Helaine’s Blog

America’s silent freelance army

March 28th, 2013 | via The Guardian

The US last calculated the number of contingent workers in 2005 – how can we structure better policies without hard data?

What kind of job do you have?

No, I don’t mean what do you do for a living. Do you have a job, a regular position with set days and hours? One of those old-fashioned things that comes with – at least we hope – health insurance, retirement benefits, vacation and sick days. Taxes are taken out of your paycheck and, in turn, your employer issues you a W-2 tax form statement at the end of the year.

Or are you a just-in-time worker? You know what I mean. Call it freelancer or free agent, you work in the gig economy. You might have multiple employers, where your hours, salary and assignments are contingent on the whims of others. Or you are a so-called permalancer, with ties to one employer, but who offers you very little in return. No matter. In either case, you can be here today, gone tomorrow.

If this last paragraph sounds about right, please stand up and identify yourself. We have no idea how many of you are out there.

This is a problem. A big one.

Employment experts routinely cite the increasing number of everyone from lawyers to technological whizzes who work as freelancers, permalancers and small-time entrepreneurs as one of the fastest growing segments of our economy. Yet the United States government last calculated the number of contingent workers in 2005. At the time, the number was some 42.6 million people – that is, just under one-third of the United States workforce.

Most observers assume the number has grown significantly since then, mostly thanks to employers who have responded to our dodgy economic climate by keeping as few employees on the books as possible. Technology company Intuit predicted in 2010 that by 2020, such workers would make up 40% of the workforce. MBO Partners, a Virginia-based consultancy specializing in the needs of such workers, takes it a step further, claiming that in 2020, more than half of all those performing paid assignments in the private sector will be working independently.

Traditional employment, in other words, is probably no longer so traditional. But we don’t know that for a fact. As a result, the Freelancers Union, the New York based outfit that started as an attempt to protect the rights of this likely growing segment of the economy, is attempting, with the aid of senator Kirsten Gillibrand of New York, to get the Labor Department to resume counting the number of less than regular employees.

So, what’s the big deal? A paycheck is a paycheck, right? Well, not exactly.

We’re working in the 21st century marketplace, but with 20th century laws and customs. Our legal and financial structure that assumes most of us are salaried employees. If this is not true, than many policies set by the federal government, states and corporations in the wake of the Great Depression – from employer sponsored health care to the ever-vanishing pension system – are not helping or protecting an ever-growing number of people, and are instead all-but-dooming them to a precarious economic existence.

Take a look at the most basic of American safety nets, unemployment insurance. Here is a highly simplified description of how it works: when you accept a salaried position, employers pay payroll taxes to fund state unemployment insurance programs. If you lose your job through no fault of your own, you are then eligible for unemployment insurance.

The catch here is the word “salaried.” The freelance workforce is not salaried. So they lose a gig, they lose their income. Just like that.

Or think about retirement planning. Many think tank sponsored initiatives to get Americans to up their savings in this area all-too-often assume they possess traditional jobs. So the talking heads natter on about how increasing the rate of salary that employers remove from paychecks for targeted savings when employees are automatically enrolled in 401(k) plans could be a really great solution.

But that assumes one has a 401(k), something contingent workers lack. Not surprisingly, a just released MBO Partners survey on freelance GenXers found a full 50% of them concerned about their retirement savings.

Moreover, freelancers are responsible for all sorts of expenses that regularly employed employees don’t think about. This blogger, for example, pays for everything from her own health insurance to the staples in her stapler. While the staples are negligible, the health care costs, needless to say, are somewhat more significant.

This brings me to another point: the Freelancers Union’s own data is not showing a group of well-compensated workers. The majority of their members earn less than $50,000. 80% of their members reported problems collecting pay from their employers in 2010, with a third unable to get any money at all from at least once client.

So how will numbers solve this? Well, they won’t, not at first. They can’t answer how the employee-employer contract is breaking down for the still salaried workers. Nor can they help us determine if these not-salaried employees are happily embracing the change, using their freedom to type away with Katiegirl the poodle sleeping on a blanket next to their desk (yes, that example comes from the columnist’s life) or if they are just doing this to get by, desperate for a real job, and would leave the dog alone for 12 hours at a stretch, if only they could.

But possessing hard numbers will finally get us out of the realm of guessing and into the world of hard data. As Sara Horowitz, the executive director and founder of the Freelancers Union, puts it, “How can we possibly make policies for the new workforce without accurate measurement of its size or contributions?” Only then, can we truly begin the process of wrestling with the questions of what sort of benefits and protections a 21st century worker needs in the United States.

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