5 Ways To Fix The Freelance Economy

James Knight, a 27-year-old freelance programmer, stands for a photo on a rooftop in Brooklyn … [+] Knight, New York, USA on Thursday, January 14th, 2016. Knight recently took an unorthodox career move: he quit a well-paid gig writing software for Google Inc. to become a freelancer. No more catering lunches, gilded perks, or million dollar views from the search giant’s Manhattan office. Knight is willing to sacrifice those perks because being an independent is pulling about twice as much down as it is on Google. Photographer: Chris Goodney / Bloomberg *** Local Caption *** James Knight

© 2016 Bloomberg Finance LP

The freelance economy is not a panacea.

As the graphic designer Benek Lisefski put it: “Generations of young minds who were fed up with employment norms that no longer met their needs thought gig working was their ticket to career freedom and meaningful work. Now they find out that they have traded one prison for another. ”

Or from Ghost Work: How to prevent Silicon Valley from building a new global subclass: “Unfortunately, the valorisation and validation of full-time employment has also made it easier for company interests to position piecework and later other forms of temporary or contract work as expendable, ie which justified no protection. ”

This dystopia is real.

Like most technology transformations, the freelance economy is not value-neutral. It reinforces existing structural conditions. If you are a software developer, the freelance economy adds to your existing market strength. It can also exacerbate the lack of market strength for supposedly low-skilled occupations.

But this dystopia is far from the bigger picture.

61% of freelancers contribute more than $ 1.3 trillion to the US economy annually. On average, the American freelancer makes $ 68,300 a year, and 87% of freelancers believe their best days are ahead of them.

So instead of throwing the baby out with the bath water, let’s discuss policy recommendations.

5 guideline recommendations

1: Separate the gig economy from the freelance economy.

The “gig” economy has structural flaws that provide incentives for exploitation. Gig economy models in particular turn workers into goods and encourage a race to the bottom.

Most freelancers, however, are not in the gig economy (50% provide skilled services such as computer programming, marketing, IT, and business consulting). They are independent professionals with autonomy, personal responsibility and control over their income. Therefore, politics must separate these two economies.

Here are common differences.

Gig Economy:

  • Transaction. Usually short (minutes / hours / days) one-time tasks.
  • Auction bid process. Client publishes job. Freelancers offer.
  • Lack of relationship between clients and freelancers.
  • Mediated through the marketplace.

Freelance economy:

  • High dollar value (over $ 1,000), long period of time (over 1 week). Usually a mixture of long-term contracts such as retainers or employment statements lasting several months.
  • Long-term relationships. Freelancers usually become the point of contact for their customers.
  • Independently. Freelancers look and work like small businesses. Of 300 respondents, only 49% used freelance marketplaces and only 38% identified themselves with the term freelancer.

For the professional economy, you should get rid of the ABC test, specifically: “(B) The service is provided outside of the employer’s normal course of business.”

2: Make it easier, not harder, for small businesses to hire freelancers.

Freelance projects are a win-win situation for our economy.

How can we make it easier to hire freelancers? Singapore offers companies up to 70% assistance in hiring interns in Singapore. Interns and freelancers both work on a contract basis – can US freelancers get similar assistance?

3: Include freelancers in the discussion.

4: Businesses Invest and Incentive That Help Freelancers.

As part of Biden’s “Build Back Better” campaign promise, $ 5 trillion is already underway. How can freelancers be involved?

Through direct investments or business incentives that meet three needs of a freelancer – career, cash flow, benefits.

Bucket 1: career

Although 70% of freelancers have completed skill development training in the past six months, technically they do not have the career path, education, and community associated with most full-time jobs.

However, freelance businesses are fast filling the void.

Freelance agencies like SuperFriendly prioritize their members’ career path. Freelance communities like Freelance Founders, Freelance Mastermind, and IDLance offer training through resources, workshops, and communities. And freelance niche platforms We Are Rosie (marketing), Instant Teams (customer success), 10x Management (software developer), Parker-Dewey (students) and Paro (finance / accounting) offer freelancers a soft landing in their niche.

Like any small business, freelancers rely on management solutions like Venture L to set up processes, manage and build projects as they grow. It’s funny, we could say that a freelancer who becomes a manager uses management solutions.

Bucket 2: cash flow

Freelancers take care of everything cash flow related – invoicing, bookkeeping, cash flow management. Corporations have accounting and finance functions, freelancers have tools like Payoneer, Freshbooks, and emerging startups like Formations and Stoovo.

Bucket 3: advantages

While 53% say they feel more secure as an independent than they would with a traditional job, underperformance and expensive health care are a common struggle. Growing startup indipop, however, can independently save 40% or more in rewards that run to over $ 7,000 per year.

Founder Melissa Blatt stated, “I couldn’t afford health care when I left the corporate world to go out alone. I knew I wasn’t alone. I discovered that Healthshares, while not a standard option, was a different approach to managing my health needs. I founded indipop to provide independent, fair medical pricing, open networks and concierge care to this independent population by putting together the best plans with unique features and helping our members find the right solution. ”

5: Learn From What Has Been Tried.

Why nationalize a bill 58% of California have already rejected?

Next week we’ll hear from the freelancers themselves. Stay tuned!

April 1, 2021