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Work Is Changing for Self-Employed, Freelance, Gig and On-Demand Workers

Updated on April 24, 2018
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Finn Mauritzen organizes worker owned cooperatives by converting existing businesses into employee ownership.

Freelance Worker
Freelance Worker | Source

How We Got Here

Different surveys reveal that more than half of workers are unhappy at work to some degree or another. Only a small portion are fully satisfied and engaged. One of the top reasons for this unhappiness is management. “They just don’t respect us,” they say. In an increasingly tight job market, employers get quite creative attracting and retaining workers. Contrary to popular belief, no amount of incentives can possibly make up for that. Then, what will? We will take a look at that, but first, let us look at how workers have responded.

Some workers have the ability to respond by becoming self-employed. As a result, the on-demand and freelance workforce is growing rapidly. Soon more workers will be independent than employed.

Many traditional workers have experienced that wages have not kept pace with inflation. Wealth and income inequality is on the rise. For a long time, conventional wisdom has held that one way to accumulate wealth is to start your own business, so many have tried that. Unfortunately, most have failed.

Let us look at some pros and cons of being self-employed.


Advantages of Being Independent

  1. Flexible hours

  2. Ability to pick and choose clients and co-workers

  3. Keep all profits

  4. High income potential

  5. More qualified retirement plan options

  6. Choose own career path

  7. Life/work balance

Disadvantages of Being Independent

  1. High risk

  2. Income fluctuates

  3. No benefits

  4. Social isolation

  5. Government compliance, marketing and other overhead responsibilities

  6. Self-exploitation through long hours

  7. Solely responsible for errors

With the emergence of a more global economy, many self-employed people are beginning to feel the pressure. For example, more and more Uber drivers are learning that the freedom to work when they want comes at a steep price. Their earnings are dismal. And how can you really compete with gig workers halfway around the world living on a fraction of what you have to pay? As more and more formerly employed workers move to online platforms, their challenges really begin to become clear.


Solutions

Some workers have already begun to respond to the shareholder owned business model by starting their own platform cooperatives. This includes taxi drivers in Vancouver and other cities, home health care workers, house cleaners and stock photographers. In all these cases workers have pooled their resources to start and own these platforms cooperatively.

Although there are many cooperatives in the US, most people are unaware that the credit union they go to is a cooperative or that the butter they eat comes from a cooperative or the hardware store they go to is a member of a cooperative. So it may take some time for workers to fully embrace worker cooperatives. Fortunately, there are ways to get started with less commitment involved. Some of these are:


  1. Informal sharing

  2. Trade association

  3. Marketing cooperative

  4. Worker cooperative

Informal Sharing

Informal sharing is already happening among friends in the same industry. In the IT industry, user groups have long been a way for people to network and share expertise. Sometimes networking has led to employment in existing firms, but rarely have independent contractors shared marketing, office space and management. Only recently, co-working spaces have emerged as a solution for startups.

Trade Association

A trade association formalizes what people have been doing informally all along.

Definition of Trade Association: “A trade association is a voluntary organization of independent business units in the same branch of industry, which conducts cooperatively (my emphasis) activities aimed at improving the welfare of the group, which does not deprive its members of the power to make essential managerial decisions.”

The role of associations is typically limited to education, certification and lobbying. If advertising is done, it is usually limited to generic services provided by all members generally to set them apart from non-members. Certification is used as a way to build that trust.

Marketing Cooperative

A marketing cooperative is a non-profit corporation. Members remain independent contractors. It typically works just like a franchise except here the franchisees also own the franchise collectively. The purpose is to operate under a single brand name and to pool resources to obtain marketing expertise at a higher level than they could individually. That allows them to focus on producing products and providing services.

Members pay a basic membership fee to cover expenses that benefit all members equally similar to what a trade association would do. The co-op may also offer special promotions in which members can choose to participate or not. Some co-ops also provide consulting services at cost.

Like a trade association educating and certifying members, a marketing cooperative can and should set standards for the conduct of its members thus essentially putting limits on management decisions just like any other franchise would. Franchises typically have elaborate operations manuals with procedures that are known to work. Franchisees who follow the instructions rarely fail. Organizing as cooperatives ensures that the people who do the work reap the rewards instead of shareholders who contribute no labor.

Worker Cooperative

Organizing as a worker cooperative takes cooperation a step further.Sharing is not limited to marketing, but also includes management. Members are no longer independent contractors, but either employees or partners. They all own one share each. They all have one vote. They share all the profit and take part in the decision making process. By organizing this way, they can afford the same level of management expertise their larger competitors can.

Freelance Writer
Freelance Writer | Source

Making a Choice

Of the four options, the marketing cooperative seems most likely to receive buy-in. A trade association will not do much unless it is on a national scale and receives widespread recognition as the standard for excellence. It is unlikely that a worker cooperative will receive sufficient buy-in until the cooperative model of ownership becomes more common. However, it is entirely possible that, when members experience the benefits of cooperation, worker cooperatives may simply emerge.The path to that could and probably will build on the informal relationships we already have, but doing it in a more intentional manner keeping what is possible down the road in clear sight.

Starting a Cooperative

What separates a cooperative from a traditional business is that all or most employees are also owners. Therefore, starting a cooperative business is not much different from starting a traditional business. You still have to be sure you can find customers who will buy your products or services.

Cooperatives do have one challenge traditional businesses do not have. Because they are democratically owned and governed, they have to spend time and energy making decisions. The day-to-day decisions are typically made by one or more managers who get their authority from a Board of Directors just like a traditional shareholder owned firm. The difference is that traditional shareholders can own multiple shares which allows one or a small group of shareholders to control the firm. Cooperative shareholders, on the other hand, can only own one share and therefore only have one vote each which makes a majority vote harder to achieve. The benefits of better job satisfaction, higher productivity, less turnover, etc. more than make up for it, though.

Conclusion

The way we work is and has been changing quite dramatically lately and there is no reason to believe it will stop any time soon. There are some signs that new generations are becoming increasingly disillusioned with inequality, racism and violence and are trying to find new ways to cope with them. Clearly, they are far more cooperative than previous generations and historically cooperatives have been one way for the oppressed to lift themselves out of poverty and oppression.

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