The insecurity of freelance work

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The insecurity of freelance work


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THE decline of the conventional job has been much heralded in recent years. It is now nearly axiomatic that people will work for a range of employers in a variety of roles over their lifetimes, with a much more flexible schedule than in the past. Opinion is still divided over whether this change is a cause for concern or a chance for workers to be liberated from the rut of office life.

Is the shift really happening? Some figures from the Bureau of Labour Statistics (BLS), released on June 7th, showed that only 10.1% of American workers were in “alternative employment” last year, a lower proportion than the 10.7% recorded in 2005. In contrast, a study of the British economy by the Institute for Fiscal Studies (IFS) shows that the self-employed sector has been growing, with the number of self-employed sole traders rising by 25% between 2007-08 and 2015-16.

These two measures are different. But getting a good statistical fix is not easy when the jobs are hard to define. The ecology of the alternative-employment market has many species. At the top end are independent consultants with six-figure salaries and tax advantages from their self-employed status; at the bottom are cleaners on the minimum wage working for an agency. Some people will be on “zero hours” contracts where they are unsure of their income from week to week. Then there are jobs in the “gig economy”—people connected to work via websites, such as freelancers labelling photos to help artificial-intelligence programs. Plenty of people use the gig economy to top up income, rather than relying on it.

The best placed are skilled professionals and artisans whose work is in demand from a wide range of customers. But many people will be dependent on a single client, which makes them vulnerable to any change in their circumstances. An old friend of Bartleby has a rolling contract to provide tech support to a big firm. The money is good but there is no paid holiday, sick pay or pension, and the contract can be ended with a month’s notice.

The IFS figures show that, although the number of self-employed traders has increased since 2007-08, their aggregate turnover dropped by 19% and their average profits fell by 23% in real terms over the same period. The eight years in question, which included the Great Recession, were thus much worse for self-employed Britons than for conventionally employed people, whose real earnings fell by 6%. One explanation may be that a lot of self-employed work comes from firms “contracting out” tasks in busy periods. When the economy stutters, they have less need for help.

As for the gig economy, it actually seems to be quite a small part of the alternative-employment sector. Far more people work in construction or business services than drive cars for Uber. And gig-economy workers are not a homogenous group. In her book, “Gigged: The Gig Economy, the End of the Job and the Future of Work”, Sarah Kessler tells the stories of several workers. One, Curtis Larson, a computer programmer, prospered because of his skills—he eventually took a full-time job, at SpaceX, Elon Musk’s rocket firm. But others found the pay low and the benefits poor. As Ms Kessler writes: “It’s easier than ever to get work done without hiring someone as an employee. But the growing group of non-traditional workers that results has no access to labour protections or safety nets provided by law to employees.”

Some gig-economy workers have tried to organise their colleagues into the equivalent of trade unions in America. But it is a difficult task. Gig employees do not gather in a single place where they can be recruited. It took a long fight for a British plumber to win his case this week before the Supreme Court to be classed as a “worker” with benefits rather than self-employed.

The most vulnerable employees seem to be those classed as “contingent workers”—3.8% of the American workforce, according to the BLS. These temporary workers can be viewed as a “reserve army” of labour that employers can use to hold down wages. (This might explain the sluggish growth of real earnings in America of late; but that argument holds water only if the reserve army is growing over time, and the BLS data cast doubt on that.)

Such workers are more likely to be under 25 and less likely to have health insurance than those in regular employment; 55% of them would prefer a permanent job. Insecurity makes it difficult for such workers to save for home ownership or even to get married. Alternative employment may be a trendy concept, but some of the alternatives turn out to be not that great for ordinary workers.



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