Articles

I quit! Why more than one-third of the U.S. workforce is going freelance

By: MOLLY PRIESMEYER
September 23, 2014

According to a new report by Freelancers Union and Elance-O Desk, 53 million Americans, or 34 percent of the U.S. workforce, are working in some capacity as freelancers.

About 15 years ago, in between contemplating being a meteorologist and a fire fighter and a whale watcher, I told someone I wanted to be a “freelance writer.” I wasn’t even quite sure what that was, but I knew at least a few things about it: It was creative work; I could write for a living; I could build my own hours; and I could build my own life. I’m pretty sure they laughed, and then we both went back to work delivering cold Shepherd’s Pie.

Now, freelancers are becoming the norm, as more and more people shift out of the 9-5 desk job in favor of a contract-to-contract at-home gig. According to a new report by Freelancers Union and Elance-O Desk, 53 million Americans, or 34 percent of the U.S. workforce, are working in some capacity as freelancers. The survey defines freelancers as “individuals who have engaged in supplemental, temporary, or project- or contract-based work in the past 12 months.”

Of course, part of the reason freelancers have become the newest, growing workforce is because the economy tanked. Unemployment rose during the recent recession, peaking at about 10 percent in 2009. There simply weren’t enough jobs to be had. As job insecurity reached a fevered pitch, people were forced to diversify their income portfolio by adding contract gigs or after-hours work.

The flip side of that freelance coin, though, is that nearly 8 in 10 freelancers report making the same amount of money than they did before they started freelancing. And 42 percent say they make more than before.

The increase in money and freedom could by why freelancers report being so happy with their jobs. In quite the timely study-release fashion, Minneapolis-based Field Nation, a company that connects organizations with independent contractors, released a survey earlier this month revealing that 97 percent of respondents report being satisfied or extremely satisfied with their jobs as independent contractors.

While those numbers may be slightly skewed, based on 846 total respondents, they’re in stark contrast to how the rest of the country rates job satisfaction. Fewer than half of American workers report being satisfied with their jobs.

Companies are noticing the benefits freelancing provides, too. According to Workforce 2020, a global study released last week by Oxford Economics, 83 percent of executives say they will be increasing the use of contingent, intermittent, or consultant employees to accommodate resource gaps and rapidly changing business demands.

Does that mean you should quit your job and start freelancing? Maybe not just yet. For one thing, the competition is fierce. In the age of new entrepreneurship, the number of freelancers is likely to reach more than 70 million, or more than 40 percent of the U.S. workforce, by 2020.

Employers should take note, however. If you want to attract and hold on to full-time talent, compensation is what matters most, according to Workforce 2020 findings. Retirement plans, flexibility, and time-off rank way higher than amenities such as fitness centers, daycare, and subsidized food. In other words, the ability to live like a freelancer matters.

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Why Ben Bernanke Can’t Refinance His Mortgage

By NEIL IRWIN,

NEW YORK TIMES
October 02, 2014

An employee of a think tank owns a house in the Capitol Hill neighborhood of Washington. He wants to refinance his mortgage, but the bank won’t give him a loan.It is perhaps not the most shocking story in the world, but it becomes so when you learn that the think tank employee is Ben Bernanke, who was until earlier this year the chairman of the Federal Reserve, charged with setting the course of interest rate policy for the U.S. economy.And it seems downright absurd when you consider that he now makes a reported $250,000 for giving a speech and has signed a book contract that is surely in the seven figures. His income this next couple of years will surely dwarf the value of his house (he and his wife bought it for $839,000 in 2004, and it is currently assessed at $815,000, according to District of Columbia property records).“Just between us,” he said on stage at a conference in Chicago on Thursday, according to Bloomberg News, “I recently tried to refinance my mortgage and I was unsuccessful in doing so.”So what’s going on?

The problem probably boils down to this: Anybody who knows how the world works may know that Ben Bernanke has vast earning potential, and that he is as safe a credit risk as one could imagine. But he just changed jobs a few months ago. And in the thoroughly automated world of mortgage finance, having recently changed jobs makes you a steeper credit risk.

“The biggest issue that we see with changes in employment is when a change in pay structure occurs,” said Jim Woodworth, a mortgage specialist at Quicken Loans, in an article on that company’s site offering home-buying advice. “For example, someone that goes from a salaried position to a commissioned position will encounter some obstacles with applying for a loan, even if the new job results in higher income.”

That would seem to fit Bernanke to a tee. He recently ended 11 years of steady employment with the federal government, during which he earned a steady salary. Now, while his earning potential is vast, it is irregular, with an unpredictable stream of revenue from speeches and book advance payments.

Bernanke was using his own refinancing difficulties to make a point that mortgage credit may still be tighter than it should be. But rather than a simple matter of tight vs. loose, the real dynamic in the mortgage market right now may be one of a lack of flexibility.

The more automated mortgages have become — based on formulas tied to credit scores and employment histories — the less room individual lenders have to use sensible judgment.