The face and structure of American labor is changing. Job security has become a myth, retirement benefits unreliable and subcontracting is becoming the new surge in trends in the workforce. You can call them “contractors,” “contract employees,” “part-timers,” “short-timers,” or “freelancers,” but the story is the same: no fringe benefits, no long-term expectations or guarantees for work, more likely to be engaged to perform on a project basis with nothing expected when the project is completed, and since these workers are often not carried on the company payroll, but provided by outside subcontractors or on a freelance basis, no unemployment insurance is required.
As companies have laid off millions of employees, and with 5.5 applicants for every job opening, the world of the freelance worker or the outsourced “task oriented vendor” has exploded; businesses can maximize their workflow flexibility – contracting when orders show down, ramping up when work justifies more bodies – and minimize their costs, with folks often working from home saving even more cash. But there are obvious consequences: “But when full-time jobs go away, so does the safety net that helps so many Americans survive dire economic times. The lack of a fail-safe for the nation's 42 million freelance workers, accounting for 30% of the U.S. workforce, has left them vulnerable to financial ruin, says a report released [April 13th] by Freelancers Union, a Brooklyn, N.Y.-based advocacy organization.” DailyFinance.com (April 13th). People will take what they can get, and with a bleak recovery projected for American jobs, a period of expected and sustained high levels of unemployment for years, American labor apparently doesn’t have the bargaining power to fight the trend.
Indeed, the survey by the Freelancers Union of a sample of 3,000 such “freelancers” showed that 80% were either unemployed or under-employed in 2009, a staggering number. Because these folks work occasionally, they are often excluded from the unemployment statistics provided by the Department of Labor. It’s bad enough between gigs, but sometimes, it’s even worse for those who actually worked: “Thirty-three percent of survey respondents said that at least once a client failed to pay for work performed last year, resulting in the loss of an average $6,000 in wages. Thirty-nine percent reported they had to cancel or cut back on health coverage. And 37% relied on savings, credit card debt and food stamps to get through lean periods.” DailyFinance.com. As a “recovery” takes place – whenever that may occur – how many employers will resort to freelancers and “contract employees” instead of bringing back the laid-off workers?
And it’s not like there are powerful unions able to buck the trend. A January 10, 2010 report from the Bureau of Labor Statistics (looking at 2009) notes that while unions are well-represented in the public/government sector (37.4%), the private sector is experiencing a contraction of union membership down to a meager 7.2% of all private workers. Blended, that means that 12.3% of workers, public and private, were unionized; compare that to a blended 20.1% back in 1983, when such numbers were first compiled. And as age-related trends suggest, union membership (overall) is on a steep downhill decline: “By age, the union membership rate was highest among workers 55 to 64 years old (16.6 percent). The lowest union membership rate occurred among those ages 16 to 24 (4.7 percent).” The above BLS report.
Because this “freelance” structure is increasingly the “way Americans work,” our laws and labor statistics need to be reformatted to reflect this new reality. Unemployment statistics that do not deal with part-timers and freelancers is becoming misleading and irrelevant. Not providing safety nets – comparable to unemployment contributions – and not having healthcare pooling is no longer a viable choice. Hopefully, the healthcare legislation that is being implemented will not be amended to eliminate this option. And we really do need to rethink Social Security and pension reform from the ground up for any number of reasons: 1. we want folks to retire to open up the job market to access the recent additions “fresh out of school.” 2. older workers often literally reach a stage in life when they really cannot work anymore for health reasons, and they need to be able to retire with dignity.
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