b&b 216: 2020 Is the year of the freelancer – but is that a good thing?
Music Featured in This Episode:
Pamela: I feel like that so much about personal finance is based around personal responsibility. And what I mean by that is that people will say, ‘oh the reason why you don’t have more money or the reason why you don’t have more savings is because you don’t work hard enough it’s because you spend more money than you save’. It’s all from the individual when really, when we’re able to understand and examine all of this systemic stuff that goes on and leads to all of this and leads to having, it take 228 years for the average black family to catch up to the wealth of a white family for instance. To have, you know, black wealth going down to potentially zero by the year 2053. It’s not because somebody bought too many coffees, it’s not because somebody spent money on a big TV or whatever it is, it’s because of policy, it’s because of systemic stuff. It’s because of culture and media that have kept us in this bootstrap society.
Dyalekt: Yeah, whenever anybody tells you that it’s because of you, they’re trying to gaslight. Remember, yo, if the banks are too big to fail then you and your family are definitely too big to fail.
Pamela: Speaking of systems and how crazy they’ve gotten, 2020 is the year of the freelancer. The Freelancers Union, in 2016, put out a study that determined that by the year 2020 they estimated that 40% of Americans would be freelancing. It was a positive study, it was a positive stat. It was something that was meant to encourage people to start working for themselves. But we wanted question that a little bit. 2020 is the year the freelancer but is that a good thing? Because we have also seen in the last four or five years the rise of the gig economy and the rise of a lot of companies who are making and worth billions of dollars doing that on the backs of people who should not be considered freelancers. Doing it on the backs of people who should have more employee rights who shouldn’t have to take care of some of the expenses that you do have to take care of as a freelancer. That line between freelancer and an employee has gotten so blurry and so many corporations, and not just Uber and Lyft. I’m talking about Google, I’m talking about IBM. I’m talking about big corporations. I’m talking about every single news publication and blog that exists right now, exists because of freelancers
Dyalekt: Yeah, you know, we’re also talking about people like
Mary Kay because you know, it feels like a lot of these companies that are
creating gig economy opportunities are really kind of like MLMs, like
multi-level marketing companies. And what I mean by that is instead of doing
the work of building a business they want workers to do it. They want you to be
vaguely associated with the company and make them a bunch of money, but they
don’t even have to pay you health care.
Pamela: That’s right they just they just get to profit off your hustle essentially and so we want to talk about especially with I don’t know if you’ve been seeing this talk about California passing AB5. It is it’s basically a law that has made it stricter and more difficult for employees to classify people as freelancers if they’re working for them and what should be considered an employee capacity. The tough part is it’s become very controversial because companies solutions to these new laws have been to just fire their freelancers. So we are blaming the legislation instead of blaming the companies for not actually figuring out how to make this work and do the right thing.
Dyalekt: Unions are still out there kicking butt doing the best they can they are there’s some great unions out there, but the nature of work has changed so much yeah that unions aren’t really equipped for and it’s not even their fault.
Pamela: The glamour around being a freelancer and the Instagram culture around it. This idea of the glamour of working for yourself and you know Dyalekt mentioned MLM’s multi-level marketing companies and that is how they sell you right? They sell you on the fact that you can be your own boss, that you make your own hours, that you’re not working for anyone else but yourself. Take time off whenever you want the image of a freelancer that people have made so ubiquitous is this idea of like you with your laptop on a beach like sipping a Mai-Tai.
Pamela: I think this has led to people being taking advantage of by companies. I mean, we mentioned Uber and Lyft specifically because they’re one of the main reasons why a law like this needs to be in place.
Pamela: If you are a freelancer, a freelancer has a very
strict set of rules in terms of what the IRS considers a freelancer and it’s
really to protect the worker. It is the legal definition you have to protect
the worker and there is that checklist and I don’t even know them all but if
you talk to an account they will of all the different things that are required
for you to be considered a freelancer and not to be required to be taken as an
employee because it is very expensive for an employer to take on an employee,
but it is not as expensive for them and take on a freelancer.
Pamela: A freelancer should be free to work how they want, when they want, to deliver the product in whatever nature they feel is their professional level of work. So they can’t be told what to do. They can’t be told how to do it. They can be told when to work. They can’t be told what hours they should be available freelancers are only responsible for whatever the result or outcome is that the company that is hiring them is asking for.
Pamela: That’s one of the other benefits of being a freelancer is you can choose to your clients Uber and Lyft do not have the autonomy. Instacart who has been sued and has been involved in multiple lawsuits because Instacart was requiring you to choose four-hour shifts to sit in a parking lot but they also were only paying you if someone hired you to do the Instacart service so they weren’t paying you for those four hours.
Dyalekt: Imagine if they told people who work in Footlocker, this is your Footlocker, this is your business, we’re not gonna help you. Here are the shoes, sell them!
Pamela: So the thing about 20/20 being the year the freelancer in this rise of the gig economy is we’ve been sold this idea that it’s more glamorous, that you have more flexibility, all of these things but what have we sacrificed right? We want to go into that in particular at the beginning of 2020, because 40% of Americans, one out of two Americans, at least part of their income is being made through gig economy type work. All of a sudden you’re not only responsible for finding the work your responsible for filing your taxes a certain way. Your responsible for tracking your expenses, your responsible for potentially a higher risk for audit. There’s so many more things that you have to think about as a freelancer that you didn’t have to think about as an employee.
Pamela: Are you really getting the benefits of working for
yourself if you are just going from gig to gig to gig and having to piece
together this income instead of having income stability?
Pamela: You can brag about this rate that’s been the lowest as in years but more and more Americans are struggling to actually find income stability because of the gig economy and that’s where we are right now. 2020 being the year of the freelancer was meant to be a celebratory thing but I think we find ourselves having been manipulated by huge companies, by these huge startups, who have taken advantage of the fact that we do want more flexibility in our work. That we do want more time with our families. That we do want to have a work-life balance. Really what they’re doing is making us work harder and harder for less and less and that’s where we are right now y’all.
Pamela: So today we are talking about the year of the freelancer and it’s based on a stat again that Freelancers Union put out that they estimated that by the year 2020, 40% of American workers would be freelancing and it was meant to be this amazing celebratory fact like let’s celebrate the freelancer! Let’s celebrate flexible work!
Pamela: Let’s talk about freelancing in general and the state of it. I really want to dig into the gig economy stuff. I think that there’s a lot of there’s a lot of government stuff that is trying to figure out how to navigate how this has evolved because clearly this has gotten out of hand.
Pamela: There is a level of stress with freelancing that I feel like we don’t talk about as much or enough, in that there is no income stability and there is false income stability when it comes to potentially being hired at a company for 45 hours a week for however long.
Pamela: One of the main benefits of being an employee and one
of the main difficulties of being a freelancer is the tax situation. You hear
about this all the time where a new freelancer is caught off guard by how much
they owe in tax at the end of the year. When you’re an employee your taxes are
automatically taken out of your paycheck. The other side of being a
freelance around the tax side is there are two taxes and this is called a FICA
tax or payroll tax is Medicare and Social Security tax. Together those taxes
make up 15.3% of the tax that you owe. When you’re an employee your employers
are responsible for paying half of that tax. So 7.65% of that is something that
your employer is responsible for paying and then you as an employee are responsible
for paying the other half. When you’re a freelancer, you’re responsible
for paying for all of it. So you are paying effectively 7.5 plus percent more
taxes by freelancing. So it’s not all the same right. When you are freelancing
for somebody full time, they don’t have to cover that tax for you and that’s
saving them a ton of money.
Pamela: I don’t know too much about California’s AB5 law that passed, it just happened and I’m not in California so it’s not something that’s kind of been in the air. But, I became aware of it because I saw Twitter thread of a writer who was saying that she just got fired from multiple publications that she was writing for because of AB5.
Dyalekt: I’ve seen mostly writers have been complaining about this yes.
Pamela: But the thing about ab5 is California basically rewrote the rules of what freelance aAnd gig work looks like in California and they made it more strict, so that companies could only allow someone to do a certain number of things before they had to classify them as employee. So for instance one publication could only hire freelance writer up for up to 35 different articles before they had to say, ‘okay, that means you should be hired as some kind of, you know, part-time full-time writer at that point’ because clearly they’re using you a lot right? The reaction that companies had instead of taking that on was, I’m sure you guessed it, they fired their freelance writers. What’s happening and what I’m seeing is freelance are blaming the legislation instead of blaming the companies for not stepping up.
Dyalekt: You’ll see that a lot of these are trying to circumvent strong unions so that they don’t have to even begin to deal with them.
Pamela: Hundreds of freelancers have been dropped by clients, like Vox media, boo Vox, really?!
Pamela: One of the things assemblywoman Lorena Gonzales, who wrote AB5, said that the law seeks to eliminate exploitive permalance positions and not legitimate freelance opportunities. Permalance is such a great term, it is open-ended, non-benefited contract positions.
Pamela: Photographers were also affected, again 35 seems to be the magic number here. Photographers can’t contribute to an album more than 35 times per year again without triggering the fact that you need to be hired as an employee. Personally, I think if you’re hiring someone more than 35 times in a year, you should hire them. You should make them a part-time employee. You should give them benefits.
Pamela: That is why being an employer is not something to take lightly. You’re taking on the responsibility of someone else’s livelihood and I say this as someone who, you know, Brunch and Budget has three employees now. It was one of those difficult decisions of because I’m a smaller business. I don’t have some of the same requirements a lot of companies do in terms of offering health insurance or 401k plans or things like that. But it was very important to me to be able to provide those well-being type of benefits to my employees before I hired someone.
Pamela: It’s impacting the creative economy because we take it. We say yeah, that’s fine. Don’t give me benefits. I’m just getting to do what I love. I’m getting to be a freelancer. I’m getting to be my own boss.
Dyalekt: Its indefensible how these companies, like Pam was saying it really softly, like really if you can’t afford to take care of your employees, don’t have employees. Be a sole proprietorship, do it yourself.
Dyalekt: The idea that you are doing what you love and yes you like work people have put all of this stuff on us like that’s something separate and I think that’s creative people are very used to people devaluing things about being like, but you like doing it. Yeah and not realizing that there needs to be both. Yeah, I should like doing what I’m doing because I’ll be better at it and I should be fairly compensated for it.
Pamela: So we are talking about 20/20 being the year of the
freelancer particularly with California’s ab5 law passing and making it more
strict and more difficult for companies to basically just hire freelancers
because they’re too cheap. You’re hired by company for the bulk of your hours
40 to 45 hours you’re essentially a full-time worker but the company has
decided to hire you in a contract non-benefited position throughout that.
Pamela: The person who wrote this article is David Wagner. And it’s something where they talk to some freelancers and again, like I say all of this, you know, as someone who isn’t in a position to be aubject to this instability of income right? I’m not that kind of freelancer. I’m not in a situation where I have to wonder where the next gig is coming next month, and I know there’s a lot of creatives and a lot of freelancers are in that situation and a lot of creatives in a lot of freelancers also rely on companies like Uber and Lyft and Postmates and Instacart and all of these gig economy things to be able to fund their passion.
Dyalekt: Well, and those of you who are working for one of these companies or another company that does some harmful stuff, don’t be we’re not shaming you. Remember these institutions take advantage of us and we have to do what we need to, to make sure that we take advantage of them to take control and take care of ourselves.
Pamela: Laws like AB5 are going to make it much easier for
you, ultimately, to be able to do that and to be treated fairly as an employee
and to be treated fairly as a worker. Because here is what uber is saying about
AB5, Uber’s legal team has said that it does not believed AB5 applies to their
drivers because the company does not consider drivers a core part of their
business. Uber does not consider drivers a core part of their business what the
fuck kind of logic did some lawyer tell them to say for them to be able to
confidently say that shit to us?
Pamela: So as we think about 2020, as we think about this new year and this new decade right? As we think about it being a freelancer, what kind of work you want to do in the next decade?
Dyalekt: There’s nothing wrong with starting a company that
goes viral and goes global and becomes this big thing. But think about the people
who are going to do the legwork. Think about your place right now, where you’re
at, and how you want to treat them. I implore you not to start a business if
you’re not prepared to treat your workers like your partners.