
The Rise and Nature of Alternative Work Arrangements in the United States [pdf] - tma-1
http://krueger.princeton.edu/sites/default/files/akrueger/files/katz_krueger_cws_-_march_29_20165.pdf
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aggronn
The authors here are worth noting: Katz and Krueger are well known for
publishing this[1] paper as well, which was one of the leading papers behind
the idea that wage differentials are a function of skill-biased technology
growth--that is, that automation and technology favors high skill workers and
devalues low skill workers. This was an early paper that at least partially
predicted the rise of wage inequality over the last decade where only high
skill, high value jobs have really improved in wage growth, while low skill
wages have stagnated.

[1] [http://economics.mit.edu/files/563](http://economics.mit.edu/files/563)

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fiatmoney
"Alternative" rather presupposes a lot. The idea of full-time salaried or
quasi-salaried employment by an abstracted company is fairly recent in the
grand scheme of things and depending on how you measure has never or only for
a short amount of time covered a majority of the labor market.

~~~
chatmasta
(You have a great username for making this comment, haha.)

You make a very good point that the current ideal of "employment" is
relatively new. Interestingly, history may be repeating itself. Freelancers
who specialize in one field or sub-field occupy a similar niche to craftsmen
from earlier centuries. For example in colonial New England, it was common for
people to specialize in one craft (blacksmithing, cobbling, etc) and train
younger generations through apprenticeships. Nobody called this
"entrepreneurship" or "freelancing," but that's effectively what it was. Small
businesses and enterprising individuals traded their labor to the local market
in exchange for currency.

Human beings and societies can adapt to market changes much faster than
regulation or measurement can catch up to them. Hopefully the US government
begins to realize the efficacy and prevalence of these "alternative work
arrangements" (I'm also not a fan of the term), and implements policies that
consider them. Some things I'd like to see:

1) Better tax treatment (freelancers who setup an S-Corp may end up paying
more tax than if they were an employee, since they need to pay corporate
income tax, personal income tax, and in some cases payroll tax)

2) Better / more nuanced measurement of "unemployment" in the country. It's an
open secret that the unemployment models are a complete joke for a number of
reasons. One is that they do not accurately consider contractors, and another
is that they consider someone who has "given up" on looking for a job to be
"employed." The models are designed to make politicians look good, which is
fine... except when the market starts moving based on the models. That is bad.

3) NOT funneling contractors into employment arrangements. There are many
advantages to being a contractor (flexible hours being the major one), and if
government regulation forces companies like Uber to treat their contractors as
employees, these advantages will rapidly disappear.

4) Better treatment of 1099 workers / freelancers / small business owners when
applying for loans or mortgages. Banks are generally very unwilling to lend
money to a "freelancer" and often want to see more years of history than they
would require from a salaried employee. This seems like laziness on the part
of the banks, who are unwilling to develop risk models for freelancers.

5) More willingness from employers, government or otherwise, to consider ex-
freelancers viable job candidates. Many firms will throw out resumes from
freelancers under the assumption that they are a "bad employee" (too
independent, can't follow instructions) or the freelancing was an exaggerated
description of unemployment.

There's lots of problems with how this class of workers is treated, and
addressing some of the above will hopefully go a long way toward welcoming
them into society.

~~~
shwouchk
An S-corp is pass through tax entity, you only pay personal income tax on the
income.

~~~
chatmasta
That's assuming you pay yourself 100% of the profits, which is not necessarily
true. You need to first pay yourself a "reasonable salary" (extremely
subjective), and for any profits left in the company after that, you owe
corporate income tax. If you want to avoid this, you can elect to file as a
C-Corp but then you need to pay payroll tax on your salary.

~~~
zrail
Exactly backwards

S corp:

* reasonable salary

* only pay payroll tax on salary

* all income taxed at personal income rates no matter if distributed or not

* income above salary not subject to additional medicare tax or passive income tax

C corp:

* reasonable salary + bonuses + perks

* remaining income taxed at corporate rates, can remain in business as retained earnings

* distributed non-salary earnings taxed again at personal income rates

Disregarded/partnership LLC

* No salary

* All income taxed at personal income rates

* Simpler to operate + less restrictions than S corp

* Can make sense if you're going to pay yourself more than the Social Security wage base anyway.

