At the Freelancers Union, Sara Horowitz is pushing for a new kind of unemployment protection fund that would cover the self-employed by helping them put away money that they could draw on in times of need.
We could call it "savings". Then, in lean times, workers could tap their "savings" to make up for temporary shortfalls in income. To minimize the cost of administration for this innovative unemployment protection fund, it could be outsourced to private financial services organizations, hereafter called "banks", which would allow workers to access their "savings" on completion of a routine procedure, up to the limit of "savings" they had accumulated.
"Savings" could be paid for by charging more on an hourly basis than full time employees received in salary for comparable work.
Well, you're missing the point of insurance. A hundred people might need to collectively save a million dollars, but acting independently they would need 10 million. With the self-employed the tragedy of the commons would kick in mighty fast though.
We could call it "credit", which the "banks" would offer out of their collective pool of customer "savings", not all of which need to be available to all "savers" at once.
Interesting concept, you might be onto something there.
Additionally, if you're "underemployed" to the extent of not being able to pay your bills, I'd say it's about time you got UN-employed and started looking for those unemployment perks.
Since employed people have it, why shouldn't self-employed?
Remember, the goal of society is not to punish the grasshopper and feel great and virtuous because you're an ant. The goal is to help every grasshopper become an ant, even if it's not in their nature. Because when grasshoppers starve, ants lose out too.
Research shows that, among employed people, contributions to private retirement funds soar if the employer sets a default of 5% rather than shifting the burden to the employee of changing it from a baseline of 0%. People are just lazy. They don't opt in, but if you set it up for them, they don't opt out, either.
So this kind of movement among employers wrt 401ks is good for everyone.
Why not something for self-employed people?
It is hard in the US to be self-employed and resist the urge to live month-to-month, to put aside enough money for your taxes and for savings, and so on. There's nothing in the system to make it easier. The whole system is biased against self-employed and small entrepreneurs. (Don't talk to me about tax breaks, this is about institutionally supported behaviors.)
Americans have practically been trained from birth to be loose with money. There are govt incentives to go into debt -- by offering cheap money on loan to everybody who wants it, and of course easy credit has inflated the cost of goods and services. That all's what has kept the insane growth curve going, until now.
You can't live in a society that tells people "Spend for the good of your country!" and then turn your back on them in disgust when they behave just as they were taught.
Creating systems that help people be virtuous is a lot better than finger-wagging and feeling self-righteous.
Why isn't there a law that -requires- any employer who provides insurance to contribute the dollar amount they would put toward an employee's plan to -any- private plan the employee wishes? Currently you need a fairly generous employer to even offer you a cash 'bonus' for waiving company insurance and buying private. And even then, it's very rarely comparable to what the company would have paid on your behalf to the group plan.
And why are 401ks tied to employers? Why can't employees choose which 401k provider they wish, regardless of what 'group plan' their employer might prefer? Or an easier alternative: why aren't employers required to offer matching into a private IRA if an employee waives 401k matching?
We champion the power of markets in the US, but then we have all these communal, zero-choice, easily-corrupted corners (particularly surrounding employment) that are a huge drag on those same markets. 'Private' insurance and retirement in the US are tantamount to a 'company store'.
Allowing the self-employed to pay unemployment insurance taxes is the same sort of thing in my mind. Why -not-? If they want to pay in what any employer would and their claims to benefits are the same as any other employee, why the hell not?
Because we don't have a democratic capitalist system, we have a corporatist oligopoly.
The federal govt was set up to be toothless -- and consequently lacking in responsibility -- on purpose. Then it overstepped those bounds in terms of power, but never in terms of responsibility.
So you have a rate of federal income tax that is double, triple, or more that of your resident state, while getting almost nothing in return in the form of social services. (Medicare, Social Security/FICA are on top of the base federal income tax.)
States will have a very hard time raising taxes because the fed govt already takes so much from their citizens, and tehy cannot overrule the federal govt tax rate.
And, states are too interconnected by trade to be self-sufficient unto themselves, even with higher taxes. And the federal govt controls states without helping much - and what aid they give comes with control issues.
The govt of the USA simply doesn't work in this century. It needs to be either more state-oriented, or more federalist, not this unholy half-breed.
Consider the following:
I'm an American citizen living abroad permanently. I have to pay federal income taxes even though I never intend to return.
And better yet, I can't even vote in any election. Because I won't declare myself a resident of a state (and subject to those income taxes).
Without paying state income tax, I cannot vote in the federal elections.
Tell me that's not fucked up.
(And no, I can't just declare myself a resident of a state that has no income tax. That doesn't work.)
I can't just declare myself a resident of a state that has no income tax. That doesn't work
I know many expats, my cousin and sister included, who establish residency in South Dakota for this purpose. The state only requires a one night stay and a mailing address to establish residency. Once you stay overnight you can get a driver's license which I think is good for 10 years. Many retired people who live in Mexico do this and there are mail forwarding agencies who will act as your mailing address for a fee.
It might be a pain in the ass for people who grew up in more populated areas, but I'm from the high plains so it wasn't such a radical idea. Some of my relatives actually live, or have lived in SD. There may be other states with similarly lax residency requirements.
note that it says "a handful of states make it easy to establish residency." i tried another google search to find a list of the residency requirements of each state. i found this:
(And no, I can't just declare myself a resident of a state that has no income tax. That doesn't work.)
Curious, why doesn't this work? It was my understanding that was a reason why many folks living abroad, especially military personnel, declared residence in Florida.
Has anyone ever been extradited simply for failing to pay U.S. income tax while living permanently abroad, and having neglected to renounce citizenship?
I highly doubt it. I think it's more of a "if you step on our shores, you're ours" situation.
But even tho I am far from being rich enough to be on their radar, better safe than sorry. Saving $50k/yr in taxes is a bad optimization if it lands your ass in jail.
> Since employed people have it, why shouldn't self-employed?
Often the problem comes down to fraud. The reason self employed people in Canada can't get EI( our unemployment insurance) is that it's too easy to lay your self off.
For these same reasons, family members can't be layed off from a company.
If we did have this EI for self employed people how would we differentiate between someone who just wants the summer off vs someone who legitimately has no clients.
Another problem is what happens when someone realizes that they can make more money on EI than trying to tough it out with their remaining clients and trying to rebuild their business?
If each case has to be reviewed by an actual person this could take weeks at a time and would probably eat all of the money put into the pot for this new style of EI.
I read the comments here and I was prepared for some tale of woe involving gross financial mismanagement and staggering levels of yuppie self-regard.
Then I read the article; now I'm disgusted, with the attitudes on display here.
I hate to break it to you guys but what's happening to her could happen to you. To put it in terms of a startup she got into a booming market and was moderately successful, when the economy started tanking she invested in improvements that would help her differentiate her offering in an increasingly competitive market. Then the customers went away.
From reading the article it sounds like she works pretty hard and has to go to her customers unlike self important web developers (like me and thee) who can work from the comfort of our chairs without needing to get up if we don't want to.
And as for the iphone, from my reading of the article it sounds like that was acquired when it represented less than a days net revenue.
If you think it can't happen to you because you believe in Ayn Rand and program in Ruby; well guess what, it can; and if it comes down to holding on to your principles or feeding your kid, you will be filling out the form for food assistance and be glad it's there for you.
Let me put it in terms of a startup. She got into a market for the lifestyle (with relatively low pay) and now the customers went away. The solution? Look for a regular job and build up savings for your next venture (or to keep the regular job).
Her initial reaction:
"If you had a regular job and you didn’t have all that travel time, would you make better money in the end?" She gave a small laugh. "But I love what I do. So I try not to think about that."
Fast forward:
She has been auditioning to teach at new studios and e-mailing former clients to offer private lessons, and she added four hours a week of office work for Karma Kids Yoga.
Yes. Her problem is not simply bad luck. Her problem is that for a while she was unwilling to entertain jobs she didn't like, and even now she only does it for 4 hours/week.
That's what won't happen to most of us. Rather than filling out the form for food assistance, we will be filling out recruiters info sheets describing "a time I worked as part of a team" and rating our C++ skills on a scale of 1-10.
You are assuming that there are even menial jobs available that would allow her to support herself, given the sheer number of other people who are looking for those same jobs that may not be true.
And as for the lifestyle choice part of your criticism, this site is very much a glass house in which to throw that particular brick; if you're working on a startup and doing your work in a popular scripting language, that's a lifestyle choice; a more financially rational decision would be to go and fix someone's J2EE monstrosity of an accounting/ERP project too big to fail.
And if some clever person comes up with a machine that can crank out code to spec, better and with fewer errors than human programmers... Some of us will adapt to the new situation and carry on as Dev/PM dealing with AI instead of coworkers, but some percentage will be left high and dry.
I'm not assuming there are menial jobs available to her. Based on her statement about non-yoga instructor jobs and the fact that the article doesn't mention a search for them, I'm assuming she is only willing to work as a yoga teacher.
She is being criticized because she refuses to enter a different market even though her current market has collapsed.
I'm also not criticizing the lifestyle choices. I'm criticizing the unwillingness to reevaluate those choices when circumstances change.
"That's what won't happen to most of us. Rather than filling out the form for food assistance, we will be filling out recruiters info sheets describing "a time I worked as part of a team" and rating our C++ skills on a scale of 1-10."
I'm fairly certain that the iPhone part is what is getting at most people, including me. It seems like it would be cheaper to break the contract and get a bare bones plan.
Food stamps. iPhone. The incongruity of that alone should be enough to excuse any unwarranted judgement, if there has even been any in the first place.
To be fair, freelance yoga instructor sounds like a luxury service provider. Yacht salesmen are probably having a rough year too. She is not a general contractor or a self-important web developer.
Yep. Although there is plenty of evidence that Yoga can be a very effective health exercise and can help prevent conditions that cost far more to fix than a few more mornings a week working on your body.
It's not impossible that her services are systematically undervalued currently; after all in the real world markets are not at all rational.
A woman with a masters degree is working as a yoga tutor, because the likes the lifestyle. It is hard to be a yoga tutor in today's economy. She owns an iPhone and pays $1,350 a month for her apartment. She is on public assistance now, and has ceased paying for the student loans which allowed her to get the master's degree.
You're supposed to feel sorry for her.
Articles like this probably turn Democrats into Republicans and turn Republicans into heart attack victims. (Since money is fungible, the food stamps are essentially paying her iPhone bill. Phew, I was worried for a second.)
I would have expected more sympathy from you patio11. An iPhone or iPod makes sense for this woman as a portable music player she uses for work. The extra cost versus a cheaper mp3 player would seem justified as a way to get email on the go. Plus a phone.
I didn't get the impression that her MA or debt burden was relevant since it's clear she is 38 and spent the last while working for her ex-husband. Her rent isn't inexpensive but she has a 7 year old kid. I got the impression she would take a job if offered. Maybe she's having trouble finding one. Look at the U6 unemployment rate.
I don't live in the States and can't comment on the rest. That said, I was genuinely heartened by the approach the company that still employs her is taking to trying to help out its staff. I really hope it works out for them and they emerge from the recession with a stronger business.
You're of the impression that she is actively looking for a regular job and would take it if offered, correct? I'm of the opinion that she says exactly the opposite: that she is unwilling to entertain the notion of working for a regular job, because she likes the lifestyle afforded by being a bohemian yoga instructor.
“I spend a lot of time on the train,” ... “and it makes you wonder: If you had a regular job and you didn’t have all that travel time, would you make better money in the end?” She gave a small laugh. “But I love what I do. So I try not to think about that.”
I think you're missing the point of the article by focusing on her. They may have been able to find a more sympathetic subject to focus on, but the point remains that many freelance workers are now facing a decline in demand, and they are really an uncounted part of the unemployed economy.
> They may have been able to find a more sympathetic subject to focus on, but the point remains that many freelance workers are now facing a decline in demand, and they are really an uncounted part of the unemployed economy.
That may be your point, but the article was about something else.
As much as I'd wish to disagree with you, she reeked of myopic selfishness. One can only hope that, one day, she'll take a moment to look up from her iPhone to see the other occupants of the bread line. That the article had the gall to confuse "middle class poverty" (whatever that means) with a mid-life crisis, seems more appropriate for a satire piece in The Onion.
Democrats tend to view the poor/needy as people who were unlucky. Redistribution is justified as evening out the results of chance.
Republicans (excluding the 'lefty christian' ones such as Bush [1]) tend to view the poor/needy as financially/etc irresponsible people. Redistribution is not justified, being mainly just a tax on responsibility.
The example given in this article supports the Republican view more than the Democratic view.
[1] I use 'lefty christian' to describe the ones who support both redistribution/social spending/etc, but differentiate themselves from Dems using christian nationalism.
Feuer’s ex-husband pays one-third of her rent. So she is even more of a leech.
Anyway, qualifying for food stamps means your making no money. So she is getting one hell of a wake up call and I expect she will snap out of it. Teaching Yoga is the same type of crack for yuppies as opening a coffee shop. It seems like a great idea at the time, but the pay which limits it's long term appeal.
I've been a freelance web developer, off and on, since I graduated from college in 2003. My latest "freelance stint" has just recently passed the one year mark. In between I've had full-time jobs for people who eventually became steady freelance clients. So that's my background.
Until recently, I had seen a huge drop off in requests for proposals and the few I did get were dead ends. In hindsight, this started happening during the early winter of last year. But in the last few months I've been picking up more odd jobs so on that front, at least in the short-term, things seems to be getting better.
I haven't had to go out and actively seek new clients in quite awhile because I've put together a steady stable of recurring clients. Most of my client base is in the professional sports field and even in down economic times, teams still need to keep their websites up and running. So that's my "secret" to freelance success in a bad economy: have good clients in stable industries.
Aside from freelance web dev work, I've also put together a decent network of sites earning money through advertising. At this time last year those sites were on pace to make a respectable amount of money each year. It wasn't a living wage but some months it came awfully damn close. Since the economy went to the dump I've seen a huge drop off in revenue from these sites. Some earn 50% less now than they did at this time last year. This income was, for lack of a better term, unnecessary for me to pay my bills and live so while it's a bummer I can live without it.
This was a bit rambling but that's my experience so far with the poor economy as a freelance web developer.
We could call it "savings". Then, in lean times, workers could tap their "savings" to make up for temporary shortfalls in income. To minimize the cost of administration for this innovative unemployment protection fund, it could be outsourced to private financial services organizations, hereafter called "banks", which would allow workers to access their "savings" on completion of a routine procedure, up to the limit of "savings" they had accumulated.
"Savings" could be paid for by charging more on an hourly basis than full time employees received in salary for comparable work.