Can work dry up?
Most freelance editors experience "feast or famine"...times when you have so many assignments you can't do them all, and then times when things dry up for a while. But it always seems to cycle back again. That's why I think it's key that all independent professionals, not just editors, be good financial planners (or have access to a good financial planner). Most of the time, if an editor is good at her/his work, the famine times are short and the feast times are greater.
I am still awaiting my feast...
Yes. This. :D
Can it dry up completely? No. As long as people are writing stories, editors will have work. But I concur with my colleagues that there are lean and fat times.
No one should go into freelance editing with the goal of becoming rich, LOL! But it is possible to make a decent living if you are persistent and if you truly live, love, and breathe books.
I've had only one brief famine in the 12 years I've been freelancing. It was after a bread-and-butter client decided to move their copyediting in house. But I scampered around and drummed up business quickly and had only two weeks' downtime. It was a good learning experience, but I'd rather not go through it again.