Brip Blap has an interesting post today, “Job Junkie.” It’s quite nuanced—a lot is going on in it. Overall, he’s talking about working so steadily and so faithfully that you become “addicted” to work. And he’s got something there. I once had a boss who told me how it felt when he was laid off a previous job. He said, “If you don’t have a job, you’re nothing.”
One thing Brip Blap observed in passing, though, caught my attention in a slightly off-topic way:
I offer my services to giant corporations for whom my fee is a footnote to a footnote to a rounding error. They don’t mind flinging some cash in my direction to avoid the hassle of hiring a permanent employee to finish their projects; they don’t have to train me, give me benefits and then file endless mounds of paperwork before they let me go. I can come in, do the work with a minimum of supervision, and leave with no fuss. So I get paid at a premium.
I was chatting recently with another freelance contractor who also feels well paid. But what looks like good pay to the freelancer, I remarked (perhaps unkindly) looks like something altogether different to the employer.
It doesn’t much matter how much an employer pays a freelance contractor, although of course they’d like to get the person to work for a fraction of the hourly rate a full-time employee would earn. Even if the employer pays you the full equivalent of what might be considered a good salary, he (or she…for brevity’s sake, let’s get politically incorrect here) is getting a bargain. He doesn’t have to pay anything for your FICA, he doesn’t have to cover your health insurance, he doesn’t have to chip in for your dental or vision insurance.
Nor does he have to provide you a decent office. If you work on the premises during your contract, a broom closet equipped with a light plug and an Ethernet connection will do. Far to be preferred, of course, is the opportunity to offer you the inestimable privilege of working remotely: i.e., you pay for your own roof, your own desk and chair, your own lamp, your own heat and air conditioning, your own water, your own computer, your own software, your own DSL, your own pens, your own pencils, your own paper, your own business cards, your own letterhead, your own parking.
It is, in short, such an amazing bargain that “a footnote to a footnote to a rounding error” hardly does it justice.
Consider, for example, what would happen if the Great Desert University decided to call me out of Bumhood and put me back to work on a freelance basis, offering to pay my previous gross salary. What would the university not have to pay?
• $600 a month* for health insurance, the full tab charged by Cigna for a policy that used to cost me just $36 a month. Total savings for a one-year contract: $7,200
• $36 a month for dental insurance; $432/year
• 7.65 percent of my pay, for the employer’s half of FICA and OASDI: $4,972.50 for the year
• Employer’s match for my 403(b) contribution: $4,550
• 1 Dell computer, bells and whistles attached: $1,000, approx.
• Acrobat Professional: $450
• InDesign CS5 Premium: $450
• MS Office: $150
• Steelcase office chair: $200
• Steelcase desk: $1,335
• Phone connection: unknown
• Ethernet connection: unknown
• Office space, air conditioning & heat, water: unknown
Before we even calculate the College of Liberal Arts and Sciences’ share of the phone, Ethernet, air conditioning, and water service, we see the university saves $20,739 on the first year of my services if it hires me on a freelance basis to work out of my home. That’s $20,739 worth of costs that the university passes to me. Before I’ve paid my income taxes.
Subtract 25% for federal taxes and 3% for state taxes; divide by 12 and you come up with a monthly net of $2656—about $400 a month less than I was taking home as a salaried employee. And that’s before I’ve paid the air conditioning, DSL, and phone service for my home office.
So, hiring you to do your job as an independent contractor works out to be a bargain for an employer. For you…not so much. Your gain out of the deal is that you don’t have to commute to work every day.
How do outsourcing employers get away with this? Beats me… But I have one theory: freelance writers and editors (and to a lesser extent, other creative talent) tend to look at their income figures through rose-colored reading glasses. In my experience with freelancers—of which I had a-plenty during my incarnation as a magazine editor—freelance writers and photographers often perceive that their income amounts to more than it really does.
I’ve lost track of the number of people who’ve proudly told me they earned umpty-umpteen tens of thousands of bucks in a given year—usually some munificent figure like 20 grand. But what you gross is not really what you earn. The figure that matters is the amount you have to live on. When someone crows about earning an amazing $20,000 or $25,000, they haven’t subtracted the many costs of doing business, nor are they connecting the cost of health insurance with their wage, in the way that a salaried earner thinks of healthcare premiums. The money that stays in the freelancer’s pocket, the amount available to pay for groceries and the roof, is much, much less than what she or he grosses—specifically because of the much higher costs of taxes and insurance.
While some people undoubtedly do make a decent income (at least now and again) at freelance contracting, the average Author’s Guild member earns less than $25,000. That figure is high, because Author’s Guild membership comprises well-paid television and movie writers and best-selling book authors, along with all the wretches with a laptop on the kitchen table. Another commonly cited figure is $10,000 a year: a number that hasn’t changed in three or four decades. Digital skills don’t help: Darren Rouse at Problogger did a 2007 survey that showed 26% of 857 bloggers earned under $10 that year. Nine percent earned $15,000 or more; 1% earned $10,000 to $14,999; all the rest earned less than $10,000.
Most people who get by as independent contractors in creative fields manage it because they have a spouse or partner who brings home a living wage. If you want to try to make it on your own, you need some demonstrable skills plus a good track record of employment in newspaper, magazine, or book publishing—preferably with a few major awards to show. And even then, you’ll have to make a lot of trade-offs, particularly in the lifestyle department.
Pay is low and workdays are long. Yesterday, for example, I started at 2:00 a.m. At 5:00 I stopped long enough to feed the dog and bolt down a small breakfast; then it was back to the keyboard. Forgot to eat lunch. Paused again for cheese and crackers around 5:00 p.m. Then worked through until 10:00 p.m.
One of my editors, who made a living in Long Island as a music critic for many years, once remarked that freelance writing is great because it lets you schedule your own work hours: any 18 hours of the day you choose.
He knew whereof he spoke.
* Figures from Great Desert University’s 2009 benefits handout