Don't Ignore Those Non-Job-Creating Entrepreneurs

A woman at work in her home office Photograph by Getty Images

Rodric Hurdle-Bradford wants the presidential nominees to articulate how their policies will help freelancers such as him. Not that he doesn’t understand why they haven’t so far: Reinforcing the narrative of plucky entrepreneurs as crucial job creators is more palatable than acknowledging that many individuals working for themselves these days are more concerned with scraping by than staffing up. “The thought of a small [shop] in the neighborhood is a lot easier for a crowd to imagine than a freelancer working in their home office at 2 a.m. during a midweek deadline,” says Hurdle-Bradford, 32, who has been working as a freelance copywriter out of his Scottsdale, Ariz., bungalow for about a decade.

Employers large and small get plenty of attention from the nominees. So do employees. But solopreneurs are absent from the campaign rhetoric. That’s troubling because the face of U.S. employment has changed dramatically over the past generation. The number of self-employed Americans has exploded, from 1.3 million in 2001 to 10.6 million today, according to an estimate from the consulting group Economic Modeling Specialists International. A Kauffman Foundation study (PDF) released last year and entitled Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation found self-employment in 2010 at its highest level in 16 years. The report’s authors, E.J. Reedy and Robert E. Litan, worried that many of those flying solo had no employees or plans to hire.

Welcome to the Gig Economy, where more Americans are neither worker nor boss—but simultaneously both—as many have previously chronicled. Yet the national political campaigns concentrate their rhetoric on employers, particularly small ones, as they vow to improve conditions so more workers can be hired. Amid chants of “we built it” at the Republican National Convention, Paul Ryan spoke of small businesses as the cornerstone of the American economy, identifying them as “all the corner shops in our towns and cities, the restaurants, cleaners, gyms, hair salons, hardware stores.” President Obama has done no better at recognizing solo acts. During the Democratic National Convention, he focused on small manufacturers, emphasizing the importance of infrastructure and his administration’s efforts to get them to hire.

The self-employed fall through cracks in more meaningful ways, too, which can make it hard for them to survive, let alone hire. They’re not covered by labor laws, aren’t eligible for workers’ compensation, and can’t write off their contributions to benefits such as health care or retirement plans the way traditional employers can. When employers write off these expenses, they also reduce their payroll withholding taxes—a double benefit that freelancers are denied. In addition, freelancers have no recourse to the U.S. Department of Labor to resolve wage disputes when clients don’t pay. Instead they have to turn to small claims court. Unpaid wages for freelancers in the U.S. might total as much as $4.7 billion dollars, which works out to an average of $4,600 per freelancer, according to this estimate by advocacy group Freelancers Union.

Completely unacknowledged by the nominees is a further troubling fact: The self-employed shoulder more risk than employees or employers do, and the risk is greater than ever because they are operating in a economic system designed for an earlier era, as I described in a commentary last year. Yale political scientist Jacob Hacker identified why this matters so much in his prescient 2006 book, The Great Risk Shift, writing that “more and more economic risk has been offloaded by government and corporations onto the increasingly fragile balance sheets of … families.”

Again, these disadvantages aren’t new. The National Association for the Self-Employed and Freelancers Union have each called for political reforms in the areas I describe above, but they haven’t gotten enough traction. Because the self-employed make up an increasingly important part of our economy, the presidential nominees shouldn’t ignore them. “Not surprisingly, the [political] debate [on small business] overlooked one-person small businesses because they do not have a voice in Washington,” says Hurdle-Bradford. They get lost in our rush to simplify Americans either as employers or employees. In today’s economy, Obama and Romney need to articulate a plan that encompasses those who are risking the most.

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