The invisible freelance workforce

I’m always amazed when confronted with outdated assumptions about freelancers. When I say I freelance for a living, people sometimes assume it’s just till I can find a full-time, traditional job. They view freelancing not as a career choice, but as a desperate move, a way to make money when there are no other options. That’s especially true of the older generation, which thinks if it’s not a traditional 9-5 with benefits, then it’s not a real job.

Unfortunately, our government thinks the same way. Although freelance careers are becoming more popular and the gig economy is growing, there is little data on who is freelancing, in what ways and how much this activity contributes to overall GDP. And if the government can’t track it, then it must not exist, right?

The structure of employment is changing rapidly. As technology has become powerful, inexpensive and easy to use, and as Internet and wireless access has proliferated, many of us can work for anybody from anywhere. Benefits are becoming decoupled from employers. Now that health insurers can no longer refuse to sell individual policies (thanks, Obama), people feel freer to leave jobs they loathe and venture out on their own.

On the other hand, the Great Recession forced many middle-aged and older workers out of traditional jobs, and those jobs have not come back. The long-running downturn taught corporations how to get by with fewer full-time employees. They realized they can save money and flex their workforce up and down quickly and easily by farming out more work to independent contractors. Millennials who graduated during one of the longest recessions in U.S. history couldn’t find traditional jobs, so many of them have pieced work together through freelancing and part-time jobs. Even if they could find a job, many prefer to fly solo. They like the freedom and flexibility of the freelance lifestyle. After all, they know that traditional employment is not particularly secure, either; those middle-aged workers that have been laid off over the last seven years were their parents.

All this is happening right under the government’s nose, yet it has few statistics that show an accurate picture. The first problem is one of terminology. Contingent workers, freelancers, sole proprietors, independent contractors, and small-business owners could all be considered part of the gig economy. Yet they are all counted differently, and treated differently, by the government. For example, if you earn any money that’s reported on a 1099 form, then the Internal Revenue Service counts you as self-employed, says Katy Tynan, author of the book Free Agent: The Independent Professional’s Roadmap to Self-Employment Success. By that definition, some 30 percent of the working population is freelance. The Bureau of Labor Statistics, on the other hand, counts someone as freelance only if 1099s are her primary source of income. By that count, it’s 10 to 15 percent of the population. If a freelancer has incorporated, she is lumped in with small businesses, even if she is just a company of one.

A recent Government Accountability Office study describes the problem. However, the data it had to work with was five years old (another problem with our government). Nevertheless, the GAO found that the proportion of people with “alternative work arrangements” had increased from 35 percent in 2006 to over 40 percent in 2010. It’s probably even higher today. That’s a huge proportion of our workforce that our government doesn’t seem to know what to do with.

“Most of the report’s 74 pages are spent explaining that in the government’s eyes there isn’t even yet a proper definition of what an independent worker is,” wrote Sara Horowitz, executive director of the Freelancers Union, in a recent opinion piece in Fast Company. “Despite its growing ubiquity, the freelance movement is happening in relative statistical and policy-making darkness.”

So our government will continue policies that are increasingly irrelevant, ineffective or, worse, downright harmful. And in this flat world, freelancers will gravitate to locations that recognize and support them. If the U.S. government doesn’t start paying more attention, it could lose some of its most creative and entrepreneurial citizens, and the economic value they produce.

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