Editor’s Note: As we looked at the data we’ve gleaned from our users on oDesk, we have noticed an exciting trend of wage growth across contractors working on our platform.
Online work provides a huge opportunity for people to grow their careers. After 36 months on oDesk, contractors earn an average of 190% more than they earned during their first month on the platform. The growth curve is dramatic: oDesk contractors increase their earnings by an average of 60% during the first year alone.
In addition to tenure on oDesk, we looked at two significant factors that accelerate earnings growth for contractors on the platform: education and prior (non-oDesk) work experience. In fact, each additional year of education translates to approximately 12% higher wages, while each additional year of work experience is worth approximately 2.6% more. Read on for the full story!
Many thanks to oDesk Staff Economist John Horton for all the analyses in this post.
We hear so many great success stories from our contractors. For example, Marcel Morgan from Jamaica left his corporate job in February and is on track to earn 20% more this year working full time on oDesk. And Josh Warren from Texas went from earning $15/hour when he first joined oDesk to $95/hour and running his own agency today. At oDesk, we are not just watching our own business grow—we are also witnessing contractors grow their earning potential and their careers.
We thought it would be interesting to analyze exactly how much earnings growth happens as contractors gain experience on oDesk and build their reputation. To do this, we calculated wage growth among a pool of 90,000 oDesk contractors (in order to calculate hourly wages, these contractors had all been paid for at least some hourly work on the platform). The graph below shows that after 36 months on oDesk, contractors earn approximately 190% more on average than during their first month on the platform. In fact, wages grow dramatically—almost 60%—in the first year alone.
How we calculated growth:
We took each contractor’s hourly wage in the first period and then divided their average wage in each subsequent period by their first period. So, for example, if a contractor averaged $3/hour in January, $6/hour in February and $8/hour in March, the three numbers would be 1, 2 and 2.66. For each month, we took the average for whatever number of the 90K original contractors were working in that period. As such, the average is exactly 1 for the 1st period. In subsequent periods, we could logically only have measures for workers who remained. It’s possible some who did not see their wages increase left. Also, it’s likely some contractors start their hourly wage lower when they are just getting started in order to get their first job, and then raise their rate once they have built their online reputation.
Factors Driving Earnings Potential
As contractors gain work experience and build their reputation on oDesk, they are building their careers.
Beyond oDesk experience itself, we examined what other factors drive our contractors’ earning potential, and found two: education and past work experience (prior to oDesk). Let’s examine both closer.
How does a contractor’s education relate to income potential on oDesk?
Each additional year of education correlates to approximately 12% higher wages. The graph below shows the relationship between education levels and earnings on oDesk using the number of years of education traditionally associated with each degree (i.e. high school = 12, bachelors = 16, masters = 18, doctorate =21).
When the diagram is horizontally “thick” it means that there are a lot of workers at that wage, and when it is “thin” it means that there are relatively few workers. With this, we can see that for high school education only, the diagram is quite thick at low wages.
We found this correlation particularly interesting because we know that on oDesk, many contractors are highly educated but live in countries where there is a lack of available work supply. With oDesk, these highly skilled contractors can make use of their education by accessing global clients who need their expertise. These skilled, educated contractors suddenly have the opportunity to do the work they want and start earning the higher wages their education entitles them to.
How does past work experience drive income potential on oDesk?
Another factor related to wage growth of oDesk contractors is prior, non-oDesk work experience. When our contractors take the time to fill out their profiles and list all the work experience they have had in the past, they see a positive impact on their hourly rates. In fact, each additional year of work experience listed is worth about 2.6% in higher rates. The chart below demonstrates that with each year of experience (non-oDesk), contractors see higher wages.
Working online provides contractors with almost boundless opportunity to gain new work experience, build their reputation, and earn considerably more in turn. To fully realize their earnings potential, all contractors should showcase their experience as they build it, and make sure their profiles reflect their education, training and prior work experience.