If you run a business, you’re probably used to the people you meet at parties saying that you must be a big risk taker or confessing that they could never do what you do because they need a steady paycheck or health insurance…perhaps making you wonder if they think you have a miraculous ability to subsist on air alone.
But why is self-employment seen as being such an edgy thing to do in our culture, given our long entrepreneurial tradition? Before corporate employment really took hold, being self–employed was barely noteworthy because it was so common.
I’ve been curious about this because every push at getting more Americans back to work seems to focus on “creating” jobs. Few policymakers ever bring up the idea of getting people back to work in their own businesses.
To some extent, I think that’s because many of the big, powerful organizations in our society benefit from our thinking that “steady,” W-2 employment is the best, most secure option for all. If workers believe that they have safety in corporate and government jobs, then the most talented, hard working people will want to compete for them. Meanwhile, these employers will be able to keep wages where they want while demanding more and more of workers. The head honchos can’t be unaware that people who rely exclusively on income from a traditional job to survive will do almost anything to get and keep that gig and put up with a lot. If workers can’t get a full-time job, they’ll willingly accept surrogates like a part-time arrangement with no benefits, with the usually futile hope that their loyalty will someday bring them more hours.
Punch Clock (Photo credit: Steve Snodgrass)
At the same time, workers who maintain the collective illusion that traditional jobs are steadier than self employment are the ideal consumers. When we have the false sense of security that our paychecks will continue indefinitely, we feel more comfortable running up credit card debt for purchases at the mall, springing for a heftier car loan or buying a bigger house. We “know” we can pay off these purchases out of future paychecks–never mind that there’s no guarantee that a corporate merger or wave of downsizing will not put us out of a job tomorrow. People who are starting or growing a business know that nothing is certain about their cash flow, so, if they want to stay in business, they start to think differently about consumer purchases. Their economic survival depends on avoiding an endless cycle of consumer debt.
I realized how much my own attitude toward buying stuff has changed since I started my own business when I recently brought my four-year-old son to the food court in a New Jersey mall, near our home. To my surprise, he seemed dazzled by the place, especially all of the little stands in the food court. I realized that it was probably the first time he had been to a mall. It wasn’t that I made a high-minded declaration one day that I would never again go to one. I just gradually started to feel that by not buying a lot of the things marketed to me, I was, in essence, ensuring my freedom from having to take a job I didn’t want. There wasn’t any emotional pick-me-up I could get from an impulse purchase at a mall that was better than knowing I was in control of my own time and that no employer could force me to go on a business trip or attend a meeting at a time that I thought it was more important for me to be with my kids.
That isn’t how mass market retailers want you to feel.
As I thought about how my spending patterns changed, I also realized that in my self-employed life, I wanted to save more money than I felt compelled to do in my last corporate job. This change in mindset is not uncommon among the entrepreneurs I interview. They realize that having their own money at hand insulates them and their businesses from ups and downs in the economy. This attitude, too, works against the goals of giant retail chains.
Consumer spending is coming back a bit since the recession, but one thing that is holding it back is the fact that many people have become involuntary entrepreneurs. As employers replace full-time, permanent jobs with short-term positions for temps and other contingent workers, many would-be permanent employees are finding themselves in financial situations that are similar to mine. To stay in good shape financially, they have to pay more attention to how they spend and conserve their money than many American workers have been accustomed to doing.
It’s not really in the interests of political or big-business leaders to tell these folks that they may never get another full-time, permanent job with benefits and to encourage them to think of themselves as being self-employed for the long haul. The more these folks think like entrepreneurs, the less likely they will be to engage in the consumer spending patterns that our economy is built around and to use what they earn to ensure their own economic independence.
But it is in the interests of these workers to think of themselves as being in business for themselves. It will lead them to make different, more profitable decisions about the work they chose to do. Some people now employed in low-wage retail jobs with unpredictable hours might be better off in their own higher-end service business. Many people are not aware of how well paying personal-services businesses like walking dogs for busy professionals can be. And such ventures don’t require much startup capital. Even if these types of businesses can’t bring as much income as a part-time job for some, they can provide a nice supplement that give a worker more economic freedom than he or she has when getting by on the part-time income from a 29-hour a week retail job.
I don’t have any illusions that government programs are going to encourage more people to start one-person businesses any time soon. As Steve King, partner in Emergent Research, a firm that studies the independent workforce put it to me this week, “No one gets elected by saying, `We’ve expanded the number of freelancers.’ Self-employed people make things messy for government agencies that find it easier if every worker’s situation can be classified the same way. From the perspective of the IRS, for instance, it’s simpler to collect taxes from the paychecks of W2 workers than from freelancers, he explains. And big labor, geared toward protecting the rights of traditional workers, isn’t likely to promote freelancing as an alternative route to working with dignity. “A labor union can’t organize the self-employed,” King notes.
Where we’re likely to see more encouragement and help for the self-employed is from groups in the “alt-labor” movement, from organizations such as the Freelancers Union–which provide benefits like access to healthcare but don’t engage in collective bargaining on behalf of their members, he says. Since freelancers generally want to be, well, free to work the way they want, they’re unlikely to want a union group to negotiate their working hours or pay. Coworking spaces, where freelancers can work together in a shared office, can also be a source of support, providing structure to self-employed people who find they’re more productive if they travel to an office outside of their home to tackle their projects.
King says that recently, companies in the “sharing economy”–which brought us firms like airbnb and Uber–and that run online freelance marketplaces have been discussing how to make sure the people who sell goods and services through their platforms can survive economically and have access to needed services, like business insurance. “I think private industry is going to provide them–and government is not,” he says.
If these hubs can help independent workers get established and stay in business, it will be good news for the legions of Americans who are now effectively self-employed–and for our economy.