
The Self-Employed Depression - reyu
http://www.nytimes.com/2009/06/07/magazine/07unemployed-t.html?hpw=&pagewanted=all
======
patio11
_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.

~~~
ahoyhere
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.

~~~
roc
I've wondered the same for -ages-.

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?

~~~
ahoyhere
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.)

~~~
menloparkbum
_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.

edit: here's more info from a quick google search:
<http://www.roamingtimes.com/blog/south-dakota-residency.htm>

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:

<http://www.infoplease.com/ipa/A0781452.html>

From a cursory look at this list I THINK that SD is the only state with no
state income tax and very relaxed residency requirements.

~~~
ahoyhere
Thanks a lot for the info!

I never looked into SD... just the other ones. (I didn't even know SD had no
income tax.) That might be an option for me on my next trip.

(Course, none of the "experts" I spoke to brought this up, either. Jerks. :)

------
olefoo
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.

~~~
yummyfajitas
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._

~~~
olefoo
Was there a point you were trying to make?

~~~
yummyfajitas
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.

~~~
olefoo
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.

~~~
yummyfajitas
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.

------
patio11
Here's the summary:

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.)

~~~
trevelyan
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.

~~~
patio11
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.”_

Maybe she should start thinking about that.

~~~
KWD
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.

~~~
anamax
> 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.

------
st3fan
So anyone here having financial problems as a software dev freelancer? Do you
feel the recession?

~~~
bjplink
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.

~~~
villageidiot
->"I've also put together a decent network of sites earning money through advertising".

Care to let us in on any of your secrets?

