WASHINGTON — The US independent workforce is expected to rise rapidly in the next five years, which is why some are calling for new state and federal regulations to catch up with the dramatic shift in the labor market.
- Report: 41 million Americans are independent workers
- Increasingly dealing with issues of taxes, health care
- MBO Partners calls for regulatory changes
Recent research conducted by MBO Partners found 41 million American workers are characterized as independent workers, often described as contractors, freelancers, consultants and the self-employed. That number is only expected to rise almost 3 percent over the next five years.
Husband and wife Josh Silverman and Debra Alfarone both work full-time in this emerging segment of the workforce. Silverman has been self-employed since 2008, when he created Edge Education, a test preparation service in Springfield Virginia.
Now, Debra is also taking the leap. After working as a news anchor and reporter for 15 years, she started her own business as an on-camera coach for journalists and entrepreneurs just 10 months ago.
While business for the couple has been steady, there’s a lot of uncertainty, particularly when it comes to taxes.
"There is one thing I worry about, it’s about paying the taxes at the end of the year. I’ve been working for companies my whole life. This is my first entrepreneurial venture, I don’t know how much to set aside,” Alfarone said in an interview with Spectrum News.
Silverman also finds its hard to gauge what his tax bill will look like in April.
“I’ll have pops for each of the SAT and ACT tests during the year, but sometimes it’s bigger than others. It’s impossible to predict. I send out my taxes to my accountant and it’s a black box,” he explained.
The couple faces other major obstacles, like health care.
"Health care is a nightmare. The plans that are out there are insanely expensive and they don’t actually cover anything,” Silverman said.
Debra and Josh are not alone. Independent workers contributed $1.3 trillion to the U.S. economy this year – close to the total GDP of Spain.
“It’s not very easy to figure out how to deal with all the issues of business. Taxes, benefits, billings, collections, contracting,” said Gene Zaino, president and founder of MBO Partners, a company that has created a platform that makes it easier for independent workers and large businesses to work together.
Zaino’s company aims to help independent workers navigate many of these challenges, but he acknowledges larger policy changes must be made and regulations should be uniform across the board.
“There’s so many different calculations as to what is an employee versus what is an independent contractor, and it varies state by state,” Zaino said.
"I think having a harmonization around the rules is very important. We need clearer rules about how this should operate from a tax point of view, from a labor point of view, from a protection point of view,” he said.
Experts are urging lawmakers to provide independent workers with stronger access to health benefits and better protection under the federal tax code. If they don’t, they are warning many ultimately could take their business elsewhere.
”I believe if we don’t figure this out, work will go offshore because work is digital and there are other countries around the world that are welcoming this kind of work,” Zaino said.
Until then, entrepreneurs like Debra and Josh will have to roll the dice, but they’re hopeful existing laws will be modernized.
“It might get worse before it gets better,” Silverman admitted.
"The idea that you’re going to have a job with some company that you work at for 35 years and then they give you a pension, that’s dead and it’s never coming back,” he added.