Hot Topic: Is America Turning into a Freelance Nation?

 

Whether you call them freelancers, “permalancers,” contractors, or long-term temps, an estimated one third of all American workers are carving out careers that don’t provide a weekly paycheck. The Freelancers Union, an organization that promotes the interests of independent workers, puts their number at 42 million. Rutgers Today asked William M. Rodgers, professor and chief economist at the Heldrich Center for Workplace Development at Rutgers’ Edward J. Bloustein School of Planning and Public Policy, to put those figures into context, and to share his thoughts on how the phenomenon is reshaping the nation’s employment landscape. A professor on the graduate faculty of Rutgers’ School of Management and Labor Relations, Rodgers is a specialist in the health of the U.S. labor market and its impact on American families.

Rutgers Today: Is the notion of working for one employer for 25 years or more gone forever? If so, what impact does that have on issues like morale, worker productivity, and loyalty to a company?

Rodgers:  Before the “Great Recession,” I would have said yes, that concept is a thing of the past.  The threat of job loss from outsourcing and restructuring had risen for all educational attainments and skills, weakening the historically strong employer-employee compact.  However, in the aftermath of the recession, we may see more Americans placing greater value on job security. The recession has caused many Americans to press the reset button on their career expectations.

Rutgers Today: What is the upside of a career as a freelancer in a job market that seems to be improving, but still remains relatively unstable? What are the benefits to the employer?

Rodgers:  One upside is the potential for flexibility. A word of caution, however:  Flexibility should not be interpreted as a lack of formality, such as not signing a contract, which is very common.

Rutgers Today: Aside from the uncertain cash flow and the lack of benefits, are there other disadvantages, either for the worker or for the employer?

Rodgers: A significant problem is that many freelancers and their clients don’t sign contracts, which leads to expending time and effort to recover payment for services. The Freelancers Union posts sample contracts that can be downloaded. Unfortunately, I have found in my research that even when you have a contract, it doesn’t guarantee you will be paid on time – or paid at all. A contract is a self-enforcing mechanism. When you start negotiations with a client, I suggest getting the details written down: when you will get the product to them, when they will pay you. If there’s no contract, you have to decide how credible the individual or firm is – assess the track record, ask for references.

If you don’t get paid on time, or if you don’t get the agreed-upon amount, you might try the following steps: 1) make personal requests via email, phone calls, or letters; 2) utilize a collection agency; or 3) take the client to small claims court. You might also pursue legal means such as litigation, arbitration, and mediation, all time-consuming and costly remedies.

The Freelancers Union asks members to report various clients who are not as faithful about meeting their payment obligations. You can check those postings on the union’s web site.

Rutgers Today: What adjustments should the market – in a general sense – make to respond to the new realities of a freelance-driven work world? Are we already seeing any of these changes?

Rodgers: First, there needs to be a new Bureau of Labor Statistics Contingent Work Survey. We don’t have a good estimate of the number of independent workers there are currently, because 2005 was the last year the Bureau of Labor Statistics conducted its survey.  Second, we need to provide independent workers with the same legal recourse for recovering unpaid wages as traditional workers possess.

Rutgers Today: Given all this, what advice do you have for college seniors who are about to hit the job market? How about the universities that are preparing to graduate the next generation of workers?

Rodgers:  Given the slow pace of the recovery, many college seniors may find themselves considering temporary work, which, in fact, might be a good option. If you’re there an opening emerges, you’ll be the first in line. However, if this does not occur (and each individual will have to decide what’s a reasonable length of time to wait), be prepared without hesitation to go elsewhere.  While doing a temp job, keep your professional networks active and search for permanent employment.  In today’s “free agent” society, you always need to know where your next job will be. Keep your job networks activated. To do this, you must be lifelong learners, independent thinkers, and responsible citizens.

For employers: As former Labor Secretary Robert Reich use to say, “Treat your employees as assets to be developed.”  Doing so will raise productivity and create loyalty. Most important, it will put you in a position to retain their most valuable employees when the labor market tightens and the baby boom cohort begins to retire in large numbers.

EBRU TV recently interviewed William Rodgers on the topic of contingent workers. You can watch the segment here.