BreakingModern — Occupy Wall Street is no more, but its demand that America treat its workers better remains at the forefront of the national conversation.
Jobs and stagnant salaries will probably be important issues in the 2016 presidential campaign. Even Republicans, traditionally the party of business, are building their platform around the problem of rising income inequality and how conservative ideas can alleviate it. President Obama wants to improve conditions for American workers by requiring employers to provide guaranteed paid sick days and family leave, and making it easier for them to join a union.
All great news for workers, who have been taking it on the chin since at least the 1970s, the last time real wages kept up with inflation. Yet there’s a glaring gap in the discussion: freelancers.
Ten million Americans are completely self-employed — that’s way up, from just 1.3 million people in 2001. A whopping 53 million people devote part of their workweek to freelance work. “Even though there may not be jobs in the conventional sense, there is still work,” urban analyst Bill Fulton told Forbes. “That’s the whole idea of the 1099 economy. It’s just a different way of organizing the economy.”
When politicians and the media talk about workers and how to improve their lot, independent contractors and entrepreneurs are almost always left out. But self-employment isn’t going away. Though the current tentative economic recovery has caused a slight dip in the percentage of U.S. workers who receive 1099s (as opposed to W-2s) at the end of each year, labor experts anticipate that more workers will become freelancers. This will either be by choice or, after being laid off, out of necessity. As automation and international outsourcing continue to reduce the demand for full-time workers, and CEOs increasingly turn to the “contingent workforce” to fulfill their staffing needs on an as-needed basis, being dumped like a dirty napkin when demand slackens is common.
The software company Intuit predicts that a whopping 40% of American workers will be freelancers, contractors or temporary workers by the year 2020.
Are proposed reforms enough?
No. None of the proposed reforms would do anything to help these lone wolves.
When you work for yourself there’s no employer to give you paid vacation days, much less paid sick days or parental leave. What are you going to do, unionize against yourself? Forget about going on strike for higher wages — which, given the fact that 12% of freelancers are on food stamps, the self-employed could use higher wages.
Freelancers earn less than full-timers. They work longer hours. They’re less economically secure. Because they can’t afford to say no when a possible client calls, their time isn’t their own, even on weekends and holidays. Speaking of which: what holidays?
If the balance between laborer and management has inexorably shifted toward the latter in traditional workplaces over the past half-century, the move toward an increasingly insecure, off-and-on-again workforce will only accelerate that trend. It’s a seismic shift and the main force driving down average wages. Yet public policy hasn’t merely failed to catch up — it hasn’t even begun to think about it.
As David Atkins wrote in Washington Monthly: “Simply letting the economy slide into the enforced uncertainty of the freelance economy without helping workers achieve dignity and stability is not an acceptable outcome.” But how can we avoid it?
Sara Horowitz of the Freelancers Union (not a union in the traditional sense, mostly just a way for independent workers to buy pooled health insurance) tells The Washington Post that one way to even out the feast-or-famine problem would be for Congress to authorize 529-like savings schemes. “Freelancers could be allowed to set up pre-tax accounts for their earnings that would go tax-free if they fell below a certain level, to keep them out of poverty during dry spells. In England, government officials have experimented with a ‘central database of available hours‘ as a public option for freelance work scheduling.”
Also in the Post: “As a general philosophy, social welfare benefits might need to shift towards how they work in Europe, where entitlements are attached to the individual, rather than their relationship with an employer. Some academics have described a new ‘dependent contractor’ status that would cover workers who serve mostly one client. These workers, the argument goes, should have more protections — unemployment insurance, for example, or workers compensation — than those who pick and choose their assignments from a number of different sources.”
Good suggestions, but pretty weak tea compared to the really big problems — much lower pay, much less security — faced by the new rising class of on-demand workers.
The best way to reverse decreasing wages
The best way to reverse downward pressure on wages would be for the federal government to set prices for labor on everything from the cost of a new roof to the price per word received by a writer to create an article like this one. For Americans accustomed to letting the “magic of the marketplace” govern their financial destinies, this would be a radical reform. But it’s not unprecedented. Wage and price controls have been deployed in India, the world’s biggest democracy. In 1971 President Nixon went after inflation driven by predatory corporations by freezing all wages and prices — a move conservatives declared a failure but that dramatically helped working poor people like my mom, who still says it saved our lives (even though she hated Nixon).
This would require a new government bureaucracy, but hey, hiring federal workers would reduce unemployment. Setting minimum wages for freelance work would be challenging, but experts know the marketplace. As a writer, I know that outfits that offer $25 for 1,000 words ought to be ashamed of themselves — no one should write anything for less than $1 a word.
Congress should extend protections against workplace discrimination based on race, age, gender, sexual orientation and disability to allow wronged freelancers to sue for compensatory as well as punitive damages.
Companies and individuals who engage the services of freelance workers should be required to pay into a general compensation fund managed by the federal government. This would probably be remitted as a percentage of compensation. Freelancers should be able to draw on the fund to take paid vacation and sick time off, as well as paternity and maternity benefits.
The only way to prevent American freelance workers from sliding into a chattel class indicative of life in a third-world country will be to give them the same rights, privileges and protections as those enjoyed by full-time workers.
Which, of course, will likely reduce the number of employers who transition from a full-time to an on-demand workforce.
Image: “Adolph Menzel - Figurenstudie (1872)” by Adolph Menzel - The Getty Center, Object 60, Digital image courtesy of the Getty’s Open Content Program. Licensed under Public Domain via Wikimedia Commons.
February 14, 2022
We should try to remove all of the economic penalties (taxes) from labor. In other cases we raise taxes on things that we think are socially destructive (cigarettes and alcohol) and we remove taxes from things we think a good for society (churches and charitable organizations.) Jobs are good for society but we tax them heavily.
If a person does work, they and the employer pay several taxes. If a machine does the work it pays none. When a machine does the work of 10 people then it could be taxed at the same amount that 10 people would have paid. That would be fair . . . right? With this system I don’t think we would be lacking for jobs.
Just a thought . . . as it’s not ever going to change for the better for the worker.
A person working and paying taxes . . . good. A machine working and paying no taxes . . . not so good.