The freelance economy isn’t a panacea.
As graphic designer Benek Lisefski put it, “Generations of young minds, tired of employment norms that no longer served their needs, thought gig working was their ticket to career freedom and meaningful work. Now they’re realising they’ve traded one prison for another.”
Or from Ghost Work: How to Stop Silicon Valley from Building a New Global Underclass, “Unfortunately, the valorization and validation of full-time employment also made it easier for corporate interests to position piecework and, later, other forms of temporary or contract labor as expendable, that is, work that did not warrant protections.”
This dystopia is real.
Like most technology transformations, the freelance economy isn’t value neutral. It amplifies existing structural conditions. If you’re a software developer the freelance economy amplifies your existing market strength. Likewise it can amplify lack of market strength for perceived low skill occupations.
But this dystopia is far from the whole picture.
61% of freelancers choose to contribute over $1.3 trillion to the US economy annually. On average, the American freelancer earns $68,300 a year and 87% of freelancers think their best days are ahead of them.
Thus instead of throwing the baby out with the bathwater, let’s discuss policy recommendations.
5 Policy Recommendations
1: Separate the ‘gig’ economy from the freelance economy.
The ‘gig’ economy has structural flaws that incentivize exploitation. Specifically, gig economy models commoditize workers and incentivize a race to the bottom.
But most freelancers don’t operate in the gig economy (50% provide skilled services such as computer programming, marketing, IT, and business consulting). They are independent professionals with autonomy, ownership and control over their earnings. Thus policy needs to separate these two economies.
Here are common differences.
- Transactional. Typically short (minutes/hours/days), one-off tasks.
- Auction-bidding process. Client posts job. Freelancers bid.
- Lack of client-freelancer relationship.
- Mediated by marketplace.
- High dollar value (over $1k), long timeline (over 1 week). Typically a mix of long-term contracts like retainers or multi-month statement of works.
- Long term relationships. Freelancers typically become the go-to resource for their clients.
- Independent. Freelancers look and operate like small businesses. Out of 300 respondents, only 49% used freelance marketplaces and only 38% identified with the term freelancer.
For the freelance economy, get rid of the ABC test, specifically – “(B) the service is performed outside the usual course of the business of the employer”.
2: Make it easier, not harder for small businesses to hire freelancers.
Freelance projects are a win-win for our economy.
How can we make it easier to hire freelancers? Singapore offers businesses support up to 70% when hiring Singaporean interns. Interns and freelancers both work on a contract basis – can US freelancers have similar support?
3: Include freelancers in the discussion.
4: Invest and Incentivize businesses helping freelancers.
$5 trillion is already underway as part of Biden’s “Build Back Better” campaign promise. How can freelancers be included?
Through direct investment or incentive’s for businesses fulfilling 3 freelancer needs – career, cash flow, benefits.
Bucket 1: Career
Although 70% of freelancers participated in skills training in the past six months, they technically don’t have the career path, training and community that comes with most full time employment.
Yet freelancer focused companies are rapidly filling the gap.
Freelancer agencies like SuperFriendly prioritize the career path of their members. Freelancer communities like Freelance Founders, Freelance Mastermind, and IDLance provide training through resources, workshops and community. And niche freelance platforms We Are Rosie (marketing), Instant Teams (customer success), 10x Management (software developers), Parker-Dewey (students) and Paro (finance/accounting) provide a soft landing for freelancers in their niche.
Like every small business, as freelancers grow they lean into management solutions like Venture L to hire, project manage, and build processes. It’s funny, we could say a freelancer’s equivalent to becoming a manager is using management solutions.
Bucket 2: Cash Flow
Freelancers handle everything related to cash flow – invoicing, bookkeeping, cash flow management. Companies have accounting and finance functions, freelancers have tools like Payoneer, Freshbooks, and up & coming startups like Formations and Stoovo.
Bucket 3: Benefits
While 53% say they feel more secure as independents than at a traditional job, lack of benefits and expensive healthcare is a common struggle. Yet rising startup indipop can save independent’s 40% or more on premiums, amounting to over $7000 annually.
According to founder Melissa Blatt, “I couldn’t afford healthcare when I left the corporate world to go out on my own, I knew I wasn’t alone. I discovered healthshares, although not a mainstream option, was a different approach to managing my healthcare needs. I created indipop to provide this Independent Population of self-employed, fair medical pricing, open networks and concierge care by curating the best plans with unique features and helping guide our members to the right fit.”
5: Learn from what’s been tried.
Why nationalize a bill that 58% of California already rejected?
Next week we’ll hear from the freelancers themselves. Stay tuned!