Volume 8, Number 4 – December 2011

More Resources on the 1099 Economy

Our last newsletter and a series of recent blog postings have focused on what’s happening in the 1099 Economy. This term refers to the growing number of American workers who work in “non-covered” jobs, i.e. they work via individual contracts as freelancers or independent consultants.   At tax time, these individuals file a 1099 form as opposed to the W2 form typically filed by full time employees.  While the numbers vary depending on how and what you count, data suggest that a minimum of  20 million Americans now fit this description.

As we’ve been following this topic, we’ve received lots of feedback and suggestions of resources and organizations focused on supporting these workers and entrepreneurs.    In an effort to share what we’ve learned, this edition of EntreWorks Insights highlights some of these promising initiatives.  While policymakers continue to ignore and neglect this important part of the US workforce, lots of other organizations are trying to help.  Here are a few of the most promising:

Freelancers Union:  The New York City-based Freelancers Union is the granddaddy of advocates for freelancers and independent workers.  Started in 1995 as Working Today, the Freelancers Union now represents more than 100,000 members across the US.   It offers a host of services, including health insurance, retirement benefits, a jobs board, and a host of networking and community building activities.   The Freelancers Union views itself as leading a national movement to change how independent work is viewed and treated.  It’s founder, Sara Horowitz, refers to the rise of the independent workforce as “the industrial revolution of our time.”

National Association for the Self-Employed:  NASE operates like a more traditional trade association or advocacy organization.   It provides many member benefits, but also places great emphasis on educating policymakers in Washington.  It does a great job of tracking legislative activity on a host of issues related to the self-employed and to small business more generally. 

CFED’s Self-Employment Tax Initiative (SETI):  SETI targets tax preparation and support services to the self-employed and to the owners of small microenterprises.  It is based on the recognition that tax preparation poses a big challenge to many 1099 workers.  Many of these workers file an annual Schedule C form, which can be a daunting proposition for those new to the business world.  By focusing on aiding new business owners with tax preparation, SETI also hopes to introduce microenterprise owners to other services, such as training and consulting, and to help them quality for other benefits and support, such as the Earned Income Tax Credit.    The IRS already helps people apply for the EITC via its Volunteer Income Tax Assistance (VITA) program that trains volunteers to provide tax preparation assistance.  But, this program does not support the self-employed or new start-up businesses.  SETI can help close this gap.

MBO Partners:  MBO Partners is a consulting firm focused on providing support to independent consultants.  I include them in this listing, because, in addition to their consulting practice, MBO is also producing some useful guides on the 1099 Economy.  The latest is their 2011 Independent Workforce Index which provides some useful background on what’s happening with independent workers. The Index finds that most independent workers are very happy with their current work status, and that most of them (55%) proactively chose to become freelancers.   Here are some other interesting data points from the Index:

• Gender differences are minor with women accounting for 53% of the independent workforce, and men comprising 47 percent.
• Gen X (48% of those surveyed) and Boomers (30%) make up the largest age cohorts. 
• The numbers of independent workers will continue to grow.  MBO projects a net increase of 4.3 million more independent workers in the US by 2013.

There are a lot of for-profit web sites and services that focus on helping freelancers and 1099ers.  Well-known examples include guru.com or Freelancers Outpost or the International Freelancers Academy.   Many of these services provide excellent support and tools.  However, I’ve tried to focus here on groups that are both helping and advocating for the needs of these workers.  Each of these efforts offers great promise, but all of them are scratching the surface of a bigger set of issues and challenges.  Let’s hope for more similar efforts and for a more extensive national conversation about what the world of work really looks like in the 21st century.

What’s New at EntreWorks Consulting?

We continue to provide more regular news and updates at the EntreWorks blog at http://entreworks.net/blog.  Recent postings have analyzed new approaches to youth entrepreneurship, the power of crowdfunding, and innovative approaches to regionalism. 

Over the next few months, look for the EntreWorks team on the regular speaking circuit with upcoming speeches and training programs in Florida, Maine, Rhode Island, and Virginia.  Hope to see you on the road!