The Obama administration has made some efforts to curb worker misclassification, but it’s too early to tell if they will yield results. In March 2010, Labor Secretary Hilda Solis declared that $1.7 billion in discretionary funds and 10,957 full-time equivalent employees would be devoted to worker protection activities, including an employee
misclassification initiative. Worker misclassification is now considered a crime. Nevertheless, given the fuzzy nature of the DOL’s definitions—which, much like the official criteria for internships, are all too easy to ignore—it’s unlikely that employers will be compelled to comply.
Of course, not all freelancers are misclassified workers. Nor are all of them forced into their part-time positions by the evil corporateindustrial complex. There are, and always have been, workers who wouldn’t have it any other way. There is an undeniable appeal to being your own boss, working from home, coffee shops, or shared workspaces, and wearing jeans—or pajamas—Monday through Friday. Freelancing can also be economically prudent. Some people freelance to save money on child or elder care; others wish to spend more time on hobbies. Freelancing can simply be more lucrative and interesting than fulltime work. It’s possible that the proclivity
toward self-employment is generational: the mainstream media has been particularly fond of characterizing “Millennials” as the model freelancers (the image of a MacBook and a latte comes to mind.) And the old adage—do what you love, and never work another day in your life—still applies.
But where and when does the bohemian freelancer become the struggling precarious worker? As Guy Standing points out, to work on such uncertain terms becomes onerous. Many workers without steady jobs must take extra work (if they can find it) in addition to caring for children or elderly relatives, just to hedge against the ever-looming layoff. A parttime lifestyle, once so appealing, becomes an uncertain burden once debts and responsibilities pile up. And in the United States, where welfare is limited, all freelancers, except perhaps the independently wealthy, share serious social and economic concerns.
American workers can no longer rely on the ”safety net” established after the New Deal: it did not anticipate that large numbers of people would cease to rely on their hard-won contractual agreements with a single employer. Nor did it hedge against the possibility that employers—and insurance companies—would eventually put an end to
these benefits. According to a recent report by the Congressional Budget Office, workers with college degrees today are less likely to receive employer-sponsored health care than high school graduates in 1979.
And the lack of oversight in the freelance economy makes things harder. Freelance clients, for instance, don’t always pay on time—the FU estimates that its members, 40 percent of whom had had problems with overdue compensation, spent a collective 17,000 hours chasing after unpaid wages (as one freelance writer interviewed for this article put it, “I wake up every day and write dozens of polite e-mails.”) It’s difficult to find affordable individual insurance plans, and costs for all insurance premiums are rising fast. Filing taxes quarterly is difficult and often costly, and the tax rate for freelance workers is higher because they pay both the employer and employee portion of their Social Security. Then there’s the issue of child care, retirement funds, unemployment insurance, legal assistance…the list goes on.
Although there are some programs for the poor and unemployed, the not-quite-poor and the underemployed are on their own. As the Freelancers Union puts it, “Welcome to Middle-Class Poverty.”
An Entrepreneurial Solution
In the early nineties, a University of Buffalo law school graduate named Sara Horowitz was working as an attorney at what she describes as a “radical progressive” law firm. Shortly after starting her job, she found out that she had been misclassified as an independent worker instead of an employee and was excluded from receiving benefits like health care and retirement funds.
When Horowitz realized this was also happening to workers at the National Health and Human Services Employees Union, where she later took a job, she started to think about solutions for some of the problems that come with contingent and precarious work. A self-professed social entrepreneur in her early forties, more behind-the-scenes strategist than charismatic labor leader, Horowitz comes from a labor background. Her father was a labor lawyer, her grandfather was a vice president of the International Ladies’ Garment Workers’ Union, and she’d worked for unions her whole adult life. She has degrees from Cornell’s School of Industrial and Labor Relations and Harvard’s Kennedy School and is adamant about having “no problems” with traditional unions. But she envisions a future where the very structures that allow labor unions to function will no longer exist.
Horowitz began to expand upon her ideas about how to organize a dispersed workforce in the late nineties, and founded Working Today, an organization that aimed to help meet the needs of independent workers. She won fellowships with Echoing Green, a New Yorkbased nonprofit, and, most notably, the MacArthur Foundation, which awarded her a “Genius Grant” in 1999. In 2001, Working Today launched its Portable Benefits Network, which provided insurance at group rates to freelancers. The PBN later became the basis for the Freelancers Union.
Offering affordable insurance to freelancers, says Horowitz, served two functions: a social one, which was to provide a much-needed benefit, but also a promotional one: freelancers were drawn to the idea like bees to honey (incidentally, the FU’s logo is a beehive) and became more likely to take an active role in the organization itself. The use of the Internet and social networks to bring in members, says Horowitz, was key (after all, there is no hiring hall). So was appealing to their specific sensibilities. Horowitz noticed that freelancers were people who “wouldn’t respond well to opportunities to ‘meet’ with their elected official or co-members, but were more than happy to come and ‘network,’ because that’s what freelancers do.”
How to build a collective identity wasn’t clearcut either. “Many of our members manage twelve identities in their lives,” says Horowitz, referring to the part-time-writer-chef-mom-yoga instructor phenomenon. “Being a freelancer is just one of them. And we have to accommodate that.”
Anyone can join the union for free—that is, receive e-mails and some discounts. But to be eligible for health insurance you have to have earned $10,000 in the past six months or prove that you’ve worked twenty days in the past eight weeks. Not all professions are eligible: the list includes predominantly white-collar or “knowledge” workers, such as media, publishing, design, and tech as well as domestic and health care workers. Horowitz says that 55 percent of the FU’s members are under the age of forty, with an equal balance of men and women. Other benefits include dental, life, and disability insurance; a freelancers’ retirement plan (without matching contributions); and a registry for freelancers to advertise their services.
Until recently, the FU bought insurance for its members at group rates from other Blue Cross Blue Shield providers. But in 2009, it started its own insurance company, the
Freelancers Insurance Company. This organization, which is a fully owned for-profit subsidiary of the FU, is classified as a Certified B corporation, which means it must
prove itself to be environmentally and socially responsible. The company was started with $17 million in grants and loans from the Ford Foundation, NYC Health, the Rockefeller Foundation, and Prudential. Its board consists of creative and finance professionals, entrepreneurs, and nonprofit executives.
A traditional union that’s governed by the National Labor Relations Act is classified as a (C)5, which allows it to engage in collective bargaining. The FU, on the other hand, is a 501(C)4 organization, which means it is essentially a not-for-profit advocacy group. Horowitz doesn’t think that lack of collective bargaining or even the ability to strike affects the FU’s constituents or clout.
The union has formed federal and state political action committees, and its negotiations, at least in New York, have been successful: with Mayor Mike Bloomberg’s help, the FU helped pass reforms to the NYC Unincorporated Business Tax in 2009, which eliminated double-taxation (business and personal revenue tax) for freelancers earning less than $100,000 and gave a tax credit to those earning up to $150,000. The group also lobbied for independent workers rights to group together to buy health insurance and helped draft legislation for wage-and-hour protections for contingent workers.
Recently, Bloomberg supported a Freelancers Union-initiated plan to create a tax benefit for contributing to a common unemployment fund and pledged to help freelancers
find better working spaces in an attempt to “start leveling the playing field.” It will come as no surprise that the organization supported Bloomberg’s run for a third term in 2009. Horowitz personally campaigned for him.
Much like Bloomberg himself, the Freelancers Union shies away from ideological or political labels. Even though the defining sentiment of the Occupy Wall Street
movement—that middle-class Americans lead a precarious and needlessly unstable existence—is very much in line with the FU’s, and, in fact, is the reason many members sign up for the FU to begin with, the FU has not endorsed the OWS movement.
“I always thought of the FU as more entrepreneurial…than political” says Horowitz. “Today’s Left is not the Left we’re going to see in ten years. [Right now] new ideas aren’t allowed to flourish accordingly. The Left is very constrained intellectually.”
“We’re progressive, but not part of the Left,” she adds, referring to partisan political membership.
Horowitz speaks about the FU as an example of the “new mutualism,” which the FU defines as “the belief that political and economic life flourishes in social networks,
and that social change requires individuals to shift their thinking from ‘I’ to ‘we.’” The online craft shop Etsy, the growing popularity of community-supported agriculture
programs, and services like Zipcar are all examples of this “sharing” culture to which Horowitz subscribes. Buying insurance at lower rates for a self-selected group of freelancers is in line with this ethos. But how much of this “we” is truly inclusive? How much social change can come about through what are essentially buying clubs? Can “we” share with—or even acknowledge—”them”?
During the health care debate, Horowitz did not advocate for a single-payer system. Horowitz explained why a market-based approach was necessary at a panel in 2008:
There’s got to be a universal system, it’s got to be paid for... I believe it still has to work through a market, because I think that you’ve got to have competition. I think you have to have subsidized capital, that’s going to make it so that if you have social outcomes, and if it’s subsidized capital, the people who don’t achieve the social outcomes don’t get more capital.
Horowitz’s skepticism about a single-payer system makes sense: today, she finds herself playing the role of insurance executive (as well as many other roles). She readily admits that the FU’s benefits “aren’t for the poor” and adds that Medicare and Medicaid are necessary parts of the existing support system. But the FU’s remedy couldn’t come close to covering the rest of the country’s precarious population. Its solution is selective not only by profession but ultimately by social class.
When asked whether benefits schemes like the FU’s let corporations off the hook, Horowitz reacts with visible exasperation. “I don’t know where we ever found this faith that corporate America would provide for us,” she says, from behind a mess of papers and over the din of a noisy fan in her office. “You don’t have to like it, but if you believe this is what’s happening, then I don’t see another solution.”
Still, it’s hard not to notice there could be nothing more convenient to the corporate and governmental powers-that-be than a nonprofit that takes it upon itself to placate, insure, and temper the precarious middle-class.
The Freelancers Union’s members are for the most part people for whom things will probably improve if the economy picks up. Freelance jobs as defined by the FU’s membership requirements are not being eliminated or becoming obsolete: they’re being cut back and modified. These workers’ skills—graphic design, health services, computer technology, even yoga—will continue to be valued. Currently, the Freelancers Union provides a “safety net” for this small group of people, and it does so as successfully as it can.
The several dozen members or former members of the Freelancers Union interviewed for this story expressed relief that someone was “finally” paying attention to this
underrepresented constituency. Some members complained about a glitch in 2008 that left thousands of members uninsured while the union changed from a corporate
plan to its own Freelancers Insurance Company system. Their trust in the institution was shaken, but, they reported, there wasn’t anywhere else to turn. Besides, they expected very little of any insurance company.
It’s clear that the FU’s health care options and advocacy are, on a local level, highly valued and necessary. One member, via Twitter, even claimed that the organization
had saved her life: without its insurance, which was the only plan she could afford, she wouldn’t have gotten necessary care. The cheapest plan for individuals starts at
$200/month for high-deductible, “catastrophic” insurance and goes up to over $500 for a more comprehensive plan; for families, it ranges between $616 and $1557.
The prospect of the Freelancers Union’s bringing about nationwide policy changes is less convincing. It is unclear how its constituents—who really could be re-named
the Hipster Union—will become a political force strong enough to take on Washington and Wall Street if their so-called solidarity extends only to a small group of likeminded individualists.
The biggest systemic problem with freelancing is that economic uncertainty puts workers in a position where they are unable to turn down gigs. Workers who are worried
about paying the rent can’t realistically ask for more money or complain about lousy working conditions, because the stakes are too high. And taking their disputes to court is expensive and time-consuming. Unless they have supremely rare talents, their employer can easily find a replacement who will accept a less lucrative contract.
The only type of cooperative that can remedy this situation is one that mandates all workers in the profession to stop providing services until the employer adopts better practices (the other alternative is a penalty- and regulation-based approach, which would be difficult for Washington, and Wall Street, to digest).
Historically, these rights have only been won when workers made themselves seen, heard, and indispensable by holding strikes and standing united. It is conceivable that freelancers’ organizations could call for boycotts, but the Freelancers Union has done no such thing.
Finally, the FU rhetoric is constrained by an unquestioning belief that employers won’t be socially responsible in the near future and that government will not make the adequate changes to accommodate a mutated workforce quickly enough. While acknowledging some of the difficulties of freelancing, the Freelancers Union wholeheartedly endorses, even promotes, the lifestyle. This reasoning reinforces the “flexonomy” that employers like.
Is the only solution to join the Freelancers Union?