A dramatic change in the American workforce has been the rise of a different kind of worker – a contributor that goes by many names: contractor, supertemp, freelancer, contigent, gigger, and much more.
No matter what we call them, these workers all have one thing in common: they are not tied long-term to any one job or employer.
Back in May, Forbes contributor Nancy Pofeldt covered a detail hidden inside the US Government Accountability Report: 40.4% of the U.S. workforce is now made up of contingent workers – contract workers without traditional jobs.
There are positives for this category of workers, including a flexible schedule and the freedom to not be stuck in one unhappy position for years. Recruiter blogs and companies looking to hire non-permanent workers extol the virtues of the freelance position. Plus, pay is often higher.
However, what these companies and recruiters won’t tell you is there are significant drawbacks to this aspect of the “Gig Economy” that many young people might not understand, like these:
Zero Job Security
Freedom comes at a cost, including the reality that as a contigent worker you have absolutely no income certainty. Even if you have a yearlong contract, it doesn’t mean you’ll be able to fulfill it. Best case scenario: less than one year from now, you’ll be looking for your next gig.
This means you need to think like a farmer; it doesn’t matter how good your current crop is… plan for the coming drought.
Zero Unemployment Insurance
As a contract worker, if you are 1099-ed you cannot claim unemployment insurance to tide you over until the next gig. Again, this means you must plan for unexpected gaps in regular income – which means becoming adept at building adequate savings is a prerequisite for the career freelancer.
You’ll Always Be (or Need) a Bookkeeper
Keeping track of your finances is crucial, and everything from invoicing, tracking your hours, following up on accounts receivable, and making sure you pay taxes (including self-employment) takes time – time that traditional employees don’t have to spend. You can hire a bookkeeper to do this for you, but that’s an additional out-of-pocket expense some supertemp types can’t yet afford.
You’ll Always Be Selling
Anthony Iannarino talks often about how everyone needs to learn to sell, and I buy into that concept wholeheartedly because the skills you need master in order to be a great salesperson is critical to your career. Even in a 9-to-5 job this is true; for freelancers, your professional life just may depend on it.
Yes, keeping your sales funnel full takes time and discipline… but when you’re a contractor you must be able to do the work at hand and consistently seek out your next buyer.
No Employer Paid Benefits
I love being self-employed because the flexibility is worth a tremendous amount to me, but I am fully aware of what I’m sacrificing. Employer paid health insurance is nothing to sneeze at, nor are paid vacation days and sick time. If you work for yourself long enough, this becomes second nature, but it takes some getting used to… and you need to be prepared – financially and emotionally – for what life without paid benefits looks like.
In no way is this post meant to scare you away from freelance work or self-employment. In fact, as it stands now nearly 30 percent of Millennials are self employed – many who enjoy the upside of driving their own careers down a non-traditional road. Rather, my intent is to make sure anyone considering this route thinks about the sacrifices they will make and plans wisely.
Freedom is wonderful, and the flexibility and self-determination freelancing brings is priceless. And with discipline and proper planning, being a contractor, supertemp, gigger or freelancer can be the best possible employment scenario.
About the Author: Amy McCloskey Tobin is a content strategist and creator. She specializes in generational insights, the future of work, the remote workforce, workplace diversity, and how tech has changed the business world. Amy has worked with major online publications to develop content and content strategy. A devotee of social media, Amy believes firmly that great content begets social media community. Find Amy on LinkedIn and follow her on Twitter!