Yesterday was Labor Day and there were the usual parades of union members, although freelancers didn’t have their day in the sun – like this cartoon.
There were also a few Labor Day discussions on television, mostly featuring people who have nice traditional jobs and who don’t seem to have much understanding of what is happening to the very nature of work in a post-industrial economy.
This will be the first of two posts about how the way we make a living – what used to be called “work” – is changing and how the economy is changing more broadly.
Let’s start off with freelance work, which is estimated to involve 53 million Americans or more than a third of the workforce and looking more like the way that a majority of Americans will work in the future. As one reporter noted:
No wonder the polite question to ask these days is not “Where do you work?” but “What are you working on?”
Current Labor Department statistics don’t show numbers as large as a third of the workforce, which may partly explain the failure of the government to focus on freelancing. However, as a Harvard Business Review article last year explained:
“Why is this? Two reasons, mainly. One has to do with definitions — the BLS standard for self-employment isn’t the only valid one. The second is really about history. We may well be witnessing the rise of a new kind of independent worker … Free Agent Nation is out there, and parts of it are growing fast. It’s just not always easy to find”
Not surprisingly, conventional institutions are having a hard time dealing with this trend.
In a poignant description of her own situation, Elaine Pofeldt, a writer and exile from corporate America, reported “What I’ve Learned About Government, Big Banks And Consumerism — As a freelancer, the state made me feel like an economic outlaw”
“The moment you step outside the way people are supposed to work in the U.S. — either because that model doesn’t work for you or because you’ve lost a traditional job — you get cut off from the country’s support systems. Never mind that our culture reveres entrepreneurial heroes like Mark Zuckerberg. Depart the W-2 world, and you become a sort of economic outlaw. You don’t get access to unemployment. But you still have to pay taxes like everyone else.”
“Employment attorneys have told me government historically hasn’t wanted more people to join the 1099 economy. It is easier to siphon taxes directly from an employee’s paycheck than to get independent workers to pay the state later.”
Focusing on freelancers earning money through platforms like Uber, Joe Kennedy, senior fellow at the Information Technology & Innovation Foundation and the former chief economist at the U.S. Department of Commerce, argued a few weeks ago that “Labor laws are a mismatch with the sharing economy”. He recommends “Creating programs like these that support valuable new industries is certainly more important than trying to impose an obsolete model on a dynamic market.”
Recently, there have been some new policy proposals that start to address the issues in our new economy.
In yesterday’s New York Times, Sara Horowitz, Executive Director of the Freelancers Union, suggested a way of dealing with the episodic income of freelancers – with accounts for pretax income proportionately made by the clients. She also asked for easier legal remedies to deal with the widespread late or failure to pay by clients.
Nick Hanauer, venture capitalist, and David Rolf, labor union leader, wrote that “by far the biggest threat to middle-class workers—and to our economy as a whole—comes from the changing nature of employment itself.” They note that “Our changing economy has given rise to a nation of freelancers and contractors — and the need for a twenty-first-century social contract.”
Among other proposals, they suggest a “Shared Security Account as analogous to Social Security, but encompassing all of the employment benefits traditionally provided by a full-time salaried job. Shared Security benefits would be earned and accrued via automatic payroll deductions, regardless of the employment relationship, and, like Social Security, these benefits would be fully prorated, portable, and universal.”
As Sara Horowitz wrote: “Politicians have been talking about the gig economy using outdated language. They’re not talking about how we work today, and they’re certainly not talking about how we’re going to work tomorrow.”
Whether it’s a shared security account or other policies, it’s time that the nation’s public officials address the way that people have to earn a living in this century, not the last.
© 2015 Norman Jacknis, All Rights Reserved