TOPICS > Economy

Freelancers Struggle As Unemployment Worsens in U.S.

November 6, 2009 at 12:00 AM EDT
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As part of his Making Sen$e series on the financial crisis, Paul Solman looks at how freelancers are faring in the declining job market.

JUDY WOODRUFF: Now a second take on jobs, this one from our economics correspondent, Paul Solman, about the tough competition for work in the ever-growing freelance market.

It’s part of his ongoing reporting on Making Sen$e of financial news.

PAUL SOLMAN: At a job fair in New York this summer where there were few real jobs to be had, two experts explained the great employment squeeze

Sociologist Sudhir Venkatesh.

SUDHIR VENKATESH, Columbia University: A company can’t afford to give someone a job for 10 years and say that you can be part of our company for the rest of your life, because they don’t know where they are going to be in six months or a year.

PAUL SOLMAN: So, rather than commit to full-timers, said Professor Peter Cappelli, companies are switching to just-in-time employees.

PETER CAPPELLI, The Wharton School: It’s really applying some of the principles of manufacturing and supply chains to the question of how you get the right number of workers.

PAUL SOLMAN: Inventory management.

PETER CAPPELLI: Some of this is it. Yes, it is inventory management.

PAUL SOLMAN: But the inventory are humans.

PETER CAPPELLI: Yes. And the inventory are people.

PAUL SOLMAN: A growing inventory that Sara Horowitz has been organizing into the Freelancers Union in Brooklyn, N.Y., because in the global economy the safety net of old is no more for more and more Americans.

SARA HOROWITZ, founder, Freelancers Union: Some people used to think, you know, freelancer, it’s a euphemism for people unemployed. But, actually, it is really all of us. It’s people that work in technology, in finance, in real estate, in — domestic workers, graphic designers, artists. It’s across the whole economic spectrum. And it is in fact a third of the work force is now working like this.

PAUL SOLMAN: You can’t be serious. A third of the work force?

SARA HOROWITZ: Yes, according to the General Accounting Office, a third of the work force. And, really, what happens matters is, what is happening to the human beings who are doing these jobs, and how do we make it that they have a real and profound safety net?

Choosing an alternative

PAUL SOLMAN: Cecilia Smith used to teach full-time, tickling the aluminums at the top-flight Berklee College of Music. She gave up the security to perform and compose on her own.

CECILIA SMITH, musician: I have never wanted to do anything else, besides be a great musician.

PAUL SOLMAN: For artists, of course, freelancing has long been a way of life, made possible in part these days by the Internet, self-promotion made easy.

Melina Hammer runs her own metalworking studio.

MELINA HAMMER, metalworker: I create wearable pieces, theatrical in nature, breastplates, headdresses, gorgeous neck pieces, armlets, even to sort of clothing sort of style pieces.

PAUL SOLMAN: Hammer wears her originality on her sleeve, and her reasons to freelance as well.

MELINA HAMMER: I need to claim something that feels like, OK, this is me -- this is me, and I am able to feel proud of that.

PAUL SOLMAN: For writer Stephanie Schroeder, the appeal of freelancing may be even more obvious.

STEPHANIE SCHROEDER: I'm an anti-assimilationist, queer woman. How can I work in corporate America?

I can't wear the suit. I can't wear the suit anymore. That is my answer. I can't wear the suit. And I won't, you know?

PAUL SOLMAN: But, these days, even traditionalists see the upside of being free to yield their lances as they wish.

P.R. consultant Carlos Giron.

CARLOS GIRON: I would love to have, you know, medical benefits, insurance, dental, disability. All of that is wonderful. However, many times, I have actually given up terrific jobs with all those wonderful benefits simply because I wanted to, you know, change -- change the environment, try different things.

Creating security

PAUL SOLMAN: That's where the union comes in, providing health, dental, disability and life insurance for a modest price, a 401(k) retirement plan to smooth out the ups and downs of just-in-time work, advocacy to make the law more freelancer friendly.

The union's organizing campaign has signed up 175,000 members to create a new deal for the new insecurity of work.

SARA HOROWITZ: Freelancers are going through periods of time now where they have no money coming in, and they are going zero to 60 right on to welfare or food stamps, because they can't get unemployment. They are paying so much for health insurance, or then, some states, they can't even get it -- retirement, a dream.

PAUL SOLMAN: And, at this point in our group discussion, the happy face of freelancing started to sag.

Stagehand Michael Collins quit a job in the touring company of Sesame Street Live to freelance, live from New York.

MICHAEL COLLINS: The best thing about being a freelancer IS also the worst thing about being a freelancer. You are always going to have days off. You are always going to have days off.

CECILIA SMITH: I hate having to have been extremely successful and then having to make so much less. I think, psychologically, that is what is hardest for people. I hate making less money. I can't stand it.

PAUL SOLMAN: And then there is the virtual assurance of constant rejection.

MELINA HAMMER: When you are receiving no after no after no after no, there is, I think, for me at least, an incredible experience of questioning my path, questioning my worth, questioning, you know, what the hell am I going to do to take care of the debt in front of me or the expense in front of me?

I have thought about how close I am to that person who comes on to the subway performing and -- and asking for people's kindhearted generosity and -- and giving money.

PAUL SOLMAN: Moreover, there is the heightened competition that can come from, well, the desperation of those out there these days.

Stiffer competition

PAUL SOLMAN: So, it's more cutthroat out there?

MICHAEL COLLINS: It's definitely more cutthroat. You have got 5,000 stagehands in New Jersey and New York, and they are all fighting for the same position, and the same 10 guys are working all the time.

NANCY HALPERN, executive coach: We have been hearing in the news the recession is over, so we're wondering, whose recession is over?

PAUL SOLMAN: Nancy Halpern His an executive coach.

NANCY HALPERN: Now former colleagues don't want to necessarily share tips and client names and ideas, because they are afraid. There's not as much business to go around.

PAUL SOLMAN: The newly laid-off competition is driving down wages, says Internet consultant Chris Santini.

CHRIS SANTINI: They are undercutting everybody. They will go in, and they will cut prices, and one of my clients came back to me and said, "I'm dropping your rate 50 percent or I'm going with someone else."

Plus, my clients don't pay. I am owed probably 75 percent of my billings that are at all at least 90 days past due. Some are 300 days past due.

STEPHANIE SCHROEDER: I'm doing horribly. It's -- it's a bad scene. And all this talk about the recession being over, it is a depression, and it's not over. I'm on food stamps. I don't know where my next rent is going to come from. It's scary.

PAUL SOLMAN: How much do you make a year?

STEPHANIE SCHROEDER: Less than $10,000. This is what the Freelancers Union is about. This is what we are here talking about, is, we need a safety net. It's ridiculous.

PAUL SOLMAN: A safety net.

And, so, we end where we began, with Sara Horowitz, who created the Freelancers Union to help those who have no choice but to help themselves.

SARA HOROWITZ: As we moved with technology to a more just-in-time kind of economy, companies and employers really wanted shorter-term work. But it's now up to freelancers to start saying, in this democracy, what do we need if work is going to be so fluid?

PAUL SOLMAN: What do they need? What do they deserve? What are they likely to get?

JUDY WOODRUFF: Paul has more about how freelancers are faring in the recession on his business page. That's at