Are Freelancers Workers or Small Business Owners?

Posted by: Nick Leiber on August 20, 2009

This is a guest post by Richard Greenwald.

rich_greenwald.jpgAmerica doesn’t know what to make of the rise of the freelancer.

Today there are about 25 million freelancers in the U.S., according to Department of Labor reports. And a recent survey by market research firm Penn, Schoen & Berland Associates shows that about 20% of employed Americans work as freelancers or are self-employed. That’s one in five Americans.

Hundreds of news organizations have examined this trend. There is a vibrant advice industry offering workshops, Web sites, membership organizations, seminars, and books. This makes sense. If the freelancing community is so big, of course there is media interest and businesses catering to it.

Freelancing is a permanent condition of our economy, not a temporary condition caused by the most recent economic crisis. We shouldn’t be confused on this score. Freelancing has been on the rise for decades. Demographers have predicted it for some time. It hit the blue collar and manual labor sector early and hard in the 1970s and 1980s and recently moved to the higher paid areas of the white collar world. Data from the Census, Department of Labor, and the Small Business Administration demonstrates that there has been a steady and increasing rise in what I call the freelance economy. As American businesses moved from a task orientation to a project orientation, and as new technologies blurred time and space, companies could replace permanent workers with more highly skilled and flexible freelancers. And they did.

These new freelancers have been celebrated for their independence and entrepreneurial spirit. They are the living example of Adam Smith's economic actor. They live in the neoliberal land of our new economy, beholden to no one and rising only by pluck and luck. There is no safety net, most labor laws do not cover them, and they have no benefits--only opportunities. They survive and thrive by their own wits.

But freelancing is risky. The average freelancer takes no vacations, is scared of the future, and is always frantic to find the next gig. Freelancers do not balance work and family, instead they blend the two into a hybrid lifestyle. Much of the economic risk has been shifted to them and they feel it.

Are freelancers workers or bosses? Most media reports describe them as successful small business owners or struggling, exploited workers. But freelancers often find themselves in both situations on a regular basis. In fact, most experience periods of exploitation followed by periods of success.

Freelancers are hard to classify because they are redefining work in America. They work for clients, on site and off. They move from project to project, team to team, and team to solo. And sometimes they take full-time jobs for brief stints. While officially 25 million people within our workforce are defined as freelancers, many traditional full-time employees also exhibit cultural signs of freelancers.

For example, they have little loyalty to employers, prize freedom, and do not expect security (to last). Much as the transformations of the industrial era redefined class relationships, a new understanding of work is developing.

Freelance consciousness has blurred class lines to the point that many children of the middle class see themselves both as exploited worker and the boss simultaneously. How we resolve this contradiction will have a profound impact on all of our lives.

Richard Greenwald is a professor and the dean of graduate studies at Drew University in Madison, New Jersey. He is writing a book about the freelance economy and encourages you to post comments below or email him directly with your thoughts.

Reader Comments

Domenick Celentano

August 20, 2009 08:04 PM

Hi Richard, freelancers can be considered small businesses...there are a multitude of single person businesses that have existed for many years...

For example the electrical, plumbing and carpentry trades are populated by many one-person shops. As consumers we have used these independent mechanical contractors. So freelancers are no different... they focus in the other areas such as graphic design, IT, etc.

As independents they have to deal with sales, marketing, finance and operations. Freelancers may be consumed with as you say, "the next gig", but the local plumber has to be concerned with the next job... so I am not sure why freelancers are any different? Not sure how you are perceiving this.

Anyone who is in the professional service business is boss AND employee... you are serving your client and sometimes it resembles an employee.

If freelancers created co-ops, they would gain valuable resources, share expenses and pool talent... no different than a business with multiple skills.

Come to think if it.... Adjunct Professors are really freelancers... and most universities would not be able to run their curriculum without these freelancers... the budget would not support 100% full time faculty.

Domenick Celentano
Silberman College of Business
Fairleigh Dickinson University, Madison, NJ

David A. McKelvie

August 21, 2009 04:15 AM

Hi Richard,
Here in the UK, we have a very familiar picture to that of the US but I have to confess that, as a freelancer of some 20-odd years, I have to agree very much with Domenick's comments.

The major difference is that the current UK government, through their politics of greed and envy, have put in place draconian tax measures and resurected old measures in an attempt to try and stiffle or curtail freelancing. This is being aided and abetted by European legislation.

I hope the freelancers in the US do not suffer the same fate. Fortunately in the UK, we have organisations such as The Professional Contractors Group to help us fight our corner.

Regards
David A. McKelvie
Scotland, UK

Increase Website Traffic

August 21, 2009 11:07 AM

I'm glad to have visited your blog and good to know you! I find it interesting and informative.

Mary Kellner Coon (makingmagic)

August 21, 2009 01:33 PM

As a small business professional, college student at age 53, displaced homemaker and grandmother, I am also an author, web designer and have now joined the ranks of freelancer with data processor and copywriter. To keep it even more interesting I am helping to teach others to do the same because I have learned throughout life that even the struggling with economic woes have dreams or have stopped daring to dream.

What I have done in the past 5 years was began because of a need to work from home due to family obligations that would not allow me to take a 9 to 5 job. I was caring for my mother 24/7 because it was not my wish or hers to place her in a nursing facility. This allowed me extra time but still a need for cash flow. I first put myself back into college online to attain the degree that I had not been able to attain when younger. Through the classes I learned research using the internet and that evolved into researching for ways to earn a living using the internet.

I had written a few poems and short stories and found that I could try my hand at building a website for these using one of the free hosted sub-domains. Wow! I loved doing that. I was so hooked that I narrowed my research to building businesses on the internet and soon found many avenues opening. With the information highway feeding me so much information daily, I soon learned that there were others in need of the same.

My first venture in helping someone was with a 67 year-old woman who had been struggling to understand how to put together the information that a "guru" was telling her when she didn't comprehend more than turning on her computer to do emails. We spent weeks on the computer putting our heads together and teaching ourselves until we both had built a complete website from the ground up.

Then came the marketing and need for traffic. Again we did the same thing. We learned SEO, traffic sites and submitters, directories and even blogging and social sites.

My point in all this is that it does not matter what we consider ourselves or what others percieve us to be as freelancers, what matters is that we do fill a need. With more and more wanting and needing to create more income to enlarge the meager or non-existent incomes today, we are seeing more and more turning to the internet.

Not everyone is a writer. A craftsman that knows that by bringing his business into the Internet-age is imperative to keep up with the competition. They may require an IT to create their website and copywriters to feed copy and ads as necessary to increase their business and to keep their advertising fresh.

How others and we see ourselves is only important in what tax breaks we can take and how we use our time and energy to create our own incomes. I for one will cross those bridges as they appear in my road that I must travel and will be happier knowing that I was filling a need while helping others along the way.

Am I a worker or employee? I work at remaining employed only my place of business is at home doing what I love.

I think outside the box most of the time, so many may not agree with me, but the first book in my new series "Stop!!! The Truth Behind The Marketing Machine" will explain just exactly why I feel and think like I do.

Mary Kellner Coon (makingmagic)
http://urlmule.com/?2357

Ismail Syed

August 24, 2009 12:06 PM

I have a couple of questions for active freelancers or any expert on the matter. 1. Do freelancers have to pay taxes in the US for income generated through freelance activities?
2. Do freelancers have to register themselves as a small business?
I would greatly appreciate a response. Thanks.

Kim Clark

August 24, 2009 01:27 PM

Hi Richard,
Thank you for shedding some light on the life of Freelancers. I've been self-employed (and self-unemployed!)for over a dozen years now. I lost my corporate job in the mid-90s and found that many employers were not interested in bringing on a worker who had passed her 40th birthday.

Presenting myself as a savvy, hard & smart working professional with a proven ability to deliver results swayed no one, in either the for profit or not for profit arenas.

Several times I was invited in for multiple interviews and every time I was denied the job. Who could be so unlucky? Did they view me as a threat?

I believe that very many Freelancers can tell a similar story. Employment opportunities evaporated and so we had to create our own. What else could we do?

The transition was tough. I had a lot to learn and I am still learning.
Clients have never been easy to sign and they are even more elusive these days. Cash flow is a recurring issue.

I've had to supplement my income by working low end part time jobs that were run by bosses that "Nickled and Dimed" author Barbara Ehrenreich would recognize. In fact, a month ago I got fired from one of them! Jobs like that are a minefield of petty, arbitrary rules and demoralizing workplaces.

So do I dream of returning to the corporate sector? Most definitely not! I am more determined than ever to make a success out of my Freelance life.

I've refined my market niche and my message. I've done over my marketing materials. I've stepped up my game. I started the blog Freelance The Consultant's Diary, on Wordpress.

The universe has rewarded me with a nice self promotional opportunity: on Wednesday August 26 I will be one of four speakers at the seminar New Economy Boot Camp. The program is sponsored by a major law firm. Maybe I'll get that dream client!

Good luck with your research and your book. Also, Domenick Celantano's comments are spot on.

Kim

Ron Saballus

August 25, 2009 12:43 PM


In today’s economy, available jobs are almost nonexistent and difficult to find. It is apparent that the tried and true formulas for getting a job and providing for our families are not working. Perhaps it is time to pursue other options and to create your own job and become an entrepreneur.

Real security can only be realized if you can control you own destiny. If you want total freedom, unlimited income and wish to develop a “money tree”, you need to become an entrepreneur.

Ron saballus
www.ExploringEntrepreneurship.com

Giuseppe

August 27, 2009 05:51 PM

The conditionm of freelancer is well defined in the book: The World is Flat.
The most interesting oint from that book is: find your core comeptency and sell it anywhere they need it.

Governements, Corporations, etc are no longer definying the limits of your value contribution opportunity.

I sell my Rapid Economic Justifications competency online or in person to anybody that wants that kind of competency.
elance.com is the platform that enbales it.

Martin Varallo

August 27, 2009 08:59 PM

Hi Richard,

I realise (AGAIN) that us freelancers are on the outskirts of society. Even though we are 25 million strong we are still seen as a 'Condition'.
Fascinating, as for me and all I know it is a choice. A choice taken because we know that society isnt really under control. Society and sanity is the illusion we and every one else creates so we can go on from day to day. Being a freelancer, self employed, someone who goes it a lone, a free thinker, a whatever is a choice taken when one realises that what we are living is LIFE, there is no second chance and time to realise what is important to ones self. We are here now and we dont want someone telling us what is what when we feel and know something else to be true. Someone else telling us what decision to make for someone, or worse some entity else. To give your life, time, energy, commitment ... I watched my father give his entire life to a company that, at the end of his working career gave him... literally, just a watch!!!! How ironic. They didnt care so gave him something to remind him of time.. his time that he gave to them for...?

Am I going to deep... I feel not. This is the root of FREElancing... choices, no constraints. There are so many rules and most unwritten on how to live your life, reinforced by the media and societies pressures, but the Buddhists have known far longer than our so called advanced first world society that when one is in the present and not in ones head (Fantasising about what if and maybe) that the most important things are present. Freelancing allows one to give entirely oneself, creatively and physically precisely because we are not OWNED by a company. Thus creativity, individualism, and leaps in thought and creativity are nurtured and opened to all that is possible.

Ownership is a huge issue on the internet these days, but as we try to hold on tighter to the things that we think we have ownership over the faster they slip away. If you are creative you will always be creative... it is not just one idea you'll have. Give and you will receive... I'm not a Bible lover I have to admit, in fact I dont believe in God (But thats another post) but this really rings true in my experience. I have seen so many people be protective over what they feel is there creation, where it has consumed them and their time... meanwhile the whole world and everyone with it has moved on and lived there lives and forgotten about who came up with it. You will always be rewarded for creativity, you just have to watch your expectations!

I know from experience that EVERYONE is creative. There are so many pressures and judgements that not every one feels that they are and of course the confident creative ones can be become very eloquent at protecting there space, their 'creativity' presenting it as magical, gifted and not possible by mere mortals...

All I'm saying is hold on less, let go more and never stop playing, creating and supporting.

Articles like this are great but also show how freelancers a perceived by the majority. The most important thing is to sit well with yourself and your choices. If you dont, do something about it other wise you might end up at the end of your life with a watch and a lot of bitterness.

I love freelancing and being a freelancer it suits my personality and my view of what life should be.... mine to decide what to do with.

Cheers,
Martin

Ed Gandia

September 4, 2009 12:48 PM

This is an EXCELLENT post! You bring up some fascinating issues here.

One of the biggest challenges freelancers face is not an external one -- it's simply the way they feel about themselves. For instance, when I started out as a freelancer in 2004, I found that the prevailing attitude was one of "starving artist," of "survival."

That didn't make sense to me. I knew there had to be a way to make a great living as a freelancer...without having to work 70-hour weeks. For me, true success meant having a freelance business that allowed me to have the clients, projects, income and lifestyle I wanted. I'm happy to report that over the last 5 years, I've been able to make that happen.

It's not talent. It's not luck. Frankly, I attribute my success to having a different set of expectations. Rather than seeing myself as an "exploited worker" (as you mention in the post), I saw myself as a trusted partner to my clients -- someone that added great value while being dependable and trustworthy.

Freelancers who are constantly struggling would do well to change their attitudes toward themselves, their profession and the value they bring to the table. That's 80% of success in this business.

I'm not saying it's easy. But it's worth it!

Ed Gandia
Co-author "The Wealthy Freelancer: 12 Secrets to a Great Income and an Enviable Lifestyle" (Penguin, 2010)

Chuck Franks

December 25, 2009 10:06 AM

Great article. I'm doing some research for hyper focusing my niche and your article helped a great deal. It gave me insight into the thought processes of freelancers and what they care about. This will help me as currently my focus is on motivation. I just blogged about how people really want and value progress as a measurement to success. As I help my clients focus on their goals it's about helping them see progress as they work toward them. Your article will help me help others.
Thank you very much.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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