Thursday, April 2, 2009

Are we heading toward a freelance economy?

It's a product of economic downturns - companies shedding workers, employees becoming self-employed.

As the recession forces more businesses to save on the expense of workers and their benefits, more of those workers are piecing together their workweeks with contract jobs, often from the companies that fired them.

The shift can be found in most every industry, from manufacturing to technology to communications. There's even a label for it now: "homeshoring" - U.S. companies turning to U.S. freelancers to get work done.

Are we moving toward a project-to-project workforce?

"The economic meltdown is marking this trend," says Sara Horowitz, the founder of the 65,000-member Freelancers Union, based in New York. "This is the future. It is here."

With that future comes questions, she says. Freelancers have little in the way of safety nets. They often face higher health care costs. They receive no unemployment benefits when they get laid off.

Horowitz and New York City mayor Michael Bloomberg announced this month they will seek a new federal unemployment benefit for freelancers that includes a government-matched fund that freelancers could contribute toward. That fund could be drawn upon by individuals when work is scarce.

Horowitz says such a fund is more necessary than ever, given the increasing number of freelancers and the dire economic circumstances many confront.

"I think we're really going to start having a discussion about how we employ people," she says.

Charles Bamford isn't so sure. An author, consultant and associate professor at Queens University of Charlotte, he thinks he's seen this job cycle before.

"In the 1981-82-83 recession, as people got laid off, many of them turned toward starting their own businesses," he says. "A lot of businesses would lay people off and hire them for 20 hours."

Just like today.

"Oh yeah," Bamford says. "The moment the jobs economy turns up and they can get a full-time job, they're gone. They are no more of an entrepreneur than people who work in a bank."

But will businesses be hiring again like they were before - or will the cost savings of freelancers be too difficult to ignore?

"I think companies are going to turn on a dime when the economy changes," he says. "All you get with contractors is their time, their processes. With full-timers, you get a history and you get a development in which workers want to innovate for the company because it's their company.

"All you're getting with freelancers is their hands and minds in that one moment, that one task. They are only going to give you what you pay them to do. A lot of companies recognize this. They understand that nuance."

Perhaps the future holds something between. Will companies want that full-time energy and commitment from a select number of administrative and creative positions, but be more willing to pay contract workers for task-oriented jobs?

Tell us if your profession - or your job - has become part of the freelance economy.


Anonymous said...

I have been freelancing for 3 years and love it. The down side is the lack of benefits and the tax issues. And the fact that losing a client leaves you no unemployment payments. Having a spouse with company health insurance is a huge plus. But a point also to consider when talking about the companies that will want full-time employees back - maybe they will no longer go back. Maybe they will wonder why they should give their innovation and their loyalty to an employer who won't blink an eye to lay them off again if they need to. Or risk staying with a failing company when you know you contract for retention payments can be null and void. I think a lot of companies are going to be hard-pressed to find as many LOYAL employees as they have enjoyed in the past.

Anonymous said...

Strange. The company I work for has been not renewing contractors rather than laying off full-time employees. Then again, it's not publicly held and thus has no motive to appear "responsible" by getting rid of the people who actually know how to do things.

It is possible government mandates for full-time employees become so onerous that it's worth putting up with the drastic loss of productivity a contractor-only or contractor-majority workforce would incur, but we're nowhere near that yet. Give The One a couple of years to get there.

Anonymous said...

Another down side is that mortgage companies won't let you re-finance regardless of income if you're paid on a 1099. I understand their reasons, but it's still a downside if you've just started contracting/consulting.

Anonymous said...

I don't think freelance is a thing of the future. Companies want to own you
and work a bunch of hours for free on a salary that looks good till the
whole picture and reality sets in. They work you all of those hours and
people think they are important in there jobs with employees missing out on
home life. With so many management changes job security is never there.

The young generation doesn't see that till they are middle age and have gone
several marriages. When people start to see this and start working less
hours management is ready to start over again with the next generation while
the older generation feel used
like a whore.

MrDigital said...

Yes, the world is moving towards a freelance economy. Look at the success of ebay, elance, and sites where small companies and individuals both can bid on jobs/projects.

We are in a time where companies are looking to save money at every turn. Outsourcing is already widespread whether we want to accept it or not. Most companies are offshoring everything from customer service, to programming, to data entry, and even drafting patent applications.

We live in a digital world...where more people are working from home, and working independently.

The younger generation embraces this....don't get left behind!

James Thomas Shell said...

Where would a freelance economy leave people that are caught in the middle of their careers? Are we supposed to keep them permanently on the government dole. Is it realistic to believe that Average Joe or Jill have the ability to do this?

I know that in Catawba County, that out of the entire population, barely over 40% of the people work and the population is getting older. We cannot sustain that level of non-productivity.

We have to get back to manufacturing products. If we don't, we won't see a return to overall prosperity. Living in a world with relatively few haves versus a multitude of have-nots will lead to a very dangerous society.

We can manufacture products again. The machines of tomorrow are waiting to be invented. We must take the bureaucratic shackles off to get there though.

Hickory Hound -- Hickory Metro Unemployment Rate nears 16%

Anonymous said...

What company in America has never free lanced or issued contract work?

The newspaper industry is becoming obselete and all developing online business models so there will be no "paper" to the news. It will be news online only although its been that way for a decade anyway.

Advertisement online will be the only way to make their loot although its been that way a decade too.

Bricks and mortar and printing black ink on thin shaved pulpwood with tons of trucks using gas and tires and paper boys and girls delivering is coming to an end quickly.

Maybe the Jetsons and Orwell will finally become a reality and there will no no need for roads and bridges either as compact family spaceships will emiminate fossil fuel products too so they can be run on plutonium or hydrogen and Big Brother tvs will be installed in every home and place to observe listen and watch 24/7/365 creating millions of new govt spy jobs to keep the idiots in line.

All this New World Order clatter the Bush Crime Family and Kissenger neocons have touted to reorganize the planet into newly divided nations including America could be upcoming too.

Anonymous said...

This is stupid. Of course we're not moving to a freelance economy! Productivity would drop off a cliff if we did, not to mention how devestated our economy would be if fewer people had health coverage, steady income, and unemployment insurance. Freelance is for people that don't want to work very much and are dependent on someone with a real job.

Anonymous said...

I've been doing contract work for 3 years and it sucks! You never know from one day to the next if the project you are on is going to survive, and most don't, so your contract ends early. You are ALWAYS looking for a job, there are few benefits and I've worked tons of overtime without pay because I needed a job and there aren't many out there and I didn't want to risk losing the job I had. And don't even get me started on health insurance. No wonder North Carolina has the highest percentage of the population without health insurance. As a contractor, you are treated like pond scum, are given few tools to do your job, and are rarely given the opportunity to learn new skills. For me, it has been a terrible experience and in my opinion it just dumbs down the workforce.

Anonymous said...

No, we are heading toward a socialist economy where the rich are punished for their success and the poor are rewarded for not being responsible. Taking from one and giving to another without their permission is THEFT not re-distribution.
Also, freelance is just a fancy name for TEMPORARY WORK. I work for a large retailer that, over the last several years, has shifted its workforce to a majority of "temps." This has many benefits for the company but not the worker. These people never know what kind of hours they may get or how long they will be around. Sometimes they are not called back for months.
The majority of struggles in the middle class have been self -imposed. Although, if companies continue down this path and the government gets its way there will only be ONE CLASS.....POOR.

Anonymous said...

It's time for Tea Party, at the moon tower ofcourse.

james said...

"Freelance is for people that don't want to work very much and are dependent on someone with a real job."

And you're an idiot. There are entire fields of work that are SOLELY freelance. They might make a ton of money and get to do a job they enjoy and have more time off than salaried cubicle rats. But I'm sure they do it because they're lazy and have safety net spouses.

You're an idiot.