Make the Economy Work for Freelancers, Too (#askingforafriend)

Transcript: [Episode Title]

Season 2 Episode [XX]

COLD OPEN

ROBIN: Do you need to go get a drink of water or something? A shot of schnapps? What do you need?

KATHRYN: I could use a beer. I could really use a beer.

INTRO

KATHRYN: Hello, and welcome to Optimist Economy. I’m economist Kathryn Anne Edwards.

ROBIN: I’m editor Robin Rauzi.

KATHRYN: On this show, we believe the U.S. economy can be better, and we talk about how to get there one problem and solution at a time.

KATHRYN: On today’s show, we will be talking about a group of people that have many names — from freelancers to gig workers to the self-employed to the non-employer businesses. That was a new one I learned today: non-employer businesses. Businesses without employees. We’ll figure out who they are and what they need.

ROBIN: There are about 30 million of them, apparently.

KATHRYN: There are dozens of 30 millions of us.

ANNOUNCEMENTS

ROBIN: Announcements. I wanted to thank Josh, who made an Eternal Optimist level contribution. He wrote that he is a real human person consuming leisure in Charlotte, Vermont — which is “Shar-LOT,” by the way, not “Charlotte.” And I also just want to thank anybody who’s become either a Utility Maximizer donor or a De-Saver donor. We really rely on all of those contributions to keep everything going here at Optimist Economy.

KATHRYN: Production says thank you so much for all of your contributions, since it goes right to Andy and Sofi.

RETCON

KATHRYN: Okay, retcon — retroactive continuity, where we revisit past things. I have two small ones and a big one.

ROBIN: Like two truths and a lie — smalls and a big.

KATHRYN: Two small ones. First one: for Optimists who do not follow us on the vertical platforms like TikTok and Instagram, we put up clips from the show. And some of the most-watched clips we’ve ever had were from the cashless episode, when Robin and I told stories about horrible bank treatment. And I just have to say that the comment section became a beautiful space of, like, “Say their name — that’s clearly Bank of America.” Someone’s like, “Yo, I know Wells Fargo when I hear Wells Fargo.” And they’re like, “But don’t forget US Bank.” I mean, it was hilarious to hear people revel in terrible banking stories and how much it hit a nerve.

ROBIN: We also got letters from people who had worked for banks who also ranted about how bad they were, as well as notes saying, “Hey, you should have mentioned credit unions as an alternative.”

KATHRYN: I should have mentioned credit unions as an alternative. Not that credit unions don’t also make mistakes — I have another bad story from a credit union. But yes, credit unions certainly are one way to avoid the biggest banks.

KATHRYN: Okay. Overtime. We get a lot of letters about overtime as well. Most of them saying, “Hey, people need overtime. People rely on overtime. It isn’t just about misclassification — you need to recognize that this isn’t just flexible income for most people’s lives.”

ROBIN: Yes. And I think I wanted to say plainly that we were not in that episode trying to say that we don’t want overtime anymore. What we were trying to get across was that overtime is a way to guarantee rights for workers — that either you don’t have to work so many hours, or you get paid more if you do. And a lot of people are dependent on that extra pay that comes from overtime, and that’s something that more people should have access to, because right now we have so many people who just work long hours with no extra compensation.

KATHRYN: Yeah. Somebody also asked for clarification about how we had suggested that the no-tax-on-overtime provision created an incentive for employers to use overtime more.

ROBIN: It’s pushing more workers into overtime at taxpayers’ expense rather than your employer’s expense.

KATHRYN: And that’s the part that I think is very manipulative of the labor market, because it’s basically telling employers, “We’re going to subsidize your use of overtime,” as opposed to having the employer pay for overtime. And I don’t think we said that plainly. Taxpayers should not be paying for somebody else’s overtime when they have an employer who’s paying their wage that they do a service for. Why am I — a worker who doesn’t get overtime — subsidizing someone who does? That should be the employer’s expense.

RETCON — CONGRESSIONAL TESTIMONY EDITION

KATHRYN: The big retcon is that I testified in front of Congress last week.

ROBIN: Which is why, if you didn’t get an episode last week, that’s why — because somebody was busy.

KATHRYN: I was busy on the Hill. Y’all, it was a lot. So I was asked by the Democratic staff to appear in front of the Tax Subcommittee of Ways and Means about the One Big Beautiful Bill Act.

ROBIN: Which they have renamed.

KATHRYN: Yeah. About four days before the hearing, they posted the hearing information, and it was called the Working Families Tax Cut Act, I think. And I was frantically emailing the Democratic staff — “What the hell is this? I haven’t prepared for this at all.” And he’s like, “Oh, no, this is what they’re calling the One Big Beautiful Bill Act now, because it polls so horribly that they’ve decided to rename it.” The name of the hearing was “Your Paycheck Returned.”

KATHRYN: So this is what it’s like. I have to prepare 10 pages of written testimony. It has to be submitted at least 48 hours before the hearing starts — so Monday, 10:00 a.m., I have to have 10 pages in. That is the basis for my oral remarks, which can be no more than five minutes. It means I worked all through the weekend, pulled really late nights, because children don’t work on weekends, which is — oof.

ROBIN: Yeah.

KATHRYN: Yes, Andy, I did in fact work overtime to get the testimony out.

KATHRYN: So then you show up on the morning of. You’re an hour early, so you absolutely hit up the gift shop and buy a stupid amount of stuff from the U.S. House of Representatives gift shop. And then you go in, and you can only speak when you’re called on. You can’t just hit the mic and start talking.

ROBIN: Not Jeopardy. Sorry.

KATHRYN: Not like — yeah, you can’t just buzz in like Jeopardy. Like, “What is shitty legislation, Ken?” You don’t get to do that. Each witness has five minutes, and then the chair of the committee will call on people, and each member of Congress who’s on the committee gets five minutes as well. And when it’s their turn, they can call on one of the witnesses or not.

ROBIN: So they can either just pontificate, or they can actually ask a question.

KATHRYN: Oh, a lot of them will get up and just — yeah. So that’s fun, because you have to sit there and look polite while they’re yelling.

ROBIN: I’d slip in an executive order here, which is that if it’s your hearing, you should have to stay until the end.

KATHRYN: You should have to be there. Once they ask their question, they leave.

ROBIN: The room was pretty empty.

KATHRYN: It just so happened that the day I was there was the day after mainly Republican Party primaries in a handful of states, in which everyone who was not an avid Trump supporter lost. Whoever Trump endorsed won. Whoever had ever stood up to Trump lost. So this was the — Cassidy lost, Massey — they all lost on the same day.

KATHRYN: And then the next morning was the hearing on the Tax Subcommittee about “Your Paycheck Returned.” And the only thing that Trump has done in two years that is polling even reasonably well is no tax on tips and no tax on overtime.

KATHRYN: So this hearing — I’ve got 10 pages on economic implications of debt financing, a permanent revenue reduction, and what that means for economic policy. And I’m trying to make this case. And I mean, they come out guns blazing about how this is the greatest thing that has ever happened to tipped workers. If you didn’t know anything about the bill and you had gone to the hearing, you would have no idea it had anything other than a reduced tax on tips. They didn’t talk about any other provision.

ROBIN: No — well, they talked about the tax credit for adoption expenses.

KATHRYN: Yeah, tax credit for adoption expenses, no tax on tips, and no tax on overtime. That is the entire legislation according to them.

KATHRYN: So most of the Republicans did take the chance to yell at me about how wrong or bad I was. The best one was the chairman of the House Ways and Means Committee, who was on this subcommittee — Jason Smith from Missouri — who told me that what’s wrong with America is economists, and that I’m not a real American, and real Americans benefited from this bill. He is 10 feet away from me, looking right at me as he’s saying, “Real Americans benefit.” I was shaking with rage.

ROBIN: Should we roll the clip?

KATHRYN: Roll it.

[CLIP OF KATHRYN’S CONGRESSIONAL TESTIMONY]

KATHRYN: Thank you, Congresswoman. I’m going to quickly correct the record. I am a real American. My profession does not disqualify me from being any less American than any other person. It doesn’t require any adjective afterwards. It doesn’t matter what my profession is. I don’t have to sit here and list that I have kids, or that I have a business, or that I have a job, or that I have workers. I am just an American. And I don’t necessarily appreciate having to tell you a hard truth about how indebted our country is and how much it will cost. You have created the largest program in U.S. history — our debt service. For someone to tell me I’m not an American just because I have to tell you the unfortunate reality that this can’t go on forever — thank you for letting me correct the record.

KATHRYN: You know, they talked about this in the movie “You’ve Got Mail,” where it’s like — in the moment, you never say the right devastating thing to a person. It’s only after they’ve walked away that you think of the actual perfect comeback. I’m on day seven of figuring out what I should have said to this guy who said I wasn’t a real American because I pointed out that he’s bankrupting the country. I’m still coming down from all that rage.

KATHRYN: And actually, my editor at Bloomberg, who watched the hearing, said that he could see I was upset because my hand holding the pen at one point was shaking, and then I just put it under the table so no one could see.

ROBIN: Yeah.

KATHRYN: It was a day. Why do I do this? Like, why go if it’s just this moment? I think that’s a fair question.

ROBIN: That is a good question. I’m glad you brought that up. Do you get anything out of it?

KATHRYN: Yeah. I mean, they don’t pay you. I had to pay everything out of pocket.

ROBIN: They don’t pay you, they don’t fly you there, they don’t put you up in a hotel — and then you get accused of not being a proper American.

KATHRYN: I did have these moments — were my dad alive, he would have been sitting right behind me. And when Jason Smith made his comment about how economists are what’s wrong with America because real Americans are the ones sitting at the other end of the table — it might surprise you to know that my dad would not have gotten up to defend me. He would have been like, “She’s fine. She’ll take care of herself. She’s got enough mouth to handle it.” He would have followed Jason Smith out of the room to say, “How dare you disrespect your office?” Growing up, he always said, “You have to respect the office even if you don’t respect the officeholder.” People’s power comes from the respect that is given to that seat.

KATHRYN: And when he got up and walked away, in my mind, I couldn’t help but think — there is a version of the world where my dad is alive following you out of here, and I’m trying to get him to calm down so I can listen in when he chews you out. He wasn’t easily intimidated, because he was an elected Republican official and a judge.

KATHRYN: But we do this because you never know who’s listening.

ROBIN: Yeah.

KATHRYN: In the course of putting your testimony together, did you come to any new realizations or insights?

KATHRYN: Yes, I think three. One was: I have been undercounting the number of tax cuts we’ve had this century. I’ve been doing this on social media and in my newsletter, and I sent my testimony to friends to fact-check, and one of them wrote back, “You know, you’re missing like two tax cuts.” And I was like, “Are you kidding me?” I had seven, and I was missing two.

KATHRYN: The biggest ones were 2001, followed by 2003, and then 2012, which made the 2001 and 2003 cuts permanent, and then 2017, and now 2025. But there were also smaller ones in 2004, 2005, 2010, and 2014. The first bunch were about accelerating the Bush tax cut phase-in. So I was brushing up on my tax bills and missing some pieces of legislation that had still cut taxes.

ROBIN: That was one.

KATHRYN: The second thing I got was just the articulation: it should not be taxpayers’ responsibility to subsidize low-wage employment, which is what no tax on tips and no tax on overtime is trying to do. It cemented to me that the tax system is really used to almost protect capitalists from capitalism.

KATHRYN: My husband came in one night — it’s 11:45 p.m. on a Saturday, and I’m at my desk buried in documents. He says, “How’s it going?” I say, “I figured it out.” He says, “You figured it out?” And I say, “Yeah — I got the Joint Committee on Taxation’s expenditure survey, and I decided I was going to typify it for every type of tax expenditure that exists, and it turns out there are 271.”

ROBIN: Okay. Going to bed now.

KATHRYN: I got really deep into tax expenditures, which is spending that goes through the tax code. So the child tax credit is a tax expenditure. No tax on tips — that’s a deduction. No tax on overtime — that’s a deduction. All the deductions and credits and adjustments you can make, those are all called tax expenditures. You would owe something in taxes, but they give you a deal. It’s like the total coupon cost of the system.

ROBIN: How many is 271 coupons?

KATHRYN: Two hundred and seventy-one coupons in our tax system, and the total cost of all those coupons is roughly one and a half times Social Security in terms of annual spending.

ROBIN: Holy cow.

KATHRYN: The largest program we have are all the coupons we send through the tax system.

KATHRYN: What I realized when putting this together was: I thought the problem was that this makes the tax code really complicated, people don’t know what they owe, and it’s created a runaway success for the tax preparation industry — whose prices run more than twice the pace of inflation. What I realized was that this is why the tax system won’t change: because now you’ve created 271 constituencies who have a vested stake in a complex system, where none of them would say, “I want the tax system to be complicated.” They would just say, “I want my thing.” And the scope of the problem really laid itself out before me when I was putting that together at midnight on Saturday with a beer, thinking about how we actually get past this.

KATHRYN: And then the third thing I learned was that you should never say to House Republicans on the tax committee — to their faces — “categorical failure,” and “you need to raise taxes.”

ROBIN: Which, I mean, you got some heat in the testimony, but you did start with “the tax system is a categorical failure and you need to raise taxes,” so you didn’t exactly hold back.

KATHRYN: No. And I love how I became, like, the face of their social media — just that clip. “You need to raise taxes.” In black and white. Yeah, that was good.

KATHRYN: And I guess the other part of why I do this is — you never know who’s listening, but also it’s a test. Sometimes you don’t really learn as much from the lectures until you actually prepare for the exam. I learned so much over the past couple of weeks. Even if it was just: what are the things that really landed with people?

KATHRYN: And if you need an optimist bent — there were Republican witnesses at the hearing, and the majority of them came up to me afterwards and said that they were impressed with what I said, or shocked and dismayed at the behavior of the Republicans on the committee, including one person who said they were deeply ashamed. So it’s helpful to remember that behind these images you see on a screen are people who are very different and nuanced in real life than they present.

KATHRYN: And then I immediately walked out of the room in a huff to go retrieve all the souvenirs I bought — including a onesie for my six-month-old that has a U.S. House of Representatives seal and says, “This is my house.” Next time I’ll do prop comedy and hold it up.

ROBIN: “Real Americans buy this.”

KATHRYN: Okay. So that was Congress. We should take a break.

ROBIN: Let’s take a break.

THE BIG PILCROW: FREELANCERS AND THE ECONOMY

KATHRYN: Okay. Today we’re talking about people like us — people like me, Robin, Andy, and Sofi. The freelancers of the world who have their own —

ROBIN: This whole episode is like an asking-for-a-friend episode. You know, we got a letter this morning — I don’t know if you saw it — from somebody who was asking more or less this question. I was like, “Are our phones tapped?” We have gotten several questions about this: how can we make the U.S. economy better for creative workers, for freelancers — not just people who are in the gig economy or maybe abused by Uber, but people who actually choose to work on a freelance basis for whatever their reasons are.

ROBIN: This woman, Rachel Gitlevich, who’s currently living in France, said that France has some interesting labor and tax solutions that are much more in line with how people are working in 2026, and she wondered if we had advice or words of encouragement for freelancers on gaining any kind of economic or social benefits in the U.S.

ROBIN: What she also said is: “In spite of how the law sees us, we’re not all small entrepreneurs. We’re just employees who absorb all the costs from our employers under a W-9.”

KATHRYN: My Terms and Conditions is a little bit of — I don’t know what to call these people. Imagine a spectrum. On one end is someone who has a W-2 employer — that company could be big or small, but they’re a W-2 employee and that’s their only source of income. On the other end is someone who owns a business with W-2 employees — it could be a restaurant, it could be a large company. In between is this —

ROBIN: Huge gray area.

KATHRYN: Huge gray area, with different tax filing statuses and different income forms — 1099-MISC, 1099-K, 1099-NEC, for those in the know. These are people who would say they’re self-employed, people who would say they’re freelance, people who would say they run a small business. They’re all kind of lumped in.

KATHRYN: The Census Bureau has been trying to understand how large this group is, and it’s very hard to capture in public surveys, so the best approach is through tax records. And in their brilliance, they came up with the term “non-employer businesses.”

ROBIN: Non-employer businesses. So that’s being self-employed, but they don’t want to call it that.

KATHRYN: Right. So on one end is someone who is basically shoved into being a contractor when they’re really an employee — they work for one company as a contractor and probably should be an employee, but all the risk is dumped onto them. The next level is freelancers and gig workers who would describe themselves as self-employed because they have a lot of clients and discretion over their business, but they’re not a large business — they file as a sole proprietor. Then you have people who own businesses with no employees: an LLC with multiple clients. What differentiates between them is whether they file their taxes using their Social Security number or an employer identification number.

ROBIN: And all of those people in between are basically running a business without any of the benefits of being an employer — and without access to any of those 271 coupons.

KATHRYN: To get that coupon. So the Census Bureau has been going through and trying to figure out how many of them there are, and what they come to is around 33 million. Around 8% of all workers are self-employed — just self-employed. Around 83% are wage and salary only. And about 10% are both.

ROBIN: Like me, yeah.

KATHRYN: Yep. So we can do the Kathryn — self-employed only. That’s me. And the Robin — self-employed and wage and salary.

KATHRYN: It’s around 17% of the workforce. Think of it as roughly one in six workers falls into the self-employment category, and about half of them are solely self-employed, and the other half also have wage and salary employment. Some of that is a function of switching from self-employment to employee status or back again over the course of a tax year. But it’s fairly consistent.

KATHRYN: Americans love to think that we are the small-business entrepreneurial haven. But actually — depending on how you measure it — the U.S. has the lowest rate of self-employment of any country in the OECD.

ROBIN: Oh really?

KATHRYN: Yes. And that’s measured consistently across all of those countries. The OECD — the Organisation for Economic Co-operation and Development — is essentially our peer countries. Most or all of the EU is in there, plus Japan, Australia, Canada, Chile, and a handful of others. Think of it as roughly the richest 26 to 30 countries in the world. And the U.S. has the lowest self-employment rate out of all of them — including countries you might think of as having crippling labor policy with all these taxes employers have to pay. They still have higher rates of self-employment than we do.

KATHRYN: I guess the U.S. has a lot more investor-backed startups. People like starting companies here, especially large-scale businesses. But because we dislike workers so much, this is a hard place to be self-employed. So you wind up with kind of — we want the businesses, but we —

ROBIN: We would like, yeah.

KATHRYN: We would like to have more self-employed people. And so I see self-employment as a function of worker power. Because we have so little of it, we have lower rates of self-employment despite having 33 million. It could be a lot higher.

ROBIN: How long have you been — I’m sorry, excuse me — how long have you been a non-employer business?

KATHRYN: I’ve been a non-employer business since January 2023, so I’m entering my — wait, math — third, fourth year.

ROBIN: Right. So I have been a non-employer business since 2010. And for those of you who are not non-employer businesses, we should just say — why does it bite to be one? There are a lot of great advantages, which is why so many people do it. But what is it that people are concerned about when they ask how we can make the economy better for freelancers and artists and creatives?

KATHRYN: I think it’s a two-way street: it’s a privilege that’s withheld from some, and then there are punishments to doing it. Making it better is not just about improving the status of being a non-employer business itself, but also who gets to be one in the first place.

KATHRYN: It’s disproportionately older workers, and slightly more male. You’re not going to find a lot of 23-year-old self-employed people. It’s much more likely to be an older worker —

ROBIN: Someone who’s developed some expertise they can take out and work on their own.

KATHRYN: And has a network and things like that.

ROBIN: So it’s interesting — I hadn’t really thought about it this way. It’s a privilege, but it also gets penalized.

KATHRYN: Yeah. The privilege side is on the point of entry. In the U.S., health insurance and retirement savings are primarily brokered by your employer. So if you don’t have an employer and you’re out on your own, you have to come up with health insurance and retirement savings on your own, and that’s really hard. For some people, it’s a little too risky. For some, it feels too expensive. For others, it is completely insurmountable — they have to have a group health insurance plan. That really creates a barrier, almost like gatekeeping self-employment by whether you can get over the health insurance and retirement savings hurdle.

KATHRYN: But then once you’re self-employed and you’ve made it over that hump, you have all kinds of challenges that come from how the tax system is set up. One of them is payroll taxes — and it’s not just that you have to pay them, it’s the uneven coverage.

ROBIN: Right. As a non-employer business — I’m going to have to learn to use this all the time — you end up paying taxes as both the employee and the employer, especially for Social Security taxes. And that’s a lot.

KATHRYN: It is a lot, and it’s two problems. One, you have to pay both sides. That changed in the Clinton administration. And then the other problem is that you’re not included in the payroll tax for unemployment.

KATHRYN: So you go off into self-employment and you lose access to employer-sponsored health insurance. You have to pay double for Social Security. It’s not clear you’d have access to paid family leave if your state has it. And you definitely don’t have access to unemployment insurance. So you’re double-paying for one benefit and losing the other really good workplace social insurance benefits. In some ways, it is very much a privilege to be —

ROBIN: Yeah. And it also shouldn’t be a surprise that we don’t have as many non-employer businesses as we might, because we hit people on both sides of it.

KATHRYN: Hold on. We have to do a quick timeout sidebar. “Small business” is not a normal phrase because it has so many definitions. The Chamber of Commerce and the Small Business Administration — if it’s under 500 people, it’s a small business, or under 250.

ROBIN: I feel like there’s some equivalent of clothing sizes. We need extra small, small, all the way to triple extra large.

KATHRYN: Triple extra large small business. Yeah. If you’ve ever heard anyone talk about small businesses, it is not clear they’re talking about what you’re talking about. When they want to talk about how many small businesses there are, they push that number way up — under 250 or even 500 employees.

KATHRYN: We’re talking about people where it’s one. The business is one person, and that is the non-employer business. But non-employer businesses are a very key pipeline to actually small businesses — where you get enough work and money that you can incorporate and start hiring people.

ROBIN: Right. Health insurance is a big problem. Payroll tax is a big problem. That’s the one we talked about in the Social Security episode, where I spoke at about 800 minutes a minute about all the things I wanted to do.

KATHRYN: I did have someone tell me they listen to all the episodes at 1.25 speed — except that one.

ROBIN: Run that one at 0.75 speed.

KATHRYN: One of my proposals from that episode was: to alleviate payroll tax burden on non-employer businesses, companies that use contractors would have to pay a fee for each contractor. Like a 1099 fee — for every 1099 you issue, you need to pay into Social Security on behalf of the contractors you use, not just your W-2 employees. That would be a way to offset the double-payment burden on non-employer businesses.

KATHRYN: All right. Why do you like or dislike being a non-employer business?

ROBIN: You’re asking me?

KATHRYN: Mm-hmm.

ROBIN: There are a lot of reasons. I like the flexibility. I like the variety of work. But honestly, like a lot of people, I think I wound up in this out of making the best of a bad situation.

KATHRYN: Duress.

ROBIN: Duress, yeah. I left the L.A. Times voluntarily in 2009.

KATHRYN: Oof, bad year.

ROBIN: Maybe the very beginning of 2010. I got another job and went to pivot to a new career. And I hated it so much that I was, I don’t know, clinically depressed within about three months and quit within another three. But I was lucky because I hadn’t been out of journalism that long, and also so many other people had also been forcibly thrown out of journalism that they were all trying different things and creating their own little non-employer businesses. People just started to call me. So rather than look for another job, I just began freelancing — really just because I was offered the opportunity. Then pretty quickly I got a big client who kept me on retainer, and I never looked back.

KATHRYN: I had a similar point of entry — leaving a full-time W-2 employer under duress. And the real breaking point was I had just had my second kid, came back from maternity leave, and I was like, “I can’t do this.” The job and I weren’t a great fit.

KATHRYN: So I quit with the intention of getting a job elsewhere. And I just — never got one. I applied to a bunch of places, and it always came apart at the last minute. I think the real heart of it was that I was offered the chance to write for Bloomberg, which is not something most economists get the chance to do, especially not at 36 or 37 without a Nobel Prize. They said I was a good writer who could explain things, and they were going to give me a chance at a column, which was so exciting. But an opinion column and an employer are not necessarily a good mix.

ROBIN: No, they’re not.

KATHRYN: I thought it was too special to risk. So I took on as much work as I could on the sidelines and gave the column a chance. And then it’s been three and a half years.

KATHRYN: It’s funny — when I started freelancing, people said, “God, I could never do that. I just don’t have the courage.” But if you work in a business that’s been as disrupted as the news media, there’s no security in being in the workplace either. I’d rather have my fate be my own to a certain extent.

ROBIN: I just wanted my voice to be my own. I was embarking on this journey of trying to communicate on every platform — go on TikTok and Instagram, have my own newsletter, write a column, start a podcast — and I just wanted it to be just my name.

KATHRYN: Not nobody else’s words but mine, which is why sometimes they’re bad and sometimes they’re okay, and we have to do retcon every episode. But at least it’s just me. I speak for me. I have an independent streak, and it came in so fierce once I left. I was like, “I don’t want to answer for my opinion to any employer who’s operating in their interest instead of mine.” My interest is a better economy, and that’s it.

ROBIN: There is a certain amount of — it’s hard to go back, if you can make ends meet. But it can also be lonely.

KATHRYN: Statistically, self-employed workers have very high rates of part-time work.

ROBIN: They work in their non-employer business part-time?

KATHRYN: Yes. The current population survey, where we get our unemployment rate, has a measure of self-employment that is more limited, because it misses all the people who are formally incorporated businesses without employees — technically, they are employees of their own businesses for the survey. But of the people who are freelancers, gig workers, and contractors who show up as self-employed in the survey, they’re much more likely to be part-time than workers overall, and they’re more likely to say they want to be part-time. They’re not part-time because they can’t find work. They’re part-time because they don’t want full-time work.

ROBIN: Mm-hmm.

KATHRYN: Granted, the part-time cutoff is 35 hours a week.

ROBIN: Hmm.

KATHRYN: And I’m like, that’s kind of about my full-time. I feel like 35 is full-time. Thirty is really full-time. But you do get people who are bringing in money, have more control and flexibility, and are working less than 40 hours a week.

KATHRYN: I was looking at this with a set of co-authors — we asked: is being self-employed a choice or not? Is it something empowering that people move toward? Or is it something where they would prefer to be an employee but can’t get wage employment?

KATHRYN: Here’s the term we landed on: “non-employee employment.” We called it that because we hate ourselves and the people who read our report. Because people say, “Uber gives people the opportunity to have control over their schedule, to pick their own hours, pick what they do” — and they don’t want to be employees.

ROBIN: Or is it just a desperation job because you find yourself in some sort of duress?

KATHRYN: What we found is that it was path-dependent. A lot of people arrived in non-employee arrangements because it was obvious they didn’t have a choice. They hadn’t worked steadily in the past two years. They didn’t have a lot of prior W-2 work. They were from mal-employed groups.

ROBIN: Mal-employed.

KATHRYN: Mal-employed groups would be people who have really high unemployment — workers with less than a high school degree, for example. If they have really high rates of contracting and non-employee arrangements, that’s probably because they couldn’t get a W-2 job. Certain immigrant groups had really high non-employee arrangement rates. But then on the other hand, there were also really high rates among people who have advanced degrees, are around 60, made incredible money, and had worked a salaried job in the past year.

ROBIN: Just wanted to take Fridays off to go golfing.

KATHRYN: Take Fridays off and bill their best friend as a contractor through their own business. Yeah, it encompasses so much.

KATHRYN: One of the problems that the contractor classification fight ran into is that there were people who desperately wanted to be contractors and didn’t want to be employees — and who would have benefited from being employees, because they would have made more money and had benefits — but they didn’t want it. And so making companies behave and telling workers what to do are not the same thing.

ROBIN: There are a lot of people who just don’t want to work for someone else. They don’t have the personality for it. They don’t have the disposition, mentally, for the nine-to-five slot.

KATHRYN: They had such a good first employer that they find every other management structure to be so subpar that they become ungovernable, and they’re really hard to actually manage because their expectations are so high and they make that clear in every meeting possible. That could be anybody.

KATHRYN: This is the problem you have in trying to regulate this on workers’ behalf: there are lots of workers who, even if they could make more money, would opt out. So —

KATHRYN: Sometimes you end up self-employed because you lose your employer. And it doesn’t matter if you walked away or they did — you don’t have wage and salary employment, and this is a way for you to make money while you figure something out. And maybe what you figure out is that you want to stay self-employed, or you want to go back.

KATHRYN: You know what it actually reminds me of? Childcare.

ROBIN: Yeah.

KATHRYN: Right now we have this cultural war around moms about whether or not they choose to work or put their kids in childcare. It’s the wrong division. Because you see women either work and pay for care, or they don’t work and stay home. But that’s not the right dichotomy — because there are also lots of women who work and don’t pay for care because they can’t afford it, and they just put their kids somewhere that is sometimes safe, sometimes not, sometimes quality, sometimes not.

KATHRYN: We don’t know what share of women would stay home or work if childcare wasn’t this massive separator. If childcare were free, universal, and high quality — how many women would go to work and how many would stay at home? We don’t know.

KATHRYN: I think the same thing with non-employer businesses. How many workers would legitimately prefer to run their own place versus work for an employer? We don’t know, because we’ve never had universal health care, we’ve never had universal retirement, and we have this very lopsided payroll tax structure that hits them hard. My view as a labor economist is that anything that gets in the way of a worker making a decision where they’re optimizing their career — that’s bad, because the economy is losing out on better decisions. I would be an amazing wage-and-salary worker, but I have to be home to take care of my kids — so I run my own business. It’s not what I really want to do.

ROBIN: Conversely, I need health insurance, so I’m still an employee where I could be building a business that would employ other people.

KATHRYN: “I can’t start my business for five more years because that’s when I’ll be eligible for Medicare” — those kinds of distortions mar our decision-making and make our economy worse. If for no other reason: people aren’t doing what they want to do.

ROBIN: We’d just be happier.

ROBIN: Do you think we can have both? In other words, if people don’t want an employer but want to be contractors — are we always going to have a system where companies abuse that?

KATHRYN: No, not if we set good rules and policies in place. Employer and company abuse is like a moving van — you will fill it however big it is. I think workers should have the same type of power that companies do: they get to run their business how they run their business.

ROBIN: I think this kind of goes back to me being a capitalist at heart. From my point of view as a worker, self-employment was a really good outside option when I was at a job that wasn’t a good fit.

KATHRYN: Self-employment was almost like my backup plan, and the better my backup plan is, the more employers have to try hard for me. There are lots of paths that lead into self-employment, and lots of paths that lead out of it. But the better off we can make self-employed people, the more employers have to be better employers. Making self-employment a good, safe space is a distribution of power.

KATHRYN: Even if you’re someone who says, “Listen, it’s just not for me — I want an employer and that’s it” — you should still be rooting for self-employment to be awesome and for more of it, because that’s going to make your employer treat you better.

KATHRYN: I don’t think people see it that way. I don’t think they see it as the pipeline to entrepreneurship or as a real, clear channel of worker power. But it’s both. So we can make it better. We can do this.

ROBIN: We can do this. All right, let’s take a break. We’ll be right back.

EXECUTIVE ORDERS

ROBIN: Okay. Shall we go to Executive Orders?

KATHRYN: Executive Orders.

ROBIN: My Executive Order is inspired by all the sporting events I’ve been to in the last couple of months: sing the actual notes to “The Star-Spangled Banner.” Honest to God, I don’t know who — why does everybody think they are the new Whitney Houston? Just sing the song.

KATHRYN: It’s a pretty good song.

ROBIN: It’s an okay song. And it’s hard to sing. So you can just sing it well.

KATHRYN: One time I was on a study abroad in Paraguay at a rural university. The whole program was about urban and rural poverty in South America and what strategies they use. The Americans and the Paraguayans were doing skits and stuff, and at the end they said, “Why don’t we sing?” And we start singing “The Star-Spangled Banner,” and the one girl on the trip who could actually sing was like, “Y’all fuckers started way too high.” And we got to “the land of the free,” and I don’t think anybody’s voice didn’t crack. Those Paraguayan kids laughed their asses off at us. We laughed too. It’s not an easy song to sing.

ROBIN: It’s not an easy song to sing, and I would like to see more choirs do it — do it in harmony, do some interesting things with it. But I’m really tired of the vocal gymnastics. That’s not the song.

KATHRYN: My Executive Order, inspired by my travels this past week, would be mandatory congressional attendance. You have to be present during a committee hearing. You have to be present on the floor if there’s debate. Mandatory attendance for all of these things. And honestly, there are going to be a lot of hearings that could have been an email as a result. But that’s mine. It’s kind of like, “You need to be there and look at me and hear the things I say.”

ROBIN: If you’re going to have a hearing — and it’s going to be a certain degree of theater — stay for the curtain call.

KATHRYN: Stay to the end. If it’s theater, you’re in the audience. Get popcorn. Watch it all go down.

SPIRITUAL SPONSORS

KATHRYN: All right, Spiritual Sponsors.

ROBIN: My Spiritual Sponsor last week was horchata with cold brew coffee in it. Now, you might say to yourself, “There’s cinnamon in horchata.” But I know there’s cinnamon in horchata, so it’s not like surprise cinnamon.

KATHRYN: The Big Cinnamon lobby got you, did it? What did they say?

ROBIN: No. Horchata with cold brew coffee. Really good.

KATHRYN: My Spiritual Sponsor for the week is listeners and readers and followers across the platforms who very much boosted me up after a tough, bruising hearing. I was wrecked for the rest of the day. I held it together, but I was extremely unhappy with how I was treated, and I had these moments of, “What does it all mean? Why does it even matter?” And all the people who reached out in response to the clips, and I posted my written testimony on my newsletter, and so many people wrote back and posted such kind things. It was helpful to remember — and this is very much in contrast to my Executive Order where Congress has to stay and listen to me — my Spiritual Sponsor is remembering that they don’t actually need to listen to me. Because you are listening.

ROBIN: Nice.

CREDITS

KATHRYN: Optimist Economy is a nonprofit media company. We can accept individual donations at our website, or you can direct a contribution through a donor-advised fund. We’re also on Benevity if your employer is one of the hundreds that use that.

KATHRYN: We talk about the Optimist Economy baseball cap, but we’ve neglected to hype the Optimist Economy stickers that are also available at our merch store. The tote bag is the biggest hit in my family — everybody loves the tote bag.

ROBIN: The tote bag is also good. The sticker’s only two bucks.

This podcast is edited by Sofi LaLonde. Social media videos are produced by Andy Robinson. Andy makes all the video clips you see on TikTok, Instagram, Facebook, YouTube, and LinkedIn. Feel free to share those. And if you’re on Substack as a free or paid subscriber to Optimist Economy, you can join our chat room.