10 ms·

The Self-Employed Depression

25 points by reyu 17y ago

patio11 17y ago
At the Freelancers Union, Sara Horowitz is pushing for a new kind of unemployment protection fund that would cover the self-employed by helping them put away money that they could draw on in times of need. We could call it "savings". Then, in lean times, workers could tap their "savings" to make up for temporary shortfalls in income. To minimize the cost of administration for this innovative unemployment protection fund, it could be outsourced to private financial services organizations, hereafter called "banks", which would allow workers to access their "savings" on completion of a routine procedure, up to the limit of "savings" they had accumulated. "Savings" could be paid for by charging more on an hourly basis than full time employees received in salary for comparable work.
- m_eiman 17y ago
  Interesting concept, you might be onto something there. Additionally, if you're "underemployed" to the extent of not being able to pay your bills, I'd say it's about time you got UN-employed and started looking for those unemployment perks.
- Raphael 17y ago
  So how does one get away with charging more?
  - jjs 17y ago
    > So how does one get away with charging more? Do it when the Cheap Police aren't looking.
- ahoyhere 17y ago
  Since employed people have it, why shouldn't self-employed? Remember, the goal of society is not to punish the grasshopper and feel great and virtuous because you're an ant. The goal is to help every grasshopper become an ant, even if it's not in their nature. Because when grasshoppers starve, ants lose out too. Research shows that, among employed people, contributions to private retirement funds soar if the employer sets a default of 5% rather than shifting the burden to the employee of changing it from a baseline of 0%. People are just lazy. They don't opt in, but if you set it up for them, they don't opt out, either. So this kind of movement among employers wrt 401ks is good for everyone. Why not something for self-employed people? It is hard in the US to be self-employed and resist the urge to live month-to-month, to put aside enough money for your taxes and for savings, and so on. There's nothing in the system to make it easier. The whole system is biased against self-employed and small entrepreneurs. (Don't talk to me about tax breaks, this is about institutionally supported behaviors.) Americans have practically been trained from birth to be loose with money. There are govt incentives to go into debt -- by offering cheap money on loan to everybody who wants it, and of course easy credit has inflated the cost of goods and services. That all's what has kept the insane growth curve going, until now. You can't live in a society that tells people "Spend for the good of your country!" and then turn your back on them in disgust when they behave just as they were taught. Creating systems that help people be virtuous is a lot better than finger-wagging and feeling self-righteous.
  - roc 17y ago
    I've wondered the same for -ages-. Why isn't there a law that -requires- any employer who provides insurance to contribute the dollar amount they would put toward an employee's plan to -any- private plan the employee wishes? Currently you need a fairly generous employer to even offer you a cash 'bonus' for waiving company insurance and buying private. And even then, it's very rarely comparable to what the company would have paid on your behalf to the group plan. And why are 401ks tied to employers? Why can't employees choose which 401k provider they wish, regardless of what 'group plan' their employer might prefer? Or an easier alternative: why aren't employers required to offer matching into a private IRA if an employee waives 401k matching? We champion the power of markets in the US, but then we have all these communal, zero-choice, easily-corrupted corners (particularly surrounding employment) that are a huge drag on those same markets. 'Private' insurance and retirement in the US are tantamount to a 'company store'. Allowing the self-employed to pay unemployment insurance taxes is the same sort of thing in my mind. Why -not-? If they want to pay in what any employer would and their claims to benefits are the same as any other employee, why the hell not?
    - ahoyhere 17y ago
      Because we don't have a democratic capitalist system, we have a corporatist oligopoly. The federal govt was set up to be toothless -- and consequently lacking in responsibility -- on purpose. Then it overstepped those bounds in terms of power, but never in terms of responsibility. So you have a rate of federal income tax that is double, triple, or more that of your resident state, while getting almost nothing in return in the form of social services. (Medicare, Social Security/FICA are on top of the base federal income tax.) States will have a very hard time raising taxes because the fed govt already takes so much from their citizens, and tehy cannot overrule the federal govt tax rate. And, states are too interconnected by trade to be self-sufficient unto themselves, even with higher taxes. And the federal govt controls states without helping much - and what aid they give comes with control issues. The govt of the USA simply doesn't work in this century. It needs to be either more state-oriented, or more federalist, not this unholy half-breed. Consider the following: I'm an American citizen living abroad permanently. I have to pay federal income taxes even though I never intend to return. And better yet, I can't even vote in any election. Because I won't declare myself a resident of a state (and subject to those income taxes). Without paying state income tax, I cannot vote in the federal elections. Tell me that's not fucked up. (And no, I can't just declare myself a resident of a state that has no income tax. That doesn't work.)
- mynameishere 17y ago
  Well, you're missing the point of insurance. A hundred people might need to collectively save a million dollars, but acting independently they would need 10 million. With the self-employed the tragedy of the commons would kick in mighty fast though.
  - dualogy 17y ago
    We could call it "credit", which the "banks" would offer out of their collective pool of customer "savings", not all of which need to be available to all "savers" at once.
patio11 17y ago
Here's the summary: A woman with a masters degree is working as a yoga tutor, because the likes the lifestyle. It is hard to be a yoga tutor in today's economy. She owns an iPhone and pays $1,350 a month for her apartment. She is on public assistance now, and has ceased paying for the student loans which allowed her to get the master's degree. You're supposed to feel sorry for her. Articles like this probably turn Democrats into Republicans and turn Republicans into heart attack victims. (Since money is fungible, the food stamps are essentially paying her iPhone bill. Phew, I was worried for a second.)
- mahmud 17y ago
  What does political affiliation has to do with financial responsibility?
  - yummyfajitas 17y ago
    Democrats tend to view the poor/needy as people who were unlucky. Redistribution is justified as evening out the results of chance. Republicans (excluding the 'lefty christian' ones such as Bush [1]) tend to view the poor/needy as financially/etc irresponsible people. Redistribution is not justified, being mainly just a tax on responsibility. The example given in this article supports the Republican view more than the Democratic view. [1] I use 'lefty christian' to describe the ones who support both redistribution/social spending/etc, but differentiate themselves from Dems using christian nationalism.
- mikedouglas 17y ago
  As much as I'd wish to disagree with you, she reeked of myopic selfishness. One can only hope that, one day, she'll take a moment to look up from her iPhone to see the other occupants of the bread line. That the article had the gall to confuse "middle class poverty" (whatever that means) with a mid-life crisis, seems more appropriate for a satire piece in The Onion.
- Retric 17y ago
  Feuer’s ex-husband pays one-third of her rent. So she is even more of a leech. Anyway, qualifying for food stamps means your making no money. So she is getting one hell of a wake up call and I expect she will snap out of it. Teaching Yoga is the same type of crack for yuppies as opening a coffee shop. It seems like a great idea at the time, but the pay which limits it's long term appeal.
st3fan 17y ago
So anyone here having financial problems as a software dev freelancer? Do you feel the recession?
- bjplink 17y ago
  I've been a freelance web developer, off and on, since I graduated from college in 2003. My latest "freelance stint" has just recently passed the one year mark. In between I've had full-time jobs for people who eventually became steady freelance clients. So that's my background. Until recently, I had seen a huge drop off in requests for proposals and the few I did get were dead ends. In hindsight, this started happening during the early winter of last year. But in the last few months I've been picking up more odd jobs so on that front, at least in the short-term, things seems to be getting better. I haven't had to go out and actively seek new clients in quite awhile because I've put together a steady stable of recurring clients. Most of my client base is in the professional sports field and even in down economic times, teams still need to keep their websites up and running. So that's my "secret" to freelance success in a bad economy: have good clients in stable industries. Aside from freelance web dev work, I've also put together a decent network of sites earning money through advertising. At this time last year those sites were on pace to make a respectable amount of money each year. It wasn't a living wage but some months it came awfully damn close. Since the economy went to the dump I've seen a huge drop off in revenue from these sites. Some earn 50% less now than they did at this time last year. This income was, for lack of a better term, unnecessary for me to pay my bills and live so while it's a bummer I can live without it. This was a bit rambling but that's my experience so far with the poor economy as a freelance web developer.
  - villageidiot 17y ago
    ->"I've also put together a decent network of sites earning money through advertising". Care to let us in on any of your secrets?
olefoo 17y ago
I read the comments here and I was prepared for some tale of woe involving gross financial mismanagement and staggering levels of yuppie self-regard. Then I read the article; now I'm disgusted, with the attitudes on display here. I hate to break it to you guys but what's happening to her could happen to you. To put it in terms of a startup she got into a booming market and was moderately successful, when the economy started tanking she invested in improvements that would help her differentiate her offering in an increasingly competitive market. Then the customers went away. From reading the article it sounds like she works pretty hard and has to go to her customers unlike self important web developers (like me and thee) who can work from the comfort of our chairs without needing to get up if we don't want to. And as for the iphone, from my reading of the article it sounds like that was acquired when it represented less than a days net revenue. If you think it can't happen to you because you believe in Ayn Rand and program in Ruby; well guess what, it can; and if it comes down to holding on to your principles or feeding your kid, you will be filling out the form for food assistance and be glad it's there for you.
- xsmasher 17y ago
  To be fair, freelance yoga instructor sounds like a luxury service provider. Yacht salesmen are probably having a rough year too. She is not a general contractor or a self-important web developer.
  - olefoo 17y ago
    Yep. Although there is plenty of evidence that Yoga can be a very effective health exercise and can help prevent conditions that cost far more to fix than a few more mornings a week working on your body. It's not impossible that her services are systematically undervalued currently; after all in the real world markets are not at all rational.
- yummyfajitas 17y ago
  Let me put it in terms of a startup. She got into a market for the lifestyle (with relatively low pay) and now the customers went away. The solution? Look for a regular job and build up savings for your next venture (or to keep the regular job). Her initial reaction: "If you had a regular job and you didn’t have all that travel time, would you make better money in the end?" She gave a small laugh. "But I love what I do. So I try not to think about that." Fast forward: She has been auditioning to teach at new studios and e-mailing former clients to offer private lessons, and she added four hours a week of office work for Karma Kids Yoga.

25 points by reyu 17y ago

At the Freelancers Union, Sara Horowitz is pushing for a new kind of unemployment protection fund that would cover the self-employed by helping them put away money that they could draw on in times of need. We could call it "savings". Then, in lean times, workers could tap their "savings" to make up for temporary shortfalls in income. To minimize the cost of administration for this innovative unemployment protection fund, it could be outsourced to private financial services organizations, hereafter called "banks", which would allow workers to access their "savings" on completion of a routine procedure, up to the limit of "savings" they had accumulated. "Savings" could be paid for by charging more on an hourly basis than full time employees received in salary for comparable work.

m_eiman 17y ago
Interesting concept, you might be onto something there. Additionally, if you're "underemployed" to the extent of not being able to pay your bills, I'd say it's about time you got UN-employed and started looking for those unemployment perks.
Raphael 17y ago
So how does one get away with charging more?
- jjs 17y ago
  > So how does one get away with charging more? Do it when the Cheap Police aren't looking.
ahoyhere 17y ago
Since employed people have it, why shouldn't self-employed? Remember, the goal of society is not to punish the grasshopper and feel great and virtuous because you're an ant. The goal is to help every grasshopper become an ant, even if it's not in their nature. Because when grasshoppers starve, ants lose out too. Research shows that, among employed people, contributions to private retirement funds soar if the employer sets a default of 5% rather than shifting the burden to the employee of changing it from a baseline of 0%. People are just lazy. They don't opt in, but if you set it up for them, they don't opt out, either. So this kind of movement among employers wrt 401ks is good for everyone. Why not something for self-employed people? It is hard in the US to be self-employed and resist the urge to live month-to-month, to put aside enough money for your taxes and for savings, and so on. There's nothing in the system to make it easier. The whole system is biased against self-employed and small entrepreneurs. (Don't talk to me about tax breaks, this is about institutionally supported behaviors.) Americans have practically been trained from birth to be loose with money. There are govt incentives to go into debt -- by offering cheap money on loan to everybody who wants it, and of course easy credit has inflated the cost of goods and services. That all's what has kept the insane growth curve going, until now. You can't live in a society that tells people "Spend for the good of your country!" and then turn your back on them in disgust when they behave just as they were taught. Creating systems that help people be virtuous is a lot better than finger-wagging and feeling self-righteous.
- roc 17y ago
  I've wondered the same for -ages-. Why isn't there a law that -requires- any employer who provides insurance to contribute the dollar amount they would put toward an employee's plan to -any- private plan the employee wishes? Currently you need a fairly generous employer to even offer you a cash 'bonus' for waiving company insurance and buying private. And even then, it's very rarely comparable to what the company would have paid on your behalf to the group plan. And why are 401ks tied to employers? Why can't employees choose which 401k provider they wish, regardless of what 'group plan' their employer might prefer? Or an easier alternative: why aren't employers required to offer matching into a private IRA if an employee waives 401k matching? We champion the power of markets in the US, but then we have all these communal, zero-choice, easily-corrupted corners (particularly surrounding employment) that are a huge drag on those same markets. 'Private' insurance and retirement in the US are tantamount to a 'company store'. Allowing the self-employed to pay unemployment insurance taxes is the same sort of thing in my mind. Why -not-? If they want to pay in what any employer would and their claims to benefits are the same as any other employee, why the hell not?
  - ahoyhere 17y ago
    Because we don't have a democratic capitalist system, we have a corporatist oligopoly. The federal govt was set up to be toothless -- and consequently lacking in responsibility -- on purpose. Then it overstepped those bounds in terms of power, but never in terms of responsibility. So you have a rate of federal income tax that is double, triple, or more that of your resident state, while getting almost nothing in return in the form of social services. (Medicare, Social Security/FICA are on top of the base federal income tax.) States will have a very hard time raising taxes because the fed govt already takes so much from their citizens, and tehy cannot overrule the federal govt tax rate. And, states are too interconnected by trade to be self-sufficient unto themselves, even with higher taxes. And the federal govt controls states without helping much - and what aid they give comes with control issues. The govt of the USA simply doesn't work in this century. It needs to be either more state-oriented, or more federalist, not this unholy half-breed. Consider the following: I'm an American citizen living abroad permanently. I have to pay federal income taxes even though I never intend to return. And better yet, I can't even vote in any election. Because I won't declare myself a resident of a state (and subject to those income taxes). Without paying state income tax, I cannot vote in the federal elections. Tell me that's not fucked up. (And no, I can't just declare myself a resident of a state that has no income tax. That doesn't work.)
mynameishere 17y ago
Well, you're missing the point of insurance. A hundred people might need to collectively save a million dollars, but acting independently they would need 10 million. With the self-employed the tragedy of the commons would kick in mighty fast though.
- dualogy 17y ago
  We could call it "credit", which the "banks" would offer out of their collective pool of customer "savings", not all of which need to be available to all "savers" at once.

patio11 17y ago

Here's the summary: A woman with a masters degree is working as a yoga tutor, because the likes the lifestyle. It is hard to be a yoga tutor in today's economy. She owns an iPhone and pays $1,350 a month for her apartment. She is on public assistance now, and has ceased paying for the student loans which allowed her to get the master's degree. You're supposed to feel sorry for her. Articles like this probably turn Democrats into Republicans and turn Republicans into heart attack victims. (Since money is fungible, the food stamps are essentially paying her iPhone bill. Phew, I was worried for a second.)

mahmud 17y ago
What does political affiliation has to do with financial responsibility?
- yummyfajitas 17y ago
  Democrats tend to view the poor/needy as people who were unlucky. Redistribution is justified as evening out the results of chance. Republicans (excluding the 'lefty christian' ones such as Bush [1]) tend to view the poor/needy as financially/etc irresponsible people. Redistribution is not justified, being mainly just a tax on responsibility. The example given in this article supports the Republican view more than the Democratic view. [1] I use 'lefty christian' to describe the ones who support both redistribution/social spending/etc, but differentiate themselves from Dems using christian nationalism.
mikedouglas 17y ago
As much as I'd wish to disagree with you, she reeked of myopic selfishness. One can only hope that, one day, she'll take a moment to look up from her iPhone to see the other occupants of the bread line. That the article had the gall to confuse "middle class poverty" (whatever that means) with a mid-life crisis, seems more appropriate for a satire piece in The Onion.
Retric 17y ago
Feuer’s ex-husband pays one-third of her rent. So she is even more of a leech. Anyway, qualifying for food stamps means your making no money. So she is getting one hell of a wake up call and I expect she will snap out of it. Teaching Yoga is the same type of crack for yuppies as opening a coffee shop. It seems like a great idea at the time, but the pay which limits it's long term appeal.

st3fan 17y ago

So anyone here having financial problems as a software dev freelancer? Do you feel the recession?

bjplink 17y ago
I've been a freelance web developer, off and on, since I graduated from college in 2003. My latest "freelance stint" has just recently passed the one year mark. In between I've had full-time jobs for people who eventually became steady freelance clients. So that's my background. Until recently, I had seen a huge drop off in requests for proposals and the few I did get were dead ends. In hindsight, this started happening during the early winter of last year. But in the last few months I've been picking up more odd jobs so on that front, at least in the short-term, things seems to be getting better. I haven't had to go out and actively seek new clients in quite awhile because I've put together a steady stable of recurring clients. Most of my client base is in the professional sports field and even in down economic times, teams still need to keep their websites up and running. So that's my "secret" to freelance success in a bad economy: have good clients in stable industries. Aside from freelance web dev work, I've also put together a decent network of sites earning money through advertising. At this time last year those sites were on pace to make a respectable amount of money each year. It wasn't a living wage but some months it came awfully damn close. Since the economy went to the dump I've seen a huge drop off in revenue from these sites. Some earn 50% less now than they did at this time last year. This income was, for lack of a better term, unnecessary for me to pay my bills and live so while it's a bummer I can live without it. This was a bit rambling but that's my experience so far with the poor economy as a freelance web developer.
- villageidiot 17y ago
  ->"I've also put together a decent network of sites earning money through advertising". Care to let us in on any of your secrets?

olefoo 17y ago

I read the comments here and I was prepared for some tale of woe involving gross financial mismanagement and staggering levels of yuppie self-regard. Then I read the article; now I'm disgusted, with the attitudes on display here. I hate to break it to you guys but what's happening to her could happen to you. To put it in terms of a startup she got into a booming market and was moderately successful, when the economy started tanking she invested in improvements that would help her differentiate her offering in an increasingly competitive market. Then the customers went away. From reading the article it sounds like she works pretty hard and has to go to her customers unlike self important web developers (like me and thee) who can work from the comfort of our chairs without needing to get up if we don't want to. And as for the iphone, from my reading of the article it sounds like that was acquired when it represented less than a days net revenue. If you think it can't happen to you because you believe in Ayn Rand and program in Ruby; well guess what, it can; and if it comes down to holding on to your principles or feeding your kid, you will be filling out the form for food assistance and be glad it's there for you.

xsmasher 17y ago
To be fair, freelance yoga instructor sounds like a luxury service provider. Yacht salesmen are probably having a rough year too. She is not a general contractor or a self-important web developer.
- olefoo 17y ago
  Yep. Although there is plenty of evidence that Yoga can be a very effective health exercise and can help prevent conditions that cost far more to fix than a few more mornings a week working on your body. It's not impossible that her services are systematically undervalued currently; after all in the real world markets are not at all rational.
yummyfajitas 17y ago
Let me put it in terms of a startup. She got into a market for the lifestyle (with relatively low pay) and now the customers went away. The solution? Look for a regular job and build up savings for your next venture (or to keep the regular job). Her initial reaction: "If you had a regular job and you didn’t have all that travel time, would you make better money in the end?" She gave a small laugh. "But I love what I do. So I try not to think about that." Fast forward: She has been auditioning to teach at new studios and e-mailing former clients to offer private lessons, and she added four hours a week of office work for Karma Kids Yoga.