Trading Places: Are You Ready for Self-Employment?

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Coping with such matters brings on Excedrin headaches numbers one through 100. There's the wasted time and aggravation, which you'll hear about over and over again if you talk with the self-employed. "I had a computer crash. I was on the phone for about six hours with Dell. At the end of that phone call I just started crying" (Trudy Bourgeois, CEO of her own one-person consulting and training firm). There's bad debt. "It's a crapshoot whether I get paid or not. I have about $5,000 owed me -- and they aren't returning my phone calls" (Jodelle Reed, independent broadcast designer). There's the gnawing anxiety of wondering what you'll do when your current project is complete; there's even the chance of being out on the street, much like an employee a century ago who lost his job. "I moved five times after I lost my job, crashing with friends. In New York City, you can't get an apartment without a W-2" (Ian White, freelance graphic designer and aspiring entrepreneur). The sheer psychological comfort of having a regular job with a company, with all its attendant support and benefits, can hardly be underestimated.

But much of it boils down to outright, quantifiable economic cost, which simply means that you have to earn (and collect) one helluva lot more in self-employment than you do in a job just to come out with the same net income. (See "A Tale of Two Designers," below.)

Add it all up -- the psychological, the practical, the economic -- and you see why it takes guts (or naïveté) to go out on your own. You have to want to do it really, really badly. Did we ever truly believe that large numbers of Americans, however good the economic times, would endure such hardships -- when all they had to do to avoid them was to hold down a steady job?

And yet: 100 years ago it would have been a serious mistake to conclude that people could never work peacefully and productively together in organizations. Today it would be a mistake to conclude that a lot more people won't eventually go out on their own.

The problem with Free Agent Nation never lay in its possibilities. With technology, many tasks really can now be accomplished at home as easily as in a conventional workplace. People's attitudes have changed, too. You're part of a two-earner household? How nice it would be to have one of you -- maybe both -- working from a home office, where you could keep an eye on the kids. We Americans dream of going out on our own, and we'd love it if the barriers weren't quite so high. It's just that as all too many people found out in the 1990s, those barriers aren't crumbling on Internet time. To facilitate a real Free Agent Nation we're going to need big, long-term changes: new kinds of organizations, new kinds of businesses, and a different attitude from government.

Suppose, for example, that there were regional or professional associations of all sorts for solo entrepreneurs. The associations could offer health and other insurance coverage, maybe 401(k) plans, tax-escrow accounts (and help with tax preparation), IT professionals on call to help with your computer -- the list could go on and on. You go out on your own, you join up, and there's an existing network of information and support.

Alternatively, suppose some savvy entrepreneur set up a network of free-agent centers in cities around the country as expanded versions of the temporary office suites that are already widely available. There'd be phone answering and tech support. There'd be a database of resources -- accountants, lawyers and financial professionals, and training centers. There might even be administrative personnel to help you sign up for health insurance and collect your bills, and maybe some kind of credit union to provide loans and income verification.

Buying into any such organization or business arrangement would be costly, to be sure. But people who work on their own for a while might welcome a chance to off-load the hassles of independence in return for more time to spend on income-producing work.

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.

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