Although online work is gaining momentum rapidly, there still exist many barriers which impede mass adoption. One such hurdle is outdated government policies. Simply put, many laws today are based on ancient “9-to-5” ideology and fail to embrace today’s transforming workplace. To open a dialog on this important topic, we invited public policy advocate Mike Hruby of New Jobs for Massachusetts to contribute a series of blog posts. Here are his first notes to the Elance community.
A humorist once said, “You may not think about government, but government thinks about you.”
Few independent contractors (ICs) spend time thinking about government. Yes, they pay their taxes, including employer taxes on their IC income. If they need to, they register with their city and state agencies and pay for a sign permit.
Mostly they think about promoting their work, preparing and winning proposals, creating project deliverables, meeting client needs, billing, and collecting. Government doesn’t come into view unless it’s a client.
Perhaps if their businesses were large they’d have a government affairs officer to think about government.
But wait—while you were minding your growing IC business, government at all levels around the globe has been getting more interested in independent contractors, so you’d be wise to put on your VP of government affairs hat for at least an hour or two each month.
It’s worrisome that some state officials believe three common myths about independent contractors: 1) that ICs are closet tax avoiders, 2) that they were forced into project work by an abusive employer, and 3) ICs are just hanging out a shingle until they find steady employment.
These officials, many of them powerful, do not realize that IC work is more profitable than employment and the IC lifestyle is much more flexible, especially for parents.
Acting on the tax avoidance myth, 16 state attorneys general are working with the IRS to significantly tighten rules governing independent contractors and restrict their freedom and flexibility, even though a 1991 Treasury Department study showed that ICs actually pay higher rates of Social Security and Medicare taxes than employees and employers do. The 16 states are California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington. Several other states and countries are watching what results.
National and provincial governments in the entire English-speaking world are resisting self-employment in the services—the opportunities you find on Elance-oDesk and other contracting sites—and it’s the biggest single reason why worldwide job growth has slowed.
So in your skinny hour or two each month, it would help your cause to explain your business to people in government—you might even enjoy it!
One place to start is with a member of your municipality’s governing body, such as the City Council or, as we have here in New England, your town’s Board of Selectmen and women. Or you could start with state or provincial legislators, usually senators covering larger districts and representatives in smaller ones.
For both levels of the legislature, the message is that you work on a contract basis doing projects, you serve clients way beyond your town (mention Elance-oDesk, since they likely haven’t heard of the online work marketplace), make more than you would earn as an employee, that no one forced you into this, and you pay your taxes and work hard to earn respect in your field.
In my 12 years of involvement in state politics, I’ve been surprised at how open state and local officers are to constituents’ visits, and how responsive they are to their requests. Massachusetts officials joke that if they hear one voter comment on an issue they remember it; if they hear two comments on the issue they open a file on it; and if they hear ten, it’s a landslide and they vote for it.
Surprise! Your simple visit, call, letter, or email will usually be heard.
So put those couple of hours each month into talking with the units of government that are closest to you about your work and what you’d like to see improved or changed.
Then, when the legislature next thinks about ICs, they will attach a face to the issues – yours; a face that is hardworking, earnest, adds value and brings revenue into their district by doing interesting and useful work.
And the legislators might quietly ask you just how well you do with online contracting!
Mike Hruby is President of New Jobs for Massachusetts, Inc., a public policy advocate for rapid job growth in the private sector in Massachusetts. New Jobs works to create a million-job explosion in the state by reducing the legal barriers to entrepreneurship, start-ups, independent contracting, IPOs and spin-outs, corporate hiring, teen employment, mothers returning to the labor force, and part-time work in retirement.
Before founding New Jobs in 2011, Mike founded and ran a national consulting firm that helped large and mid-sized technology companies find new markets for their technical products and capabilities. He has sold, led and completed over 500 team consulting projects sized from $300 to $250,000. Mike lives in suburban Boston with his wife, Leslie. The couple has two grown daughters.