If there ever was a statistic that shows just how much the American workforce has changed in the last 60 years, this is it: Today, some 42 million Americans, or 30% of the nation's labor force, now make their living working independently -- that is, not tied to any one employer.
As striking, that percentage is expected to increase to 40% by the end of the decade, according to a report issued last week by Freelancers Union, a nonprofit advocacy organization.
That's a big shift from the reality (and the mindset) that many Americans once enjoyed. Whether their collars were blue or white, workers just a few decades ago could count on the likes of General Motors, Goodyear Tire & Rubber (GT), IBM (IBM), General Electric (GE) and a host of others to provide jobs for life as well as a stable retirement.
More Than a Few Downfalls
It doesn't take a keen observer to note that today's employment scene is much less staid. As technology has evolved, so, too, have attitudes toward work. For many, that has its benefits. Top among them: the ability to work how you want, when you want. But with the flexibility has come more than a few downfalls, as Freelancers Union's report shows.
The survey of some 3,000 freelancers across the country showed that 81% had little or no work. Further, 40% said they had trouble collecting wages from clients, and 39% had to either cut back or eliminate their health coverage.
As is the case with many traditional employees, the Great Recession has taken a grim toll on the nation's independent workforce. But lacking the safety net that workers on payroll enjoy, such as unemployment insurance and the ability to petition the Labor Department for past-due wages, independent workers are having a more difficult go of it.
"Wiped Out My Savings"
Jenny Troester, a self-employed graphics designer in Glenside, Pa., says last year was "brutal." Two-thirds of her business comes from small businesses, which have either folded or can no longer afford her services, says Troester, owner of Dreamwalker Productions. "Unfortunately, because of that, my business is suffering," she says, adding that last year was the first in 12 that it lost money.
As a result, she says, "I've basically wiped out my savings." Troester says she's had to rely on credit cards since she's unable to collect unemployment, and government assistance is limited to loans, which she's unlikely to qualify for given her tenuous financial situation.
What's needed to help Troester and the millions of others like her is a safety net, much like the one that exists for traditional workers, says Sara Horowitz, founder and executive director at Freelancers Union.
Unlike employees who get laid off and are eligible for unemployment benefits, Horowitz says, independent workers have had to rely on savings to muddle through, resulting in many of them depleting their nest eggs. That has left some to apply for food stamps or other forms of public assistance, she says, "which means the taxpayer ends up picking up the bill."
$6,000 in Lost Wages on Average
Horowitz says it would be much more efficient to have some form of unemployment protection, adding that independent workers in such circumstances may have not found themselves in such straits if deadbeat clients had paid overdue wages.
Freelancers Union's survey showed members lost $6,000 on average and spent 17,000 hours as a group pursuing unpaid wages, absent the aid of any government agency to assist them. The only remedy open to independent workers to recoup lost wages is small-claims court, which caps losses at $6,000, Horowitz says.
Independent workers also face the burden of buying their own health insurance and other benefits, Horowitz says. With provisions contained within the recently passed health care reform bill still several years off, many freelancers are choosing health coverage not based on need but on what they can afford. Currently, individual policy premiums cost some 300% more than those purchased through a group plan.
Such problems are symptoms of the larger problem, which is that the nation's safety net needs updating. The current set of safeguards was first developed amid the New Deal, when protecting factory workers was the goal. Says Horowitz: "We need to build sustainable, innovative solutions in this economy."
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