But while the unemployment rate should fall as the economy picks up this spring, the recent recession has accelerated a long-term trend toward a "free agent economy," one increasingly dominated not by traditional employers and jobs, but by independent contractors.
While I think this is a good thing, I'm not sure the Obama administration does, which is why it's ironic that their policies are turning more and more of us into free agents.
America has always been a nation of sole proprietors – think the colonial butcher and baker – but these days, the lifestyle is back. An early 2009 survey from Kelly Services found that 26% of Americans consider themselves "free agents," up from 19% just three years ago. While you can blame the economy for part of the surge (laid-off people often become "consultants"), this is a long-term trend with many positive aspects.
Susan Walsh, AP
President Barack Obama talks about jobs in a speech on Tuesday.
Second, self-employment makes the economy more efficient.
Consider the case of Amanda Steinberg, who owns a Web site consultancy called Soapbxx. Soapbxx has no W-2 employees (i.e., people on the payroll). Instead, her entire team consists of long-term freelancers. Everyone works from home. All have other gigs. Some of her contractors live overseas and run their own companies. Those who don't have health insurance through other sources get it through the New York-based Freelancers Union.
Steinberg guarantees roughly 20 to 30 hours of work per week for her core team of five people. When she's swamped, she can grow to 20 people. And "in months where it's really tight, we can shrink down to be really tiny," she says.
This worst-case scenario happened in early 2009. For two months, Soapbxx had no income. Normally, Steinberg would need $18,000 per month to pay her contractors, but she warned them that she couldn't make their minimum. She squeaked by on $6,000 per month, focused on sales, and by March, ramped up to $20,000 in contract payments.
If people had been on a payroll, she would have either needed a cash-flow loan – which few lenders offered at the height of the credit crunch – or she would have needed to lay people off. The flexibility of using freelancers kept her business running.
But while this works for Steinberg and many others, I don't think this is Obama's vision for the recovered economy. His proposals tend to involve construction jobs or payroll tax credits, which imply more traditional employment situations.
So it's ironic that Obama's policies may be speeding up the free agent trend.
Over the past few months, I've interviewed many business owners who are contemplating adding head count. One thing holding them back, though, is uncertainty over health care.
Even those who offer insurance fear their policies won't pass muster, and they'll face new costs. Hiring people is expensive. If you have a payroll, you have to meet it. So in tight times, if you foresee new costs, it's easier to wait. If you need to meet rising demand, you contract with free agents if you can, since independent contractors generally fund their own benefits.
I doubt this is Obama's intention, but anything that raises the cost of employing someone will make employers less likely to hire, and more likely to seek the flexible talent solution that our wired economy makes possible.
And so the ranks of free agents will grow. The smart people in Washington should be able to figure that out.
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Laura Vanderkam is a New York-based writer and author of "Grindhopping" and the forthcoming "168 Hours."
