Skilled freelancing just jumped from roughly 1 in 4 U.S. knowledge workers to more than 1 in 3, according to Upwork’s 2026 Future Workforce Index, released July 14. The report also found that freelancers who work with AI earn 34% more per hour than those who don’t – a gap that’s reshaping who small businesses hire, and how.
What happened
Upwork surveyed 2,400 U.S.-based skilled workers between March and April 2026 and paired the results with platform data on AI-related work. The topline number: 38% of U.S. knowledge workers now freelance, up from 28% a year earlier. Separately, 58% of full-time employees say they’re considering freelancing, up from 36% previously.
The AI-earnings gap was the sharper finding. Freelancers incorporating AI into complex work saw earnings rise 45% year over year, and AI-augmented professional services – domain experts layering AI onto established fields like consulting, marketing, or finance – grew 72% in volume with 22% earnings growth. Lower-complexity, purely execution-style AI work told a different story: contract volume grew fast, but per-contract earnings fell 13%.
Stanford economics professor Nick Bloom, commenting on the findings, said: “The value is not showing up evenly; it is concentrated in more complex work where people are applying expertise, judgment, and business context on top of AI.” Upwork Research Institute managing director Jennifer Brett added that “giving employees access to AI tools is only the first step. The real work is redesigning workflows and investing in employee learning.”
Why it matters
The data points to a widening split in the freelance market: workers who pair AI with real expertise and judgment are pulling ahead, while those doing commodity AI-execution work are seeing earnings erode even as demand for that work grows. For any business bringing on freelance help, that split changes what “good value” looks like – the cheapest AI-assisted contractor isn’t necessarily the one delivering the most.
What this means for small business owners
If more of your team – or more of the people you’re hiring – are freelancers rather than employees, a few practical things follow. First, worker classification matters more than ever: a freelancer who’s effectively working full-time hours under your direction may not hold up as a 1099 contractor under IRS or state rules, and misclassification penalties don’t shrink because the arrangement felt informal. Second, your books need to track contractor payments cleanly for 1099-NEC reporting at year-end, especially as you bring on more specialized AI-savvy freelancers for higher-value project work.
It’s also worth budgeting differently for this shift. If skilled freelancers commanding AI-premium rates are becoming a bigger part of how work gets done, that’s a cost-planning conversation worth having with your bookkeeper now, rather than reacting to it in Q4.
“The value is not showing up evenly; it is concentrated in more complex work where people are applying expertise, judgment, and business context on top of AI.” – Nick Bloom, Stanford University
The bottom line
The freelance workforce isn’t just growing – it’s stratifying, with AI fluency now a real driver of who earns more. For small business owners, that means paying closer attention to both classification risk and where freelance dollars actually deliver value, as gig work becomes a bigger and more permanent part of the workforce mix.
