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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 464962  
Subject: "Agent economy" of part-timers Date: 10/5/2012 12:05 PM
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http://www.nytimes.com/2012/10/05/business/entrepreneurs-sta...


When Job-Creation Engines Stop at Just One

By CATHERINE RAMPELL
New York Times, October 4, 2012

...

“I think we’re all headed toward an agent economy, where everyone becomes an agent or a service provider instead of an employee at some big corporation...”

But the implications for the American work force are worrisome, and may help explain why economic output is growing much faster than employers are adding jobs....

For decades, new companies have produced most of the country’s job growth. Without start-ups, the country would have had a net increase in jobs in only seven years since 1977. The number of people employed by new businesses peaked in 1999, the height of the tech bubble, and has fallen by 46 percent since then, to 2.5 million in 2011, creating a slow leak in job creation that has proved difficult to plug. ...

The decrease in start-up size is probably driven by some combination of technology, changes in management philosophy and tighter financing. ...
[end quote]

Employment Level - Part-Time for Economic Reasons, All Industries usually peaks during recessions and falls rapidly during recoveries. This includes slack work (reduced hours) and people who wanted a full-time job but could only find a part-time job.
http://research.stlouisfed.org/fred2/series/LNS12032194
http://research.stlouisfed.org/fred2/series/LNS14200000

Unemployment Level - Looking For Part-Time Work remains high.
http://research.stlouisfed.org/fred2/series/LNS13200000

Unemployment Rate - Full-Time Workers shows a decline in unemployment.
http://research.stlouisfed.org/fred2/series/LNS14100000

The trend of business startups using part-time workers (agents and contractors) instead of hiring full-time employees joins the trend of increased automation in decreasing employment.

Wendy
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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405362 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 12:37 PM
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I'm in this boat and frankly, I don't worry about it and see it as a net positive thing for individuals and the economy. It allows flexibility and avoids being tied to one company.

The first paragraph says it all:
Today, in his third start-up, he has one employee: himself, aided by seven contractors working more or less part time.

I do the same - I hire a lot of contractors. I sometimes have hired employees - and I do both - but I find it's easier for me to manage hiring contractors than employees. I am also a contractor. I have a lot of friends also who work much as I do.

I would much, much, much, MUCH rather have several clients I support on a PT basis as a contractor than be in-house at any of them. First of all - it's far more lucrative for me. And secondly, it gives me flexibility. And unexpectedly I found when making the change, it also gives me much more mental equilibrium than I used to have as a middle-to-iupper level manager at a big company. I do not care much about internal politics at the companies I support, as I am not dependent on it. I mean - sure I am dependent on it financially - but the crazy overheated rumor mill (and the waste of time that are annual reviews) sail cleanly over my head most of the time and leave me alone.

Until last year I didn't show up anywhere on the workforce statistics. Now, as an S-Corp employee, I do. But there has been no real change to my work life or economic contribution. I was no less stable before and am no more stable now. This idea that only employees indicate stability is outdated in my opinion.

Really, the only big negative I can see is that this country has the oddity of people being dependent on their employer for health insurance, and it is harder and more expensive to get it on your own. But aside from tat? It's all upside as far as I am concerned to be a non-employee working PT.

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Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405363 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 1:26 PM
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Really, the only big negative I can see is that this country has the oddity of people being dependent on their employer for health insurance, and it is harder and more expensive to get it on your own. But aside from tat? It's all upside as far as I am concerned to be a non-employee working PT.

Don't forget also the fact that the IRS and Congress severely restricts your ability to save for retirement if you are a contract employee unless you have the ability to create a SEP.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405364 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 1:53 PM
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Don't forget also the fact that the IRS and Congress severely restricts your ability to save for retirement if you are a contract employee unless you have the ability to create a SEP.
Yes, contractors can create SEPs, and it is a better saving vehicle than a 401K unless your employer does a crazy high match. You can save up to $50K (limited to 25% of salary) for 2012.

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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405365 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 1:53 PM
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Thank you for sharing your experience.

<First of all - it's far more lucrative for me.>

My first concern was stability. With a shifting situation of part-time work, isn't your work more of a "pieces of the puzzle" situation than a full-time job would be? How does that affect the stability of your income?

<Really, the only big negative I can see is that this country has the oddity of people being dependent on their employer for health insurance, and it is harder and more expensive to get it on your own. >

This was my second concern. As the years go on, health insurance becomes more expensive. If you had an interruption of coverage you might become uninsurable if you were to develop a chronic condition.

<t's all upside as far as I am concerned to be a non-employee working PT. >
I'm glad you pointed out the upside of the situation because I only saw the risks.

Wendy

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405366 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 1:55 PM
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Don't forget also the fact that the IRS and Congress severely restricts your ability to save for retirement if you are a contract employee unless you have the ability to create a SEP.
That's not my observation nor experience... Neither the IRS nor Congresss directly restrict a contractor's ability to save (for anything.) On a macro scale they *discourage* saving by those paying attention to real inflation, but not from 1099 vs W2 income sourcing.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405367 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 1:57 PM
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It's not really much less stable than working for an employer who can lay you off at any time. It is more variable. And it FEELS less stable. I wouldn't do it without a nice healthy safety net because of the variable income stream (I have a two year e-fund).

It takes a certain mindset to make it work, and an ability to market (which I'm not actually very good at - and I hate). But all in all I like it better.

Plus I don't have to write another annual review ever again in my life. Thank you, all the powers that be!

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Author: gibbersome Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405375 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 2:52 PM
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The biggest issue I have with this is that most contractor/agent positions are already for the experienced workforce. It's usually the bigger companies who invest more capital in their employees, such as helping with training and licensing.

I am lucky since I am in the medical field and my training is funded in large part by the government (residency programs are funded by the Department of Health and Human Services). However, some of my friends who are recent law or engineering graduates are having a hard time finding their first "big firm/big company" job. Most of these companies would rather hire someone with a few years of experience under their belt, and if the skilled workers cannot be found domestically, they look elsewhere.

Two major downsides are apparent with the rise of agent/contract jobs:
1. Less jobs with benefits (independent contractors positions do not always come with medical insurance or pension plans).
2. Companies/small businesses look for those already trained and are much less willing to invest capital in a untrained employees.

Both provide short term benefits to businesses with dire long term consequences for this generation of workers.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405377 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 3:21 PM
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It is true it's the best fir for the more experienced. But "dire consequences"? I don't see that at all. There will be more job-hopping, but that's not actually a negative in my opinion. It exposes you to more people and more ways or working.

Experience matters, but you don't have to get it from a big company. Heck, I once hired an ex-jockey who had worked construction.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405378 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 3:25 PM
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Less jobs with benefits (independent contractors positions do not always come with medical insurance or pension plans).
They never do - or you are an employee, not a contractor.

And yes, the medical side of this loss of benefits is a big negative - and makes being a contractor impossible for those with pre-existing conditions or serious health issues. I find the retirement side of it - as I noted above - a big positive change, as you can save so much more as a contractor than an employee.

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Author: steve203 Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405388 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 5:51 PM
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I wouldn't do it without a nice healthy safety net because of the variable income stream (I have a two year e-fund).

That's what makes the proposition a no go for the mob, as most spend every dollar the moment they get it, and carry a 5 or 6 figure debt load. Like the bumper sticker I see quite often says "I owe, I owe, so off to work I go"

Steve

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405389 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 5:58 PM
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I didn't start out with that - it's mostly from my retained earnings. Save, save, save...

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Author: mauser96 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405393 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/5/2012 7:44 PM
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re consumer debt
http://www.cbsnews.com/8301-505145_162-57527029/u.s-consumer...

So I guess the Fed is getting what it wants . Richer banks, higher stock prices, and more consumer debt.

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Author: flyerboys Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405409 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/6/2012 1:21 PM
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This thread takes Macro economics into Moral Economics. How should we live and how should we raise and train our children to live?

I went from employee to contractor/consultant after 5 years of saving like mad, but most importantly after finding a niche (Vaxen kernel programming) where customers had a great sense of urgency as contract deadline grew near.

I would work weeks with little sleep, often on a cot near the computer console, in a state of self-induced mania. Huge payoffs. Then I would recover and sleep for a week, and then spend time relaxing, training in new skills (in those days I was mastering C and my favorite, a weird language called FORTH, and marketing/awaiting the next project. I was "working" about 2 out of every 5 days but in very irregular lumps (40 days ON nonstop and then 100 days 'OFF') but making 3-4 times annually what I had made before.

I bought private health insurance in 1979, holding on for dear life ever since until this year, when the price was simply too astronomical. Health Reform divorcing insurance from place of business is necessary if independent businesses and contractors are to survive.

It is very very hard to teach people how to do independent contractor if they were not raised to do it. However, some nomadic groups live this way naturally, and so we need to look at the large scale infrastructure of Culture/Childhood Training/Economics/Religion as a the boundaries of possible microeconomics.

david fb

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Author: solarae100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405410 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/6/2012 1:27 PM
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Health Reform divorcing insurance from place of business is necessary if independent businesses and contractors are to survive.

Bingo!


Edy

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405411 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/6/2012 1:45 PM
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Health Reform divorcing insurance from place of business is necessary if independent businesses and contractors are to survive.

Bingo!


Three approaches to doing that (pick one or find another):

a) Make employer-paid health-care insurance premiums either count as income to the employee (for all taxes including state income taxes, state disability insurance, Social Security, Medicare...);

b) Don't allow employers to count those premiums as a business expense;

c) Make ALL health-care insurance premiums 100% deductible from taxable income (for all taxes, see above).

Along with that I want one simple national insurance (not restricted to health-care insurance) reform: if an individual buys insurance in one place, the individual moving to another place in that state or another state does not constitute grounds for the insurer to terminate that insurance or decline to renew it (however this must not be construed to prohibit actuarially justified changes in premiums, including the difference between owner-occupied and rental housing).

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405414 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/6/2012 1:56 PM
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It is very very hard to teach people how to do independent contractor if they were not raised to do it.

Very true. But once they see the rewards it's hard to hold them back. At least it was with me.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405431 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/6/2012 7:23 PM
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It is very very hard to teach people how to do independent contractor if they were not raised to do it.
I totally disagree with this. I never thought I'd do it - no one in my immediate family had done it, and I worked at a huge F'500 company for years where I never remotely had to think about marketing or benefits.

It just takes some hustle, and it takes being really really organized. Anyone can do it - it isn't rocket science.

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Author: flyerboys Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405444 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/6/2012 11:09 PM
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warrl: I'll take any or all of your three points!

ginko: "It just takes some hustle, and it takes being really really organized.

AGREED! ...and almost impossible to teach. You have it "naturally" (whatever that means) or you are trained into it by age 16 or by great and prolonged suffering.


david fb

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405452 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/7/2012 1:31 AM
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Gingko100: <<It just takes some hustle, and it takes being really really organized. Anyone can do it - it isn't rocket science.>>

I agree. It further takes a little moxie and a lot of confidence in your abiities and yourself. I was downsized out of a large international corporation. Fortunately, through the years, I had built up a large network of potential clients, including competing companies. When, after losing my position (I was bought out), I started my own company immediately, and my first client was the company which downsized me. Yes, during the recession, I was not was rolling in "dough", but like you, I had a nestegg (along with SS) to carry me through. Now, business has picked up considerably, but I am ready for a downturn, if and when it occurs. I LOVE what I do.

Like you, I have a SEP, and am saving 25% of my pay (SubS Corp). Since I work parttime, due to my desire to travel and goofoff, I bring in about 25% of my original salary in 1999. But, I am comfortable, my company pays my Medigap, I have LTC insurance.

Donna (very grateful)

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Author: RaptorD2 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405463 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/7/2012 5:28 AM
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An agent-dependent economy is not bad for aging baby boomers with good work experience and/or education.

Someone on PBS the other day said that even as more and more boomers are becoming consultants, more and more boomers are coming to the realization that their best employment bet is to form their own consulting company, even if they are the only employee the firm ever has.

I recently talked with a dentist who was losing patients left and right through no fault of his own (he's a really nice guy and a great dentist and we have a first-rate dental college here where graduates tend to want to practice here.) So I helped him map out some small advertising and mailing campaigns on the cheap. He called me last week and said, "Dan, what the hell have you done? I was hoping to retire in 4 years; Now I'm swamped with new patients and referrals!"

So I played my virtual violin to show him my sincere :) sympathy. I HAD tried to warn him, but he didn't think the little campaign had much chance of such success. Me? I'm not surprised at all. I've done this for a living and usually for start-ups. Ongoing businesses are relatively simple with a little creativity thrown at them.

Boomers? Consultants-R-Us ... or we will be. Beats punching a clock.

Dan

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405497 of 464962
Subject: Re: "Agent economy" of part-timers Date: 10/7/2012 3:30 PM
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Thank you for recommending this post to our Best of feature.

I agree. It further takes a little moxie and a lot of confidence in your abiities and yourself.

Ayup! And it helps ability/skills to go along with the moxie.

Desert (The world's greatest excuse pales in the face of mediocre performance.) Dave

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