CNNMoney had an article on the growth of freelance hiring.  Freelance professionals now make up 26% of the workforce, up from 19% in 2006.

“As the economy contracts, there are not only more people looking for new ways of earning money, there are also more companies looking to make their employment practices more efficient,” said Rob Palmer, CEO of GoFreelance.com, a job search site for freelancers.  Freelance positions fill both needs.

One obvious benefit for businesses is not having to pay for benefits.  Health care premiums are always increasing.  There’s no 401k match for the company to make for freelancers.  Using temporary employees also precludes the company from having to add to its pension liability.

But freelance jobs can be less cost effective for workers. Freelance paychecks can be erratic, plus freelance workers are vulnerable during down times, as they are the often first ones cut when companies scale back.

I’ve worked with many freelancers in my career in the defense industry.  Most of them were design engineers, who we referred to as job shoppers or consultants.  They were usually the first to go, but not always.  I worked with a freelancer whose specialty was a software language.  He’s still going strong after 10 ten years, and has survived a few downsizings.  The article gives some helpful advice:

For those trying to make it in the world of freelance, Erickson recommends creating a safety net first. She advises workers to find an inexpensive group health insurance plan like the one offered through the Freelancers Union, contribute to an IRA, which offers tax-deferred growth on your savings, and pay quarterly estimated taxes that include Social Security and Medicare taxes.

Freelancing is not for everybody.  I know that I would miss the steady paycheck.  There would be some anxious moments when the bills are due if I hadn’t worked that month.

The freelancer’s plight isn’t much different than my friend’s father’s.  He operated heavy equipment, and we saw alot of him during the winter when construction jobs were scarce.  He periodically went on unemployment, and used his savings from the warmer months to carry his family through the lean times.  This is where sticking to a well-planned budget is important.

How many of you freelance, even if it’s part-time?

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