• Community, Lifestyle

Freelance by choice? Not always

It's an old saw: companies hire freelancers to shift human resources costs--social security taxes, health insurance and retirement benefits, and the like--onto workers. While we often emphasize the way that independent workers contribute to economic growth, one example from Illinois shows how this trend can hurt a local economy. Crain's Business, in Chicago, reports on the use of freelance workers in skilled trades. In construction, one contractor who repeatedly lost jobs after being underbid learned that his competitors "shrunk their costs 30% or more by paying their workers as independent subcontractors, which allowed them to avoid payroll taxes, workers compensation and unemployment insurance. Their workers, mostly immigrant tradesmen, earned $10 to $15 per hour less than the $35 hourly union wage." Now, the state government wants to crack down. It's been estimated that this type of "subcontracting" cost Illinois $350 million in lost tax revenue in 2005. A bill in the state legislature proposes that "workers who are told what time to show up, given specific instructions at work and who use the employer's equipment would be considered employees, subject to tax and insurance requirements."

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