The Freelance Surge Is the Industrial Revolution of Our Time(theatlantic.com)
theatlantic.com
The Freelance Surge Is the Industrial Revolution of Our Time
http://www.theatlantic.com/business/archive/2011/08/the-freelance-surge-is-the-industrial-revolution-of-our-time/244229/
15 comments
One of the big aspects that often gets overlooked in any discussion about freelancing is the notion of having a cash cushion. One of the comments on the article stressed that we may be moving towards a new culture of frugality/austerity as a byproduct of more people needing to keep cash reserves to deal with the up/down cycle of freelance income. It's a transition that took me a bit of time to make personally, but I'm glad I did it.
off-topic a bit: What's a little odd to me is how much small/medium businesses rely on credit for payroll. I've got a friend at a small business, and they have a credit line they use for payroll every 2 weeks, and they've been worried that their credit line would be reduced, meaning they'd have to lay people off. I've asked around and some other companies do this as well. Is this practice really widespread, or just the few I spoke with?
gentle plug: the indieconf conference for web freelancers can help you adjust to this new industrial revolution :) http://indieconf.com
off-topic a bit: What's a little odd to me is how much small/medium businesses rely on credit for payroll. I've got a friend at a small business, and they have a credit line they use for payroll every 2 weeks, and they've been worried that their credit line would be reduced, meaning they'd have to lay people off. I've asked around and some other companies do this as well. Is this practice really widespread, or just the few I spoke with?
gentle plug: the indieconf conference for web freelancers can help you adjust to this new industrial revolution :) http://indieconf.com
Agreed re: living more on a budget and cash cushion. My income is good as a freelancer but my wife and I buy nothing on credit and our one big splurge is travel. Our idea is that is times ever get tough we can just give up travel for as long as needed.
I am definitely not "feeding the economy" by buying a lot of stuff (being a good little consumer) as I would have 10 or 20 years ago.
I have traded a desire for and ownership of material things (house on the ocean and a beautiful sailboat) for a lot of freedom and control over how I spend my time. A good trade!
I am definitely not "feeding the economy" by buying a lot of stuff (being a good little consumer) as I would have 10 or 20 years ago.
I have traded a desire for and ownership of material things (house on the ocean and a beautiful sailboat) for a lot of freedom and control over how I spend my time. A good trade!
Similar story here. We've still got a somewhat hefty mortgage, but no other debt, and my wife and I both work from home. We just splurged by getting a second car (used, paid cash), as I'm traveling to client sites more, and I've left my wife stranded at home for 2.5 years already.
Outside of some work equipment/supplies, we've definitely been working on saving and having liquid cash available. We had multiple emergencies this year - my wife got very sick and we had an emergency room visit, and we had some deaths in our family which required a lot of travel. In all cases we were able to pay cash from savings rather than charge it, which, 10 years ago, would have been my default way of thinking.
It'd certainly be nicer to have some sort of different health care in the US such that a trip to the emergency room didn't cost thousands, but it is what it is.
Outside of some work equipment/supplies, we've definitely been working on saving and having liquid cash available. We had multiple emergencies this year - my wife got very sick and we had an emergency room visit, and we had some deaths in our family which required a lot of travel. In all cases we were able to pay cash from savings rather than charge it, which, 10 years ago, would have been my default way of thinking.
It'd certainly be nicer to have some sort of different health care in the US such that a trip to the emergency room didn't cost thousands, but it is what it is.
Small business frequently uses credit for working capital.
If you need 10k to front the cash for 5 more staff at your restaurant, why not? The business will grow.
In general savings through austerity is better, but many companies would not grow past sole proprietorships without credit.
If you need 10k to front the cash for 5 more staff at your restaurant, why not? The business will grow.
In general savings through austerity is better, but many companies would not grow past sole proprietorships without credit.
It is a worrying sign if they pay wages on credit. Payment to small businesses is erratic generally, and it gives no scope to grow. When I was in this type of business we kept 3 months costs in the bank at all times.
Exactly - I'd think you'd need to build your own 'credit' vs getting it from a bank. Just wondering how common that was, or perhaps still is.
I thought most businesses financed payroll with periodic short-term loans? If you can be 100% sure you'll get the credit it's better to put that money to work than have it lying around.
(Then one day the credit dries up and you're hosed, I'm not commenting on the wisdom of the strategy but my understanding was it is standard practice.)
(Then one day the credit dries up and you're hosed, I'm not commenting on the wisdom of the strategy but my understanding was it is standard practice.)
If you have regular income and outgoings, and large efficiencies to scale that could make sense, mostly done through factoring, ie credit against invoices, so secured lending. It is less sensible in businesses with more variable cash flows and nothing much to secure borrowing against.
Hum. This remind me of the case of a big delivery company a few years ago in France. Basically, all delivery guys were supposedly "freelance contractors" with the big company. Of course all wasn't so rosy in real life because it was just an astute scheme to circumvent employment laws such as maximum hours of work per day or week, minimum wages, unions, etc.
The delivery guys sued en masse and got their contract re-qualified as salaried employees proper.
I'd be wary that actually the "freelance revolution" may be another big jump backwards to the 19th century for workers marketed as a "freedom gain".
The delivery guys sued en masse and got their contract re-qualified as salaried employees proper.
I'd be wary that actually the "freelance revolution" may be another big jump backwards to the 19th century for workers marketed as a "freedom gain".
This happens a lot in the media business, which relies quite substantially on actual freelancers, who tend to be high-priced writers, directors, designers, composers, editors, and so on - many with their own agents.
That large pool of legitimate freelance labor has provided media companies with the cover needed to pass of their regular staff jobs as something other than permanent employment. The cynical (read: accurate) term used by people stuck in these spots is 'permalancing'.
That large pool of legitimate freelance labor has provided media companies with the cover needed to pass of their regular staff jobs as something other than permanent employment. The cynical (read: accurate) term used by people stuck in these spots is 'permalancing'.
I remember a friend from high school who worked as a Production Assistant (PA) in LA. Among other tidbits I heard, like driving across the city for Christina Aguilera's lunch, was the fact that every fourteen days (or maybe it was ten?) most of the entire production staff was fired en masse and then rehired the next day. Otherwise, according to union rules, they had to become part of the union.
How could that possibly even work? Was it really just 'you're fired... okay you're hired', or was there a day in between, or what? If the union and the employees had any sense at all they would have called bullshit on that.
well unless the laws change as the article suggests.
The article looking good, if a bit fluffy, until it turned into an obvious advertisement for the author's upcoming political manifesto/book/whatchamacallit.
One might have thought that, except she posted a couple things around the same time last year, then nothing for almost a year. I got to thinking that perhaps she/they just put out stuff in September :)
Although not mentioned in the article, I wonder what will be the role of companies in this freelance world...
If companies are only ever changing groups of freelancers properly gathered to accomplished certain tasks, what will differentiate them? The ability to recruit and pay the most talented freelancers? I'm not sure that will work out on the long run.
As someone already mentioned, many companies are already facing erosion of employee loyalty but not the most successful ones. I 'd argue that those companies that are market leaders don't suffer so much from that problem (mostly) because they are able to instill a set of values and principles across their workforce and this is very hard (maybe impossible) to achieve with freelancers, who easily come and go and are probably much more emotionally detached from their current employer.
I actually believe in this freelancer world, but I also believe there has to be a reinvention of the way companies work in which setting the right balance between culture/brand identity and decentralization/individualism will be critical.
If companies are only ever changing groups of freelancers properly gathered to accomplished certain tasks, what will differentiate them? The ability to recruit and pay the most talented freelancers? I'm not sure that will work out on the long run.
As someone already mentioned, many companies are already facing erosion of employee loyalty but not the most successful ones. I 'd argue that those companies that are market leaders don't suffer so much from that problem (mostly) because they are able to instill a set of values and principles across their workforce and this is very hard (maybe impossible) to achieve with freelancers, who easily come and go and are probably much more emotionally detached from their current employer.
I actually believe in this freelancer world, but I also believe there has to be a reinvention of the way companies work in which setting the right balance between culture/brand identity and decentralization/individualism will be critical.
Funny, i've been meaning to finish a blog post on this exact same topic. I actually think the freelance revolution will be a reversing of the industrial revolution.
The industrial and neolithic revolutions brought the masses together to form towns and then large cities, where as I believe with the increase of freelancing and e-jobs, along with better remote working environments, people will start to question the high cost of living within a large city.
The industrial and neolithic revolutions brought the masses together to form towns and then large cities, where as I believe with the increase of freelancing and e-jobs, along with better remote working environments, people will start to question the high cost of living within a large city.
There can be a 'high cost' to living out in the country too.
The 'direct' cost - lower property taxes, for example - is offset by often having to drive further for basic stuff that you may be able to walk to or use public transport for in a larger city.
There's also a social cost - fewer human interactions - which, for some people, is actually a positive, but it's not for everyone.
Also, opportunity cost can be higher out in the country. You may simply miss out on experiencing things that you would in a city. But in a city, you might miss out on cleaner air, nicer sunsets, etc.
The 'direct' cost - lower property taxes, for example - is offset by often having to drive further for basic stuff that you may be able to walk to or use public transport for in a larger city.
There's also a social cost - fewer human interactions - which, for some people, is actually a positive, but it's not for everyone.
Also, opportunity cost can be higher out in the country. You may simply miss out on experiencing things that you would in a city. But in a city, you might miss out on cleaner air, nicer sunsets, etc.
I am not so sure about that, since there is significant social advantages to living in a city.
Though it will properly cut down on the amount of commuting people will have to do.
Though it will properly cut down on the amount of commuting people will have to do.
Not that I am disagreeing but would you mind mentioning the social advantages that you are talking about?
Face to face conversations [http://headrush.typepad.com/creating_passionate_users/2006/0...], bars, theaters, museums, entertainment parks, turist attractions, easy shopping posibilities, etc.
There are many advantages to clustering together that electronics and increased communication simply cannot replace yet (and I doubt it ever will, even video calling feels "phony" somehow).
There are many advantages to clustering together that electronics and increased communication simply cannot replace yet (and I doubt it ever will, even video calling feels "phony" somehow).
I'm sorry but I lived an extremely rural town for 10 years with <20k people and all of these thing were available. I'm not convinced these are exclusive to cities.
The ability to find a group of people like you. If you're straight, white, and born in the small town, this isn't a problem. As a gay man, I'd have a lot of trouble in many small towns.
The ability to walk down the street at 3 in the morning and see a non-trivial number of people around.
A friend was in a small town teaching for the summer, and he said "So then we went to the bar. I say the bar because there was only one." Where I live, there are 171 listed in the phone book.
The ability to walk down the street at 3 in the morning and see a non-trivial number of people around.
A friend was in a small town teaching for the summer, and he said "So then we went to the bar. I say the bar because there was only one." Where I live, there are 171 listed in the phone book.
Mass transit precluding the need to own a motorized conveyance, proximity to life's staples (and the varieties available thereof), diversity in culture and ideas (even ethnicity, if that's your bag), architectural variety (nothing beats looking at a giant skyscraper for wondering at the sheer human achievement).
It's all subjective, after all; but that's just off the top of my head.
It's all subjective, after all; but that's just off the top of my head.
I was explaining exactly this phenomenon to a friend, couple of days back. I see this trend inherently tied in with the increasing availability of self-learning resources by virtue of internet and initiatives like OCW, p2pu and others. This makes it possible to break out of the academic mold in which the undergrad/grad degrees put you. This also makes it possible/easier to keep the skills up to date in your chosen field.
I don't know how industrial revolution felt like to those who lived through it, but I am seeing more and more people around me jumping the ship everyday.
I don't know how industrial revolution felt like to those who lived through it, but I am seeing more and more people around me jumping the ship everyday.
I fundamentally agree with this article. I think there are two factors at play here 1) Modularization of everything we purchase. Freelancers/contractors give business flexibility to scale up or down as they need to. 2) A continuation of the erosion of loyalty to a corporation.
Our parents generation spent 10-20 years at a job. Our generation spends 2-5 max.
In my view this is great especially for the US because it means that more people get paid for the value they create as opposed to wasting a company's time/money by clocking in from 9-5 and just waiting for Friday to roll around.
Our parents generation spent 10-20 years at a job. Our generation spends 2-5 max.
In my view this is great especially for the US because it means that more people get paid for the value they create as opposed to wasting a company's time/money by clocking in from 9-5 and just waiting for Friday to roll around.
"Our parents generation spent 10-20 years at a job. Our generation spends 2-5 max."
I wonder if in some ways we're getting just as much done in those 5 years vs the 20 earlier generations spent. Perhaps there's a set amount of work at which people tend to move on (or get laid off) and we're just reaching it faster?
Far-fetched, I know, but still crossed my mind.
I wonder if in some ways we're getting just as much done in those 5 years vs the 20 earlier generations spent. Perhaps there's a set amount of work at which people tend to move on (or get laid off) and we're just reaching it faster?
Far-fetched, I know, but still crossed my mind.
I would say one thing that they miss is the equalization of opportunities between countries. Right now if you are born in the US you have 10 times higher income than if you are born in the Philippines (for equal abilities). In the future, it will get closer to 1 to 1.
Income of highly skilled people in low wage countries will go up and income of low skilled people in the US who are working in areas where low wage countries can compete will go down.
Great that my new business idea is completely built around this trend.
Income of highly skilled people in low wage countries will go up and income of low skilled people in the US who are working in areas where low wage countries can compete will go down.
Great that my new business idea is completely built around this trend.
Actually it is properly closer to the industrial derevolution because it (and this going to sound marxists but really isn't what they envisioned) it put the tools of production back in to the hands of the workers.
A programmer working on a webapp has all the tools he needs (or may easily get them, often for free) to do the development on his computer. He has to ask nobody for permission and need not (even if he chooses to do so) work for somebody else.
Yes you still need hosting and coffee but those things are commodities (heck coffee is traded on the Chicago mercantile exchange) and the skilled tradesmen of the old needed copper, wood and tools too.
Interestingly enough this also means that the equalization between skilled and unskilled labor which the industrial revolution brought (the unskilled labors never had it better, compared to their contemporaries, than during and after the industrial revolution) has ended -- a person can no longer come out of school, work at the assembly line and expect a good solid middle-class job. At the same time those who take the time (and have the opportunity) to educate themselves can expect to make a pretty good life.
Some part of me feel a little sad that those big machines don't matter as much as they used to, but the rest of me is very happy they don't. I much prefer working with computers to standing in a factory.
A programmer working on a webapp has all the tools he needs (or may easily get them, often for free) to do the development on his computer. He has to ask nobody for permission and need not (even if he chooses to do so) work for somebody else.
Yes you still need hosting and coffee but those things are commodities (heck coffee is traded on the Chicago mercantile exchange) and the skilled tradesmen of the old needed copper, wood and tools too.
Interestingly enough this also means that the equalization between skilled and unskilled labor which the industrial revolution brought (the unskilled labors never had it better, compared to their contemporaries, than during and after the industrial revolution) has ended -- a person can no longer come out of school, work at the assembly line and expect a good solid middle-class job. At the same time those who take the time (and have the opportunity) to educate themselves can expect to make a pretty good life.
Some part of me feel a little sad that those big machines don't matter as much as they used to, but the rest of me is very happy they don't. I much prefer working with computers to standing in a factory.
Mass production was just one aspect of the industrial revolution, mainly developed in the US. Other parts of the technological change were as important, increasing productivity, the development of machine tools etc. Now capital costs for tools are coming right down as they turn into software, big companies are not so necessary as they were just a source of large capital. Newspapers were big because printing presses were hugely expensive. As industries lose the need for huge capital big companies will go, as their command structures are less efficient than agile markets of freelancers and small businesses.
Let's not forget that the industrial revolution was all about mass production. Read about adam smith and his essay on mass production of the pin for more details. I don't see this freelance revolution as anything close to mass production. Quite the opposite actually.
Take any well read blog. It is properly read by more people than have newspaper subscriptions.
The computer is one of the best mass production devices since the steam engine was invented.
The computer is one of the best mass production devices since the steam engine was invented.
I wrote a blog post about that a while ago: http://gaiustech.wordpress.com/2011/05/20/the-means-of-produ...
But not every job consists of pure symbol manipulation.
But not every job consists of pure symbol manipulation.
The name you want to invoke here is John Ruskin, who has been mistaken for a Marxist.
There definitely seems to be two things going on:
- Every year it gets easier to start a new business.
- Every year big companies provide less job security.
Combine this, and there is a move to free agency.
This is great for people who can find a way to get paid for differentiated skills. It is awful for commodity skills.
- Every year it gets easier to start a new business.
- Every year big companies provide less job security.
Combine this, and there is a move to free agency.
This is great for people who can find a way to get paid for differentiated skills. It is awful for commodity skills.
Honestly this is nothing new. Selling commodities of any kind has alwas sucked unless you can do it at scale (which is basically impossible when the limiting input is ones time).
For a short time industrialization meant that the least skilled could produce as much as the most skilled, but as pg argued that was as special case of a special situation. I know of no case where it has happened before or after, anywere.
If you only have commodity skills, the best thing you can do is to go down to the nearest community college.
For a short time industrialization meant that the least skilled could produce as much as the most skilled, but as pg argued that was as special case of a special situation. I know of no case where it has happened before or after, anywere.
If you only have commodity skills, the best thing you can do is to go down to the nearest community college.
The downside is that this comes with a growingly prevalent risk. An individual is more likely to be a successful actor in sabotage and espionage, and harder to put trust on, than an established company. As this "gig economy" grows, I anticipate that freelancing individuals will to a greater and greater extent be approached with offers as well as deployed on purpose for this kind of work, as a form of incidental spy. That said, being a freelancer myself, I definitely see more than just the negative aspects of the freelancing revolution.
It remains to be seen whether this evens the playing field between employer and employee or not. I suspect not. It is certainly a great way to get out of health care costs, etc., although to be fair a lot of regular jobs don't pay that sort of thing anymore either.
This doesn't seem to be leading toward a more organized workforce with regard to compensation. That's probably not a good thing. There seems to be some opportunity here though for an enabling technology to work that out, but I don't know what it would be yet.
This doesn't seem to be leading toward a more organized workforce with regard to compensation. That's probably not a good thing. There seems to be some opportunity here though for an enabling technology to work that out, but I don't know what it would be yet.
Permit me to doubt it.