From The Washington Post, Lydia DePillis writes about the move towards more freelancing in the workforce. She identifies the shift for both the high and low end of the wage scale — companies that may be trying to circumvent labor laws and save on payroll taxes by engaging low-wage workers as independent contractors and professionals who have an entrepreneurial spirit and want to control the projects they take on and the hours they work. She writes:
“The shift toward an “on-demand economy,” as venture capitalists call it, is happening on both the high and the low ends of the wage scale — and there are a couple of ways to think about it.
The first is that employers are taking advantage of comparatively low-wage workers such as housekeepers and construction workers by illegally misclassifying them as independent contractors, leaving workers without the protections and benefits that come with being an employee. The Labor Department has been cracking down on this tactic, which also cheats the government out of payroll taxes. Some companies, such as the car-hailing app Uber and the cleaning “platform” Handy, are being sued by their own service providers for allegedly inappropriately classifying them as contractors when they don’t have anywhere near the amount of freedom that that’s supposed to entail.
The other way of thinking about the “on-demand economy” is that it liberates professionals to design their own schedules and set their own rates, enabling them to take on more clients and make more money. Take Thumbtack, which connects consumers with contractors who provide more premium services, such as a kitchen remodel, a wedding photo shoot or a personal training regimen. Its service providers were legitimately independent anyway — without Thumbtack, they would have spent more money and time finding business through Google ads or business cards on a bulletin board at the local food co-op.
And then there’s the vast middle ground: Traditional employees who could be legally transitioned into independent contractor status, with the help of a system to manage them all. That’s potentially the tectonic shift, as companies seek to pay workers only when they have the work, rather than keeping them on staff all year long.
“Whether you’re a small dress shop or Wal-Mart, you’re going to want to move from fixed cost to variable cost where ever you can,” says Work Market chief executive Stephen DeWitt. “Now you’ve got the opportunity to do that.”
Work Market has a few different ways to make money. Businesses can post occasional jobs, and Work Market takes 10 percent of the value of the transaction. If they manage a more substantial part of their business on the platform, businesses can pay a flat monthly fee. And if they want to use Work Market as a back end for their whole freelance workforce — as Yahoo! has been doing for its contract bloggers, for example — the company will design a custom system that takes care of scheduling, taxes and performance reviews….”