The Independent Contractor vs Employee Controversy

...What's Better To Seek For When You're Unemployed?

by Arturo F Munoz

independent contractor vs employee Uncle Sam

So you've been struggling between being an independent contractor vs employee. In these days of continuing long-term unemployment, the question is no longer theoretical.

Should you opt to become an independent contractor vs employee?

Your long-term livelihood depends on this decision, because long-term employment is a thing of the past. Therefore, whether you come to depend on a company to become either your employer or your client will have lasting impact on your ability to produce steady income.

What should you keep top of mind before making your choice?

Is Independent Contractor vs Employee The Real Choice?

Between the end of 1945 and 1947 the United States experienced a severe contraction in government contracting because of the end of World War II. Meanwhile private industry began to boom. A similar contraction has been under way since the 2009 Great Recession.

Currently the loss in government employment for the U.S. has been only 15% smaller than the most pronounced contraction of the 1940's. This loss has been most felt at the local government level, where there have been 20 times more jobs lost than at the federal level. Meanwhile, the private sector has been slowly improving. See the chart below.

independent contractor vs employee opportunity

Recovery has been very slow in the private sector. But in comparison, except at the federal level, the public sector has been sinking. Hundreds of thousands of government contracts and permanent positions have disappeared.

In a situation like this, it doesn't matter whether you should choose to be an independent contractor or an employee. What matters is to find a growing sector of the economy where there is opportunity. What kind of opportunity opens up when the local government sector shrinks?

This sector has shrunk and continues to shrink at a rate unmatched since the end of the greatest war time the world has ever known, when all forms of government mushroomed like fungi in a clammy jungle everywhere. If back in the 1940's there was opportunity to be part of the growing private sector as the government ship sank, do you doubt there may be opportunity today to do the same?

The Choice Is Between Enterprising And Risk-Averse

Trying to decide whether becoming an independent contractor vs employee is what's best for you right now is like trying to decide whether you should run your own business vs helping someone else run theirs. But if there is no business to run, the decision is impossible to make.

So better yet, ask yourself "What business can I run" vs "What business can I help someone else run better?" And if you can help someone else improve their business somehow, then ask yourself "Should I create a business dedicated to working only with people who particularly need to improve these kinds of businesses?"

And go for the local market because as the local weight of bureaucracy shrinks, so does the weight of regulation. This opens opportunities to serve the local clientele and grow the local economy. Those who want a job but wait for others to take the risk of starting new businesses will be unemployed for a long time.

Those who think independently, however, and seek for a way to exploit a local demand and contract their services to improve the lot of a local group of clients in a region significantly freed from the burden of local bureaucracy will not only gain employment with their entrepreneurship but a lucrative local beachhead, as the downward trend in local government spending continues.

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