"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.
(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.
In regards to point 3, I thought one of the issues was that Uber was forcing their "contractors" to work at specific times in order to remain employed.
Most of the regulations around this that I'm aware of are basically the opposite of what you're describing. The government forces companies to treat some workers as employees precisely because they're already being treated as employees rather than contractors (i.e. not having a flexible schedule).
There is are checklists[0] to determine contractor vs employee, which vary slightly from location to location, but maintain roughly the same ideas. Companies like Uber want the upsides of having employees classed as contractors, but not the downsides. They should be forced to pick one or the other, rather than trying to straddle the line.
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.
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.
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[ 2.5 ms ] story [ 39.8 ms ] threadYou 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.
[0]: http://art.mt.gov/artists/IRS_20pt_Checklist_%20Independent_...
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.
[1] http://economics.mit.edu/files/563