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Week of 2.15.08

What is a Freelancer?

A freelancer is part of America's independent workforce. According to the Freelancers Union, this includes "the segment of the labor force working outside of standard employment arrangements as independent contractors, temporary workers, contract workers, leased workers, part-time workers, on-call workers, day laborers, and the self-employed."

Legally, there is no coherent definition that exists to distinguish whether a worker is an employee or an independent contractor. This is a problem that can lead to what's known as "worker misclassification" - when employers treat workers like independent contractors rather than full-time employees, thus allowing the company to avoid paying benefits or state and federal taxes. Worker misclassification can lead to workers being denied benefits they deserve.

"Permalancers" are essentially permanent freelancers —people who work full-time, with duties and hours very similar to regular employees. But because they are hired on a contract basis they do not have the perks and benefits of a full-time employee.

Freelance Facts & Figures

  • There are 42 million independent workers in the U.S. They constitute more than 30 percent of the U.S. workforce.

  • While the number of independent workers has risen by nearly 3 million workers over the last decade, their proportion of the workforce has remained steady at 31%.

  • Almost 40% of independent workers surveyed in 2006 lacked health insurance.

  • In 2006, one-third of independent workers were saving less than $1,000 for retirement, half were saving less than $10,000 and two-thirds were saving less than $30,000.

  • In 2006, both public and private employers spent a gross total of about $2.33 trillion for major employee benefit programs. This is up almost 50 percent from 2000.

  • Just 3% of independent workers surveyed in 2006 believe elected officials understand their issues, with only 10 percent saying the media helps educate the public about their fate.

The Independent Workforce (2005 Data)
The Independent Workforce
U.S. Government Accountability Office, 2006  
  • Independent contractors, in 2005, had an average age of 46. The majority were men (65%), had attended or graduated from college, and 8 out of 10 were white, non-Hispanic.

  • The Internal Revenue Service estimated the cost of worker misclassification to the nation in 2006. Their estimate in dollars for tax loss in Social Security tax, unemployment insurance tax, and income tax is $2.72 billion.

  • Union membership in the U.S. has steadily declined during the past 25 years. In 2006, the number of people belonging to unions fell by 326,000 to 15.4 million.

  • The Freelancers Union has more than 50,000 members nationwide. They offer health insurance to individuals and families in more than 30 states, and currently offer health insurance to over 15,000 New Yorkers.

  • In 2000, Microsoft agreed to pay $97 million to settle a class action lawsuit brought by thousands of workers employed as "permalancers."

  • Baby boomers in particular report that they would rather work part-time or on their own terms, rather than work full-time or retire.

Sources:

The Rockefeller Foundation: American Workers

Fiscal Policy Institute: The State of Working New York

Cornell University Study: The Cost of Worker Misclassification in New York State

United States Government Accountability Office: Employee Misclassification

Freelancers Union: The Rise of the Freelance Class; A New Constituency of Workers;
Building a Social Safety Net


Freelancers Union: Defining the Independent Workforce

New York City Comptroller: Economic Notes

Further Reading:

The Washington Times: Independent Workers in '08

The Nation: Permalancers, Unite!

TomPaine.com: The Shape of Unions to Come

The New York Times: Labor Union, Redefined, for Freelance Workers

StatesmanJournal.com: Union aids independent workers

The Atlanta Journal-Constitution

Marketplace: All the work, none of the benefits

Crain's New York