey’ market opportunities and other burgeoning sectors, such as FemTech to illustrate how they could help create solutions for new and existing clients.

While you may have missed out on this competition, (see below), the hot areas of development are still worth noting and to look out for similar competitions.

UK registered businesses had the opportunity to apply for a share of up to £2 million to develop digital health technologies in partnership with organisations from EUREKA countries.

  • Competition opened: Monday 4 May 2020
  • Competition closed Wednesday 5 August 2020 12:00pm

The fund is looking for digital health and smart device projects that promote healthy ageing. They must meet one or more of these themes:

  • robotics
  • augmented or artificial intelligence
  • software as a medical device
  • wearables
  • medical devices
  • diagnostics
  • imaging
  • data analytics
  • sensors
  • apps

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