Working at a coffee shop

As state policymakers take on the 'gig economy' with laws that severely restrict the use of freelance labor, such as California's controversial AB5 , I thought it was a good excuse to write about why self-employment is an economic good. Self-employment is a valuable path to upward mobility, protects regions against economic downturns, and helps many workers smooth their savings in the face of unexpected bills (Disclosure: I work with Tech4America, a tech policy nonprofit).

Before I get to the evidence, I want to say that I speak from personal experience. I owe my career and financial stability to self-employment: when I was in graduate school, I moonlit as a freelance journalist; the valuable job experience I got writing a few articles a month helped me snag a full-time freelancer gig soon after I left school. A few years later, even after I landed a full-time staff writing job, I still freelanced for other publications, which ended up being a financial lifeline when I left that company and allowed me to earn a living income between jobs. Eventually, as a consultant/freelancer, I earned more than I did as an employee, but it took a few years learning the skills of self-employment.

My personal experience seems to jive with the evidence.

"A higher share of self-employed workers in a county was unambiguously associated with greater resilience," wrote economics professor Stephan Goetz, in an international comparison of how different regions bounce back during recessions. Goetz notes that his study was in part inspired by prior research showing that regions with higher rates of self-employment seemed more resistant to the negative impacts of trade deals with lower-wage countries.

Beyond economic resilience, self-employment also helps workers cope with unexpected expenses. Using special access to individual bank data, JP Morgan Chase found that workers with income from known job platform companies had noticeably less volatility in their savings accounts, presumably since they were able to opportunistically take on new work. "Simply put, landing a platform job is easier and quicker. Individuals can, and do, generate additional income on labor platforms in a timely fashion when they experience a dip in regular earnings."

Last, I run an experimental jobs training program, which is based on some previous research showing that multiple-job holding is how many workers train for new, higher paying occupations. So-called "side hustles" are an invaluable source of job training and upward mobility for many workers. One of the things I learned this past year while running the pilot program is just how inaccessible being an employee is for many workers at the lower end of the income distribution. I deal with single moms and folks with health issues who can't take time for full-time school or internships. Most training programs systematically exclude people who need more flexible, intermittent work and therefore exclude a large slice of the population from upward mobility.Freelancing is a way for many disadvantaged workers to have a shot at high-income occupations.

Now, self-employment does have serious problems, and can often mean financial hardship for the workers who rely on it. But, in my experience (and the data I've analyzed), the hazards of self-employment often exist because we treat it as something temporary or intuitive. Self-employment is like any other skill or occupation: it takes about 3-5 years of dedicated experience to earn steady, well-paying income.

The problem has become that it is too easy for workers to become freelancers without knowing the complex skills of solo-preneurship: time management, client relations, networking, financial planning, and stitching together non-employee benefits. The path to earning more money as a freelancer is less intuitive than the promotional path as an employee.

Workforce agencies are beginning to realize that people need help navigating flexible work arrangements, which is why cities like San Francisco have partnered with SamaSchool, a flexible work nonprofit education organization (Disclosure: the Tech4America pilot project has partnered with SamaSchool to train some of its participants).

As more policymakers begin to evaluate their state's relationship with new forms of work, I hope evidence like this makes the case that self-improvement is worthwhile, but like all worthwhile things, requires investment.

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Why Self-Employment Is Good For Workers And The Economy - Forbes