The prospect is appealing: work your own hours, be your own boss, choose your assignments. Who wouldn’t want that? But reports from Uber and Lyft drivers suggest that the glittering prospect is deceptive and that many drivers make roughly what fast-food workers make.
Here’s the truth: The gig economy is glorious only if the skill you are selling has great value, your business skills are sharp and you have the opportunity to use your business savvy.
Now well into senior citizen-hood (and still working), I have spent more than 60% of my professional life as an independent contractor, starting long before someone coined the term “gig economy.” I started as a freelance translator, then had other careers, returning to translation decades later. But the industry had changed, and bidding platforms have contractors scrambling to be the first with the lowest rate. There may be little or no personal contact, the client sets the terms of payment and rarely is there room for negotiation.
While some skills command higher remuneration — e.g., technical, management consulting, government contracts — this is not the case for many others, including teachers, writers and editors. And they never actually receive the full hourly rate. For example, if the client uses PayPal to compensate, the gig worker loses 2.9% or more in fees. Then the IRS must be paid. And who pays for health care? Depending on where one lives and family obligations, a freelancer could end up working 12 to 14 hours a day just to make ends meet. And usually the terms of payment are set by the client, which means waiting weeks or even months to get paid.
Most importantly: When you’re not working, you’re not making money. You need to line up assignments so that there is little or no downtime between them, which is a great way to generate stress.
Let’s be clear: The hiring party’s (legitimate) job is to get the most work for the least money. The prospect of having a near-full-time employee without paying benefits is enough to make any corporate executive salivate, but contractors with sufficient business savvy will not fall victim to the company’s need to keep costs low.
Successful freelancers learn — often the hard way, as I did — what they must do to survive. In order to thrive, my hourly rate must be at least double what I would earn in a permanent job. In addition to paying for my own benefits, I must allow for the cyclical or erratic nature of income. I must know how to prepare an effective invoice and how to collect from slow-paying clients. Then there are taxes: identifying and tracking deductions and handling estimated and year-end taxes. The body of regulations is byzantine (I use an accountant).
While some may not have the luxury of walking away from a burdensome assignment or an onerous arrangement, every freelancer can know his or her own value, and develop the business skills that makes gig work satisfying.
For all their talk of the value of human capital and work/life balance, many corporate executives are quick to divest themselves of the responsibility of providing for those who work for them. An independent contractor takes on that enormous burden and should have the means for shouldering it.
P.S. The prospect for permanent employees may be changing, if some companies have their way. Under the 996 work culture in China, employees are expected to work from 9 a.m. to 9 p.m., six days a week. Don’t we remember that this was life for factory and other workers before labor unions existed? Some coal miners never saw the light of day because they went into the mines before sunup, emerging only after sundown.
Can it be that all workers are the new slave class?
Mary Jane Wilkie works as an independent contractor in New York City. She wrote this for The Baltimore Sun.