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> What would the world be like if contract/freelance/part time/short term work were the default?

That's actually one of the reasons I find the idea of a guaranteed basic income so promising. The biggest thing making an "everybody freelances" world a dystopia rather than a eutopia (sic) is that it would eliminate any semblance of income stability.

Static long-term contracts would still be an option because of the reliability they offer to both sides, but it would give employers the benefit of at will employment without the drawbacks that normally has for the employees.

Of course I don't really see it happening in the US -- at least not in a way that's good for the employees. A lot of the welfare system in the US is still based on the idea of traditional long-term employment, even with Obamacare and all that decoupling it a bit.

The concept you're looking for is "savings". Contractors and freelancers charge a premium to compensate for the lack of income stability. If that premium is saved up, you get stability.

Except some freelancers don't seem to be very good at the savings part.

If that were the case, one could hardly blame it on that particular hiring process/point of view.

No, but it gives a clue as to why there are more employees than freelancers.

Relying on savings to compensate for irregular income requires you to have a runway to begin with.

Given the increasing mountain of debt new graduates start with, this is going to be generally untenable for most new employees; and even some older employees will have enough financial obligations that building up the requisite amount of savings to account for income irregularities would be very difficult.

Getting to the point where you can deal with uneven income flow can take quite a bit of time, time you need to spend working for someone.

That's actually one of the reasons I find the idea of a guaranteed basic income so promising. The biggest thing making an "everybody freelances" world a dystopia rather than a eutopia (sic) is that it would eliminate any semblance of income stability.

Don't forget health care. That plus a basic living stipend would be quite a revolution to the economy. We'd start to price activities more sanely, and use automation more effectively.

The people still driven by status will still work their asses off to get ahead, and in general I think things would still get done. With the energy resources and automation we already have, we can do this now.

> Don't forget health care. That plus a basic living stipend would be quite a revolution to the economy.

Don't get me wrong, I think this would be incredible, but where would the money come from to fund this? How would you guarantee that the funding stays in place for the long haul?

In America, there is plenty of money to be had by taxing the affluent, wealthy, and "obscenely" rich (a lot) more. There is nothing to guarantee any source of money beyond varying levels of confidence. Medicare and SS have lasted a long time, albeit after repeatedly being weakened. For similar reasons I have some confidence that said taxes used explicitly for guarantees of basic income and health care would be left in place for some considerable time.

Generally the calculations tend to be based on an increased tax on consumption (people who are better off spend more money, so they end up paying more into the system) and/or the reduction of expenses in a lot of the social welfare system (which can largely be rolled into the basic income).

Some designs assert that the basic income should simply be paid to every citizen regardless of other sources of income. Other models propose a model with a soft cut-off point (so for every dollar beyond a certain baseline of income you get some fraction of a dollar less basic income, up to a level where you -- again depending on the model -- either start paying it back or simply don't get any basic income at all). In any case the idea is that (unlike with welfare models like the one we have in Germany[0]) for every dollar you earn you actually end up with extra cash in your pocket.

Ideally the basic income should be high enough to provide a frugal but sustainable standard of living with access to everything necessary to participate in the market. But arguments can be made for lower amounts as well.

[0]: One problem with the German welfare system (and similar ones) is that if you receive welfare benefits and earn money, that money is subtracted from the benefits you receive at a rate of pretty much one-to-one. So if you (hypothetically) get 400 euros in benefits and then find a job that pays you less than 400 euros, you effectively end up with the same money you'd have without the job. This creates an unintentional incentive for welfare recipients not to take on low-paying jobs (frequently the only ones they qualify for) which is then clumsily counteracted with various legal constructs (like forcing people to take job interviews or accept job offers for jobs they are not a good fit for at all). It's not a terrible system, but the design flaws are obvious.

I'm German, so I'm taking universal public healthcare for granted. I guess Obamacare sorta is a step towards that idea in the US?

It's a funny thing this idea of liberty. On the one hand an American citizen is freer in that there are less restrictions on what he can do. On the other hand a German citizen is freer in that he (theoretically) doesn't have to worry about the bare necessities.

As an aside: there's also the idea that basic income would eliminate the need for minimum wages because you can decide to work for pennies without it being exploitative because you would barely suffer any consequence for not taking it. A lot of things would change if unskilled workers wouldn't have to suffer unacceptable working conditions out of fear of unemployment.

What's the weekly rate of the average freelance software developer? And how does that compare with that of a freelance bartender, nightwatchman or refuse collector?

Relying on a BI (at any feasible level) for even a fairly brief period of time is going to represent a severe drop in income for most skilled contractors, and thus people paying mortgages on their condos in SF are going to be just as worried about income instability as before.

My rack rate, when I was contracting was $150/hr. So yeah a basic income would have covered basically my health insurance maybe, if I didn't have a gig.

But with a rate like that, I didn't have to work but 3/4 time to feel flush.

The idea behind a BI is not to make work redundant.

Sure, even with BI the loss of a job could mean losing your mortgage. But it would allow you to make do in between jobs without having to live in a van down by the river.

    a dystopia rather than a eutopia (sic)

This is an awesome typo. "Utopia" is a transliteration from Ancient Greek meaning "No place." The same rules of transliteration would make "eutopia" mean "good place."

"Utopia" came into English through a satire, the meaning being that nowhere's really paradise, but today we mostly use it without that edge, i.e., as if it really were spelled "eutopia."

I don't think that's a typo. I think pluma added (sic) to point out that he spelt it differently on purpose, not that he's quoting someone verbatim.

But thank you for teaching me about eutopia!

FYI, St. Thomas More, who coined the term Utopia, seems to have been intentionally ambiguous about whether the term was a transliteration of eutopia (good place) and outopia (no place).

ah, my bad, I think you're right.

I wished I could say I coined that term, but I've seen it before. It's sometimes used in literary studies to explicitly distance a positive utopia from a dystopia. That it's a homophone makes it a clever pun, but also pretty useless in normal conversation.

It's a beautiful idea but the problem is implementation.

The government of most countries is already a powerful and corrupting force, giving it even the additional power and discretion to 'hand out' a basic income is terrifying to consider.

Ronald Coase won a Nobel Prize in Economics for asking and answering why individuals choose to form companies over contracting out their work.

In a frictionless, efficient market it is always cheaper to contract out work. But the world isn't frictionless. There are transaction costs. Search, information, bargaining, maintaining confidentiality and enforcing agreements all cost time and money. Meanwhile, overhead costs and the management error grow as in-house functions increase. Balancing labour transaction costs and management scaling inefficiencies results in an optimal firm size. This firm will outcompete less agile and well-integrated small firms and distended behemoths.

http://www3.nccu.edu.tw/~jsfeng/CPEC11.pdf

> What would the world be like if contract/freelance/part time/short term work were the default?

I've heard this line a lot. The interesting thing is that there are areas, even inside tech, that this is the default. And it's nto necessarily better. For example, steelworks or the oil industry. A pretty significant portion of the employees in these fields (including IT sectors) are contractors. They have minimal job security and limited motivation to excel (even in the steel industry where perks are fairly decent).

I know this empirically because whenever we have a job opening there is a queue of people from these industries looking for a more stable role, even if it means a pay cut. Which somewhat gets to the heart of it - this is about job security!

What you are describing works well when you look at the top 0.5%, or maybe less, of employees. For the rest, the current system has evolved to favour the employee and provide stability for them month-to-month.

Now don't get me wrong; it's imperfect, and we need to evolve the system again! But short-term working is not a coverall solution IMO.

Agreed. I'm guessing there should be (in the realm of possible solutions) some sort of intermediate arrangement, or a whole spectrum of intermediate arrangements. These may previously have been too complex to manage, but might now be plausible.

(Can't help but feel like there's some sort of parallel between this and conventional attitudes towards marriage! Just because marriage is a little bizzare doesn't mean that the only alternative should be bachelor life forever.)

One pain point that should be solved is this; changing jobs is expensive, or risky. If you don't time your notice period correctly you can end up having to last on a short salary. I know a few people who got into debt in this way.

I recently had to think about this and for me, moving roles is worth probably about ~£2K salary in "life admin" (i.e. if the new role is not offer two grand more then it's not worth moving, from a purely financial motivation)

But short-term working is not a coverall solution IMO.

Indeed. A coverall solution would be a basic income for all permanent residents, coupled with a nationalized healthcare program. People want stable employment because freelancing is so risky without the benefit of any guaranteed regular paycheck or insurance. If the government actually provided a minimum subsistence income and insurance program for working adults, there would be much less incentive to get "married" to a corporation, and the labor market would be much more fluid, fungible and efficient as a result.

People have kind of touched on this a bit, but I just want to say this as explicitly as possible, because I think this is a thing that's been kind of forgotten over time: Forcing employers to commit to their employees on some level was one of the most significant achievements of the labour movement.

Most people don't really want to have the 'flexibility' of working, because that also comes with having to find work on a regular basis. In some post-scarcity or at least post-austerity society this might be something people are willing to do, but most people aren't working because that work is something they have a passion for, they're doing it so they can do other things like have a home and a family.

Employers of this kind of labour would love nothing more than to schedule you whenever they felt like, have more part time employees at lower wages, and let you go if you miss even one shift.

Preach it, brother.

Committment forces cultivation of talent rather than frontrunning.

"I cynically suspect the current concept of full-time work evolved to suit employers, it allows them to manipulate and scare employees, especially when (for example) health insurance is at stake. "

Before, getting paid _daily_ was the norm. Getting money for the whole month at a time is way more predictable.

Employers typically are financially much better suited to weather out economic slumps than individuals are.

On the average, it's to the employees benefit temporary employment is not the norm.

"employers naturally have more data about salaries and so forth, in general most employers have many employees, while most employees only have one employer. That is inherently asymmetrical."

This is very true. Unions are a one such leverage balancing mechanism.

I don't particularly enjoy the hiring process. It takes a lot of time, which is time I can't be building.

I think I would really, really not enjoy having to potentially hire a brand-new crop of people, or renegotiate every contract on my team, every time we hit a gatecheck, major deliverable, project checkpoint, etc.

The current concept of full-time work means I as an employee don't have to worry so much about not having a job in a week (it takes time to hire a new me, too), and also that the people I hire likely aren't going to disappear on me in a week, as well.

Moving to a "everyone short-term contracts" model means I have less security that this team I've spent a lot of my time trying to build may end up not being here in 6 months. It means my team members have less security that the coworker of theirs who is specializing in ____ will be here in 6 months.

Probationary periods in new hire contracts exist for that "this isn't a mutually good fit" issue.

Ultimately it feels like an "everyone is a contractor" default will end up increasing overhead for the company, reducing productive time available for people involved in hiring (my developers have to interview a new hire, as well), and less security for both the contractor and the employer.

This.

The solution to overhead of hiring isn't "let's do more hiring". It's figuring out how companies can de risk the hiring process. Certainly moving everyone to contracts would do some de risking (definitely around 'parting ways'), but more revolutionary would be to figure out a way to de risk the 'finding talent' part of hiring.

> What would the world be like if contract/freelance/part time/short term work were the default?

The problem with this arrangement is the cost of health insurance. Currently, the insurance market heavily favors employer-paid coverage; it's much more expensive for freelancers to buy their own insurance.

With the ACA, this is no longer true, at least in NY. When I was an employee in 2013, my premium healthcare plan cost ~2400 / month for my family. I only paid half of that, but my employer was pying the other half. Now I am contracting and I bought the best plan in the NY exchange which costs ~1700 / month. It has less choice of doctors, but higher % coverage, and the in network list is pretty large. Also, the plans offered to corporate groups have changed a lot and the plan I was on in 2013 is no longer available.

Glad to hear the ACA is helping, but as someone who has little experience with the US healthcare system: Jesus H. Christ. Unless you've got a family of nine, that is a lot of money for health insurance.

If everyone was a freelance employee, and could be replaced at any time, what motivation would companies have to invest in their employees (training, etc)?

If I were ever in charge of hiring for many types of position (whether programming, or writing, or such), I think I would do something similar. The advertisement will say "looking for full time X (must complete initial contract period of Y weeks)" or similar. The best way to see if you like someone's work, is to see it. So, hire them for up to three months (telling them that this is what is happening, and why, and being completely upfront about it), and if it works out, hire them full time. Then, why not hire multiple people? If you have a program that needs work done, then hire six people to work on those parts for a couple of weeks. See who's work you like, then hire them full time.

This requires a change in both thinking, and how programming is done. You want to have nice chunks of work that can be completed by new people in a short period of time. But, I'm sure it's possible.

(Where I'm from, the way to get a full time job in many fields is: get casual work, get short term contracts, get longer term contracts, someone else dies or retires, you get offered a full time job. This is partly due to too many people looking for too few jobs. This is not an ideal situation, but does mean that by the time people are hired for the full time job, the people hiring them know them already, and the quality of their work.)

No, that's not similar. There's a huge difference there ...

Good consultants / freelancers have higher hourly rates than normal employees, to cover their expenses and the periods of inactivity. Plus really good ones are much more expensive simply because they can deliver value that can't be delivered by average employees, so they are expensive because there's demand for their skill-set.

Your solution for example would not get me hired by you. Because I hate probation periods. Because getting hired for only X weeks is a risk for me that has to be worth it. So either you're a really sexy company for which I'm dying to work for, or you must pay me enough for those 3 weeks to be worth it.

And furthermore, the relationship between a consultant hired for a limited amount of time and an employee on probation is very different, going beyond just price. A good consultant gets hired based on (initial) trust in that consultant's skill-set, wheres a probation period signals exactly the opposite.

Of course, for that initial period, paying extra would be the way to go. The difference between what I suggest, and an ordinary probation period is thus: with an ordinary probation period, still only one person is hired, but not only do the others not get paid, the one person is still not guaranteed a job at the end of the process. My way's more upfront.

Very few people would leave a job for a "chance" at another. So you'll limit yourself to only people currently without work, which is a much smaller pool and likely to be filled with a disproportionate number of recently fired people.

As well as 'not so recently' fired people.

That's pretty much how it works here. Labour contracts include a provision that you can be fired for any reason at any point during the first three months with the company (they still have to pay you for all the days you're with them, of course). Conversely, they also include the clause that you can leave at any point during those three months without advance notice. After that, both parties must give a full month's advance notice to the other before terminating the relationship.

I've done a bit of both, and I can honestly say that the biggest problem with freelance work is that your work is short term and well defined.

I don't know how many times I could see client's problems, which weren't always what they thought they were, without any mandate to fix it. Sometimes they even hire you to do something that completely fly in the face of what they need. That's not fun.

If you're in it for the long haul you can allow yourself to take bigger risks, even if it's officially outside your responsibilities. What are they going to do? Fire you for fixing stuff? It is simply a more fun way to work and to interact with your peers, even if it may not be as financially rewarding.

Another option would be to hire fairly leniently, but prune ruthlessly and early.

In most jurisdictions, there is a trial period of sorts, typically 60 to 90 days, during which it is easy to fire an employee, before various rules about dismissal kick in. As far as I know, most companies don't really make use of this, except in really serious cases.

But assuming it is in fact easy to fire during this period, we could hire somewhat loosely, and then carefully evaluate the progress of the employee at the 60-day mark. And just dismiss the ones who aren't making good progress. We might dismiss half the hires early.

How long until you run out of applicants willing to take the risk of having to restart their job search after they've settled down?

Assuming we only care about applicants who believe themselves to be competent, that depends how much they trust you not to make false-positives.

"They let a lot of their hires go in the first month, but that won't happen to me."

Hard to say. Most people over-estimate themselves and figure they won't be the ones to get cut. It would also make sense to be clear about the trial period right up front, so people don't "settle down" too early.

The real problem would be hiring people who need to move.

I don't know if I'm convinced "making contract work the default" is the right solution. But I do agree the lines should be blurred in terms of how companies approach their "hiring process". Companies won't change unless they perceive the change as bringing benefits to the company (ie. saving or making money). I think there will need to be some major success stories before we see widespread adoption of dramatically new hiring policies.

> What would the world be like if contract/freelance/part time/short term work were the default?

It appears to be what we are moving towards, and so far it ain't looking pretty. Sure, "our kind of people" profit from it, but mostly workers are being ruthlessly exploited on a massive scale without the protection offered to employees in most civilized countries outside the US.

> I cynically suspect the current concept of full-time work evolved to suit employers,

The reason there is a difference between full-time employment and contract work is regulations put in place to limit the power companies wield over its workers.

Companies like FedEx try to pass of its employees as "contract workers" to circumvent employee protections. I guarantee this is not done to benefit the employees.

Many companies hire contractors and then turn them into permanent employees.

While that sounds like a reasonable hiring approach most of the contractors I know (in the UK and Ireland) wouldn't take permanency because contractors earn significantly more. Maybe it's a bit different in the US though.

I was the same. There's an easy enough solution to that for the company, however.

I knew a few contractors who did take the full time role despite the lower pay.

It was different in the US before ACA (Obamacare) was implemented. Before then, employer subsidized healthcare was significantly cheaper than buying private insurance on the open market. That was a major impetus to taking a full time job. Now, the employer health plans are little better than what you can get through ACA, especially if you're young and healthy and can opt for the cheaper options with less coverage.

I'm a startup founder and while this had been our initial approach to evaluating new engineers, our payroll company, PayChex, has specifically advised us to NOT do this. Why? Because it sends a red flag to the IRS to come after us for taxes for the period when they were a contractor.

Crazily enough PayChex has told us that the real solution here is for us to "sign" the person over to a contracting company so we can hire them thru the contracting company for the evaluation period. Yes we'll pay more for them since we have to pay that company's markup but we won't get gone after by the IRS. And, yes, it adds another layer of BS / paperwork. End result? We've hired no one because of this - its too hard to vet engineers without seeing their work. Sigh.

IANAA && IANAL but maybe you shouldn't take your payroll company's word for this. I would guess if you meet your tax obligations and employment law obligations you should be ok. Maybe get a second (and third) opinion??

> I would guess if you meet your tax obligations and employment law obligations you should be ok.

If its an audit red flag, that's a risk even if you aren't breaking the tax rules associated with that transaction -- it increases the risk associated with any tax rules you might, knowingly or not, be breaking.

Further, if you are using it to vet potential permanent employees in working conditions as much like the ones they will be working in as employees as possible, its quite likely you aren't meeting your employment law obligations when you designate them as contractors (and, because tax treatment is tied to that designation, quite likely as a result not meeting your tax law obligations.)

Certainly, the best advice is a domain expert working for you in that capacity, that knows exactly what you are planning, rather than your payroll company speaking in generalities, but in generalities the advice given doesn't seem all that bad.

What you say makes perfect sense, but in that context how do "contract to hire" places do what they do legally?

One common mechanism is the use of third-party staffing agencies who are regular employers of the staffers for the contract period the way the payroll company upthread recommended.

Direct contract-to-hire is also done, but its fairly frequently not done legally, which is why it gets additional scrutiny.

I really wouldn't not hire because of the chance of being audited, that seems like a pretty disproportionate response. May add complications, but if you're that worried, you can always hire people full time on an explicit trial basis.

What's wrong with going back and paying the employer side taxes on the contracting period for those that convert?

So... pay more money now via contracting house markup to avoid maybe paying more later?

Yes, that's because companies that hire people as 1099 independent contractors also usually provide their equipment, train and direct them on how the work is to be performed, etc.

The litmus test for a 1099 is that "an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done."

Companies frequently fail this test when hiring people as 1099.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...

> We've hired no one because of this - its too hard to vet engineers without seeing their work.

I really wish certain segments of this industry would stop being so irrationally paranoid about hiring. I think so many of our hiring and talent problems are self-inflicted.

You can hire someone ad a short term contract employee. Your payroll company was trllijgt you to not fraudulently hire people as "independent contractors".

What would the world be like if contract/freelance/part time/short term work were the default?

Many of the replies thus far have quite rightly pointed out that the predominate contract/freeland/short term model actually puts even more power in the employer's hands, and is often used in an abusive, diminishing way. It is full-time employment made worse -- all of the problems and detriments, with fewer of the benefits.

There is an alternative model, but it is extremely hard to make a success. I build systems for financial services, and have a long, proven track record (one of the products I built half a decade ago, barely changed since, was just acquired by another company for big money). I decided to go solo, set up a corporation, and pitch my independent services for short term engagements. The premise is that it amplifies my own motivations, focuses my work, and intrinsically improves my rewards.

A surgeon ready to swoop in and remove the cancer -- focusing on my specialty and utilizing my somewhat unique set of talents -- leaving a well-documented, working, tested, proven solution for your organization to pick up and run with. This can be for load sharing, for capacity extensions, or because certain talents don't exist on the team. It allows me to specialize in a way that I couldn't do in one engagement, and I don't end up whiling my days away reading Reddit (which is the case for a significant percentage of full-time workers pretty much everywhere).

It is extremely difficult to get businesses to buy into this model. The first problem is the illusion of a "learning curve" -- if you have a learning curve in what you do (the classic "employees can't be productive for the first n months), you probably don't actually know what you're doing. I saw this in one firm where everyone was sure it couldn't work because their mystical financial calculations were so complex it would take months to understand them. Only they weren't actually complex whatsoever -- everyone was just blissfully in the dark about how to calculate simple things like IRR, so it seemed like some sort of unique, in house mystery meat.

A bit of a rant -- I could go on for pages -- but honestly most firms can't utilize the contract style employee because their own processes are so broken, their projects so tightly coupled and intertwined and undocumented, that they can't imagine how to separate something out.

"...most firms can't utilize the contract style employee because their own processes are so broken, their projects so tightly coupled and intertwined and undocumented, that they can't imagine how to separate something out."

I frequently find it frustrating that an employer can have meetings and make specific plans for a rented person doing a one time project, but they generally don't know how to organize or make their own people more effective. It's like the employees are a given, but this outside thing needs special approval and funding so it needs to be handled well.

> if you have a learning curve in what you do (the classic "employees can't be productive for the first n months), you probably don't actually know what you're doing

Either that or you have a crapload of self-imposed complexity.

That said, some roles really do have a major learning curve due to the amount of background domain knowledge required.