Think about your social circle. Does it seem like everyone you know is now a wedding photographer, designer, tutor, or some other kind of freelancer? If so, you might be onto something. According to a recently released study by Jon Lieber of Thumbtack, Charlottesville ranks 10th in the nation – above much larger cities like Los Angeles, Washington, D.C. and Denver – for “Per-Capita Digital Marketplace Adoption.” That’s a fancy way of saying that people in Charlottesville love hiring freelancers through apps like Etsy, Uber, AirBnB, and the Cville-based app Moonlighting.
These online platforms are all part of the “on-demand” or “gig economy,” a rapidly expanding – and increasingly controversial – host of startups that connect independent service providers with customers via crisply designed online marketplaces. These apps boast a lot of convenience, but have drawn heat because they lack the safety net of traditional employment. An Uber driver, for example, may work 40 or 50 hours per week on the platform, but he or she is technically classified as a 1099 independent contractor rather than a W-2 employee. As such, an Uber driver does not receive employer-provided insurance, retirement contributions, vacation, or any of the other benefits afforded traditional workers. Meanwhile Uber gets to dodge payroll tax and a host of HR headaches. Some labor advocates and traditional employers feel like the apps are getting off too easy. Others are more inclined to value the flexibility and earnings that these platforms provide for workers, and urge regulators to let these young companies innovate solutions on their own.
1. San Francisco, CA
So. That’s a neat bit of trivia, but what does it have to do with your friend, the wedding photographer? The Thumbtack ranking is interesting, because it shows that Charlottesville – and your freelancer friend – might be at the vanguard of some very big macroeconomic changes to the way we work. In 20 years, so the thinking goes, we may all be freelancers, winning jobs on apps through our ability to show off our skills and experience. If this report has anything to say, Charlottesville may already be leading the nation in this trend.
According to a report last year from the Government Accountability Office, 40.4 percent of American workers are already “contingent,” meaning that they are self-employed, part-time, temps, day-laborers, or otherwise freelancing. They don’t get employee benefits, and many have to hunt down work more or less daily. This kind of contingent work poses major a major challenge to the nation’s safety net, leaving a huge swath of Americans without protections like sick leave, unemployment insurance, and workers comp. Even more strikingly, firms like Intuit forecast that task-based employment is likely only to grow. Why pay someone for who they are (a role), when what you really need is what they do (a specific task or project)? Digital platforms will allow employers to take these efficiencies to their logical extreme on a scale that has never before been possible. And it’s not just “low-skill” workers like taxi drivers who will feel the change, but law clerks, accountants, and a lot of other “cognitive” workers, too – witness accounting mega-giant PwC’s new freelance platform.
While all of this change is scary, Charlottesville’s top 10 Thumbtack ranking hints that the move to task-based employment might not actually be such a bad thing. After all, Charlottesville is a pretty nice place to live, and apparently a lot of locals are making their way here by freelancing. The fact that a widely praised college town is also an under-the-radar pioneer in this booming gig economy might just go to show that a work-life model based on skills, flexibility, and autonomy won’t be so bad after all.
Whether you love – or hate – this idea of being your own boss (and everybody’s employee), it’s an idea that we may need to get used to and prepare for as a society. So what can a town like Charlottesville do to champion its freelancers and get ready for the shape of things to come? The key is to create a highly-skilled workforce that can successfully market their chops. I’m not talking about college degrees (although let’s not forget that college grads continue to earn way more than other workers), but instead about the kinds of specific, marketable expertise that customers will continue to value. Here are a few suggestions on how to foster those skills:
- Minimize occupational licensing. On average, a licensed hairdresser must go through 372 days of training – 10 times what is required of the average EMT. In Iowa, you can actually spend a year in jail for braiding hair without a license. No joke. Occupational licenses are often created by incumbents in order to keep out challengers, and they wind up deterring people from developing marketable skills. Regulatory barriers should exist only in fields such as electrical work or plumbing where low-quality service providers present a danger to their clients. Same goes for permitting.
Take advantage of grants for apprenticeships. Studies show that apprentices average a 90 percent employment rate upon program completion, and that for every dollar employers invest in apprentices, they gain $1.47, making apprenticeships a bargain both for small-business owners and workers. These programs can be especially beneficial to individuals without credentials like a college degree, boosting lifetime earnings by as much as $300,000.
Decouple benefits from employment. Allow employers who don’t or can’t offer benefits the ability to make tax-free contributions to individual retirement accounts through platforms like Honest Dollar and Betterment. Create tax-preferred savings accounts to enable workers to save income for emergencies or time off. Take advantage of new programs such as myRAs and MEPs that allow workers with no formal employer or multiple employers to save cheaply and safely.
Reduce the burden of tax compliance. Studies estimate the cost of tax compliance for small-business owners to range anywhere from $168 billion to $1 trillion per year in accounting and legal fees, lost productivity, opportunity cost, and unreported taxes. With 16,000 line items, complying with the U.S. tax code represents approximately 80 percent of the paperwork burden that Americans undertake for the U.S. Federal Government. Studies have consistently shown that tax complexity matters even more than tax rate to small-business owners. Simplifying compliance would go a long way toward empowering freelance workers, and that can begin at the local and state level.
Are you a freelancer? Do you know someone who is? What is it about Charlottesville that makes it easier or harder for freelancers to thrive? I look forward to your comments!
ABOUT THE AUTHOR
Carolyn Zelikow is a Program Associate with the Aspen Institute Future of Work Initiative. Led by Honorary Co-Chairs Sen. Mark Warner (D-VA) and former Gov. Mitch Daniels (R-IN), the Initiative is a yearlong nonpartisan effort to identify concrete policies that will strengthen the social contract in the midst of sweeping changes to America’s workplace and workforce. Before Future of Work, Carolyn managed a pair of event series called Aspen Across America and Aspen Around Town, worked with the Aspen Ideas Festival, and helped to organize the Aspen Institute Summit on Inequality and Opportunity. Before joining Aspen, Carolyn was Assistant Director of Tom Tom Founders Festival. She graduated from the University of Virginia in 2012 with a B.A. in English Language and Literature. Raised in Charlottesville, she now lives in Washington, D.C. Opinions expressed on Charlottesville Tomorrow’s website are her own.