As it happens, you can already see such organizations in a kind of embryonic form. There's a nonprofit in New York City, for instance, called Working Today. It's only seven years old, but already some 85,000 independent professionals and small-company and nonprofit employees in the metropolitan area have signed up for benefits through its networks. Working Today offers health, life, and disability insurance, along with a variety of financial services. Then there are businesses such as Boston-based Aquent, once known as MacTemps Inc. (and in that incarnation an Inc 500 company). Aquent "hires" independent professionals in a broad range of fields related to marketing communications and then hooks them up with clients on a project basis. The professional gets nearly all the benefits of regular employment: a W-2, health and dental insurance, a 401(k) with a match, and so on -- yet he or she is never required to take any particular assignment. Aquent handles billing, collections, lining up the next job, and other such hassles.
Are such outfits -- few and far between today -- likely to expand and proliferate? Maybe, but there's a chicken-or-egg problem: they need enough solo entrepreneurs in any given area or profession to make the enterprise viable, but they may not get enough as long as all the barriers are in place. One way around that problem may be legislation analogous to the safety-net legislation that helped stabilize Employee Nation several decades ago. Right now, for instance, national associations can't offer health insurance because they can't handle the widely disparate state regulations that govern the field. Congress could eliminate that problem with a stroke of the pen. A national health-insurance system that guaranteed coverage for all, regardless of where (or whether) people worked, would do still more.
Granted, all this is no more than suggestive. And one thing it suggests is that we're talking decades, not years. But that's exactly the conclusion you have to draw about Free Agent Nation: not that it can't happen someday, or that it won't, only that it hasn't happened yet. How people work is a social construct, the result of a hundred different laws, policies, customs, incentives, and practices. Here in America, things have been organized for decades to give people a big incentive to work for companies. But if we created a new set of institutions designed for free agents, the last barriers to entry might begin to crumble -- and that stubborn self-employment rate might begin to creep upward.
As for the pace of change, well, as Aquent CEO John Chuang puts it, "it's more the tortoise than the hare." We know it was the tortoise who won the race. We just don't know how long the whole thing took.
John Case is a contributor to Inc.
A Tale of Two Designers
| Take two Web designers earning $90,000 a year. Harry, who works for a company, gets his pay every two weeks, minus 7.65% payroll tax, income-tax withholding, and his share of health insurance. But look at what else he might get and (roughly) how much it would be worth annually: |
| Annual salary |
$90,000 |
| 25 paid days off -- three weeks' vacation plus holidays |
$9,000 |
| The employer's share of health insurance, plus dental, disability, workers' compensation, and unemployment coverage, all of it tax free |
$6,000 |
| Office space and furniture, a high-powered computer, a phone, and a high-speed Internet connection |
$5,000 |
| Supplies |
$1,000 |
| A 50% match on 401(k) salary deferrals |
$3,000 |
| Other assorted perks and benefits |
$2,000 |
| Total compensation, in cash and benefits |
$116,000 |
| |
| And then there's self-employed Larry, equally talented and hardworking, recipient of the same gross income (if he can collect it) of $90,000. Here's what he has to pay that Harry doesn't: |
| Annual salary |
$90,000 |
| Employer's share of self-employment tax (at current caps) |
($6,000) |
| Health insurance (if he has a family or lives in a high-cost area like New York City, it'll be much more; and he probably won't be able to buy any other coverage, such as disability, at all) |
($4,000) |
| A desk, a computer, and phone and Internet service (minimum -- and that's if he works from a home office) |
($3,000) |
| Supplies |
($1,000) |
| Gross income less self-employment expenses listed above |
$76,000 |
| |
| Compensation difference between Harry and Larry |
$40,000 |
| |
| |
| Larry will do a little better on his income tax than Harry, because some of his expenses are tax deductible, but it won't be enough to make up the $40,000 difference. |
|
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For more self-employed resources, see Inc.com's Striking Out on Your Own and the Running a One-Person Business channel.
