Why You Have to Think of Yourself as Self-Employed Even if You’re Not

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This concept is becoming increasingly important as the economy and the job market evolve into something as yet not clearly defined. But it’s even more important if you’re a relatively new entrant to the workforce, or you’re an older worker, looking either to remain in the workforce, or cut a path into something completely new. As traditional full-time jobs erode, it’s increasingly important to think of yourself as self-employed – even if you’re not in the formal sense.

For more and more people, there isn’t a living wage job available. This is even more true for people who are under 30 or over 50. The fact that many people in both age groups are still having difficulty finding living wage jobs – in a supposedly strong economy – isn’t a personal failure, but a sign of the times. And rest assured, it’ll get even worse when the next recession hits.

Why You Have to Think of Yourself as Self-Employed Even if You’re Not
Why You Have to Think of Yourself as Self-Employed Even if You’re Not

The only constructive way to deal with that reality is to begin to think of yourself as self-employed, and gradually move yourself in that direction. It’s more of a slow evolution than hitting a light switch, so it’s possible even if you’ve never been before.

If employers are under-estimating you – by not hiring you – you can’t afford to under-estimate yourself. If “giving yourself a job” is the only way to insure a paycheck, then that’s what you need to do.

And rest assured you can. The same factors that are eroding traditional jobs are also creating an exciting number of non-traditional income opportunities.

Employment, Self-Employment and the Age Factor

The lack of job stability is an issue at all levels of employment. The problem is more acute on the margins – young workers looking to get into the workforce, and older workers hoping to retain a foothold.

This article was actually inspired by an email exchange I had with reader Linda S. She raised the question of age as a factor in the job search. This isn’t a topic I’ve covered outside of an occasional side bar in employment related articles, but it’s an important one. And not just for older folks either. Younger workers, even those with college degrees (but especially those without) often have difficulty finding employment that pays a living wage.

Yet whether you’re over 50 or under 30, this is a topic that doesn’t get a whole lot of coverage in the financial press.

Let’s start by looking at two important employment demographics:

Underemployment for Recent College Graduates

44% of college graduates ages 22 to 27 work in jobs that don’t require a college degree. This results in a phenomenon known as under-employment, and it’s one of the biggest employment issues of our time.

The increasing levels of student debt, in combination with a relentless rise in the basic cost of living, is putting many young college graduates into a vice grip. On the one side, they’re slammed by high expenses. And on the other, by limited income opportunities.

This is just a theory on my part, but I believe the more desperate a person is to get a job, the harder it is to find one. And the harder it is to find a good one. Given that the average college grad is carrying $37,172 in student loan debt (and that’s for 2016 grads), the desperation factor is obvious.

The recent grad probably also has credit card debt, as well as an auto loan – and the daunting task of finding affordable housing. The young person is forced to seek jobs paying at least $50,000 to $60,000.

The big problem with that requirement is the combination of a) a lack of hands-on experience, and b) employer’s unwillingness to pay living wages to all but the most qualified candidates.

Now in certain fields, certainly health care and IT, it’s possible to earn those income levels even without hands-on experience. But in most other fields it’s a tall order.

The alternative is to continue living at home with your parents, and./or to juggle two or three jobs to make enough money just to survive. Life decisions typical for the age range, like moving into an apartment or purchasing a car, are put on the back burner.

The Increasing Reliance of Older Workers on Continued Employment

According to the US Census Bureau the percentage of Americans 65 and older who continue to work has increased from 12% in 1994 to 18% by 2016. That’s significant because that timeframe includes two major recessions.

But the report showed what’s perhaps an even more interesting set of statistics. They showed that earnings by workers 65 and older have increased faster than any other group between 1994 and 2016 (figures are based on average monthly income for each age group):

  • 17% for workers aged 14-24, a $245 increase from $1,431 to $1,676.
  • 20% for workers aged 25-34, a $600 increase from $3,049 to $3,649.
  • 32% for workers aged 35-44, a $1,254 increase from $3,939 to $5,193.
  • 32% for workers aged 45-54, a $1,390 increase from $4,363 to $5,753.
  • 41% for workers aged 55-64, a $1,629 increase from $3,928 to $5,557.
  • 80% for workers aged 65-99, a $1,816 increase from $2,276 to $4,092.

Not only are more people over 65 continuing to work, but they’re doing so at higher pay levels. Question: Are they doing it because they want to, or because they need to?

My money is on need.

An average income of $4,092 per month translates into an annual income of over $49,000. That’s a living wage, especially when combined with Social Security or other retirement income.

Based on these statistics there’s a wholesale shift going on. Back in the 1990s, a relatively small number of older workers worked to supplement retirement earnings. Now it’s looking as if more in the over-65 crowd are working to earn a primary living.

There’s an important message in there for all workers, but especially those over 50 who are evaluating career strategies.

The Shift from Retirement to Non-Retirement

We all have theories on why this is happening but mine is that we’re in the early stages of what I refer to as the Alt Retirement Movement. We’re shifting from a time when most people over 65 comfortably retired, to one in which earning a living in some capacity will be absolutely necessary to supplement Social Security and other retirement income sources.

The same high cost of living that’s squeezing younger workers is also affecting people in the traditional retirement years.

And as is always the case with life in America, this dilemma comes with more than a small dose of irony. An entire closet industry has been developed, advancing the idea of early retirement, despite the fact that 78% of the population live paycheck-to-paycheck.

It’s playing out like a TV show where we’re witnessing a complete disconnect between what we’re watching and what’s happening in the real world.

If I’m right about the alt-retirement development, and the evidence seems to be mounting in that direction, it should change the way we think and plan for retirement. Sure, we absolutely need to save and invest. But it’s becoming equally important to develop a strategy of maintaining sustainable work.

This will change the entire way we view work. Rather than planning on a single career that will include stages, including “coming into the homestretch” in your 50s, we may have to consider a flexible occupation that will serve us from graduation until well into the retirement years.

If that’s the case, both career planning and retirement planning will have to change based on the new reality. That will include career planning for the 60s and 70s. And that’s where we’ll run into those age factors.

Younger Workers, Older Workers – Different Details, Same Outcome

Younger workers face an uphill fight in the job market due primarily to a lack of experience. There are also anecdotal factors. For example, many employers believe today’s younger workers are less career-focused, more demanding, more interested in time off, and less committed to quality performance.

It doesn’t matter whether or not any of those factors apply to you. As a member of the class of young workers, those negative attributes are being assigned to you.

But the situation is similar with older workers, those over 50, but the details are different.

Employers often view workers over 50 as “marking time” until retirement. They’re seen as less committed to the long term, and not as promotable. The common belief is that they lack current level skills. At the extreme, they may not portray the youthful, high energy image the employer is looking to project.

But older workers face another limitation unique to the age group, and that’s health insurance. For employers that supply group health insurance, older workers raise the cost of premiums for the entire group.

These are the dilemmas being faced by workers under 30 and over 50. And they’re what you’ll have to deal with, whether you’re trying to move into a new occupatio or remain in an existing one.

Age discrimination – at both ends of the age spectrum – is really quite common. It’s largely unreported, and not seen in the same light as discrimination over race, religion, sexual orientation, or disability status.

Translation: You’re not going to be able to fight it legally or politically, but you will have to deal with it.

Employers can discriminate because they’re finding ways to operate and even grow with fewer employees.

The Employment Work-arounds – Whether You’re Under 30 or Over 50

In football, there are 22 players from both teams sharing a space that’s 360 feet long, and 160 feet wide. That should be more than enough space for all. But out of the 22 players, at least a dozen will be crowded around the line of scrimmage, within a space that’s at best 50 feet wide and 30 feet deep.

Typically, when plays are run through this “pile” of players, it results in gains of no more than a few yards (five yards is typical). But the really big plays are the ones that either run around the pile, or go over it with a pass. They’re are not only the most exciting plays, but also the ones most likely to score touchdowns.

They’re able to do this precisely because they avoid the pile-up in the middle of the field.

That’s the visual we have to project when it comes to finding work. In the employment universe, the “pile” is big companies and government jobs. These are the jobs everyone wants, because they tend to pay the best, offer the most generous benefits, and put you on a career path.

But for all those reasons, they’re also where the biggest crowd of job applicants gather. Building the pile even bigger are the online job boards. They make the crowds of jobseekers even larger, since applying online is so easy.

But that’s exactly why they’re the worst places for younger and older workers to find work. Everyone is applying there, and only the best-of-the best will be selected. The entire arrangement puts all the power in the hands of large employers.

That doesn’t mean you should avoid the job boards entirely. But at the same time, they can’t be your primary strategy.

The Job Hunting Equivalent of the End Sweep and the Long Pass

If we see large employers and job boards as the “pile” equivalent from the football analogy, the best strategy is to avoid them entirely. You’ll have to make the job hunting equivalent of end sweeps and long passes. As either a younger or older worker, the pile is not your friend.

What are the end sweep’s and long passes when it comes to finding work?

  • Look for work with small employers. No one’s knocking at their doors, so they can’t be as choosy. I’ve had good success going this route, and especially recommend it to people over 50. It also tends to be more flexible, so you can combine it with other income earning ventures.
  • The skilled trades. If you’re a young person these can be an option. Skilled workers often have greater job security and higher pay than people in the college norm fields.
  • Get a foothold in the gig economy. There’s a lot more to it than just driving for Uber, and it’s fast becoming the occupational trend of the future.
  • Create a portfolio of income sources. Perhaps the best way to do this is by becoming a mobile creative. Multiple income sources are the best solution to job instability.
  • Literal self-employment, which we’ll discuss in detail in the next section.

Shifting Toward Some Form of Self-Employment

Any of these strategies have the potential for you to become partially or fully self-employed. For example, if you have a limited employment arrangement with a small business, you can take on gig work or even start a side business. If you work in the skilled trades, you can begin providing your services direct to the general public. And creating a portfolio of income sources turns you into an entrepreneur.

And that’s really of the point. If you’re under 30, or over 50, and struggling in the traditional job market, it’s imperative to think outside the box. Stop thinking of landing a job and start thinking of creating an income.

The difference between the two isn’t semantics. A job is a formal employment situation, while creating an income is completely open-ended. For example, creating an income can come from having a job, but it can also come from having one or more gigs, or selling a product or service either to the general public or to small businesses.

There’s yet another significant difference. Applying for a job today largely requires credentials. Those can include having a certain level of education, professional certifications, X number of years of formal experience, and even direct employment with a competitor.

The flipside of the credentials dilemma is the background check. Large employers are doing deeper and more frequent checks than ever. Bad credit history, a previous arrest or conviction, or even a bad reference or two can keep you from landing a job, even if you have the right credentials. And then there’s personality/psychological testing, but I don’t think we need to even dip into that.

By contrast, the informal job market/economy cares a lot less about background checks.

The idea is to make end runs around the traditional job market.

A Lack of Credentials Doesn’t Mean You’re Without Hope

If you’re under 30, you can get credentials. However, it’ll require a significant investment of time, effort, and even money. But if you’re over 50, and you don’t have the right credentials, you’re pretty much out of luck.

However, though you may not have credentials, you definitely have certain skills. And you can acquire more as you go along. With the Internet, it’s possible to acquire any skills you need to produce a new income source.

Inventory your skills from every aspect of your life. They can include not just job or business skills, but also personal skills, hobbies or even passions. Make a list of all your skills, then do the following:

  • Put the skills you feel most confident of at the top of the list.
  • Do some research and determine if there’s a market for those skills (hint: if others are monetizing a skill, you can too).
  • Do more research to determine the full extent of that skill.
  • If there’s anything you need to learn, commit to doing it. You must be at least above average to make any money at a skill.
  • Market your skill(s) either to small businesses or to the general public.

Marketing your skills is actually not as complicated or costly as you think. But you do have to have courage, as well as a willingness to step outside your comfort zone.

On a personal level, I’ve found skills to be my greatest asset as I’ve gotten older. Whether it’s been freelance writing, selling or doing accounting work, I’ve found that solid skills make all the difference, especially if you’re weak in credentials or work experience.

Why You Have to Think of Yourself as Self-Employed

No, this is not as nice and comfortable as the traditional job situation has been since the end of World War II But in a very real sense, it seems as if we’re going back to the economy and job market of the pre-World War II era. Back then, jobs were a lot less stable, and far more people were self-employed.

While we’re clinging to the notion of the employment stability of the 1950s and 60s, reality is reverting to the mean. The reality is that earning a living has never been easy for the middle class, except during the post-World War II era. We’ve all been spoiled by that arrangement, which leaves us poorly prepared for the economy as it is, and where it seems to be heading.

This is the most compelling reason why you have to think of yourself as self-employed. If you don’t, You’ll spend a lot of time sitting around waiting for someone to hire you.

The essence of self employment is that you’re fully capable of generating an income source independent of any single employer.

You can do that whether you are currently earning income from a single source (an employer) or from several sources at the same time. My Guess is that multiple income sources are going to become the norm in the next few years.

Don’t allow the current “strong economy” to lull you to sleep. Both the economy and the job market are changing and fundamental ways that are not easily explained by the government or the news media. Rest assured the entire shift will move into higher gear When the next recession hits.

If you think of yourself as self-employed, and direct your occupation accordingly, you’ll be in a better position to deal with whatever those changes might be.

( Photo by homethods )

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12 Responses to Why You Have to Think of Yourself as Self-Employed Even if You’re Not

  1. I heard on the radio recently that employers are putting less interest in college educated. In the past they required a college degree of some sort. Now, they train and school them on the job. It would appear then that the investment in the new hire would require some sort of commitment from that new hire.
    Also, school debt the next big bubble?

  2. Hi Ruth – I’ve heard about some employers not requiring degrees, including Google and some other big techs. That’s certainly a positive development and it would really open up the job market if it becomes more common. And you’re absolutely right, employer training will require a long-term commitment from employees, so we’ll have to see how that plays out. A lot of variables there, but definitely a positive trend.

    Yeah, that student loan bubble is a big X factor. It’s what’s holding back a lot of young graduates. It’s not just the burden of the debt either. I think a lot of them are dealing with the emotional fallout too. Having a big debt not only impairs your life, but also your thinking. Creative energy doesn’t happen when you’re mind is occupied by burdens. My guess is we’re going to see some sort of student loan amnesty, maybe after the 2020 election. I don’t necessarily agree with it (debt forgiveness for an entire class of people), but it may be an economic necessity. The current set up isn’t working. We might also suspect college costs will come down once the student loan bubble pops.

    That will be another positive development, though like all change, it will be a disaster for some, like anyone in the college education complex. But heck, not to be unsympathetic, but academia has been riding that boom for a long time. Other industries go through purges, and maybe one is coming for that industry. It’s already happened to farmers, factory workers and small businesses, so no one is or should be exempt. The problem with all these bubbles is that they benefit a relative few at the expense of millions. That’s an imbalance and it does need to correct. I think an amnesty would help that along.

  3. Student loan costs would come way down without a federal loan program. The only reason they have spiraled out of control is because they can.
    It’s the same for health care. If there wasn’t insurance then the huge costs would come way down.
    All these entities that rely on loan programs or insurance’s would be forced to reduce there costs or they would never collect a dime from anybody.

    I used to ask my mother how she paid for dental work and she said, we went to the dentist for a cleaning paid the 10.00 and went home.
    Now that same cleaning is 400 dollars because of insurance. I understand value of money has lost 98 percent since the 70’s but it still wouldn’t cost 400 dollars. 100 yes.

    Think about it. I was going to take some classes online and the classes were 1000 a piece. Really? For a computer and a program. It’s all skewed because of this.

  4. Hi Tim – The stuff I’ve been reading is pointing toward online education as breaking the back of the college system. The lower classes will forgo college for learning via specific online courses in specific subjects or skills. This is already happening on YouTube. And while some colleges are dipping in, it’s only at the fringes and not all that much cheaper than physical attendance. My guess is the free and low cost courses drive out the college stuff, and then the colleges themselves. It’s more practical too. You learn what you need to, rather than spending 4-6 years getting a degree that includes coursework you’ll never use or even remember.

    But I agree, these loan programs and scholarships are driving up the cost to obscene levels, just has they have with healthcare, housing, and I’d even say cars. Once it all breaks down, people will have more control over their paychecks since they’ll have less debt. But the process that will get us to that point will be ugly. But then, life has never been pretty.

  5. Too much stuff can be financed now. People even finance furniture.
    Back in my parents day you couldn’t finance hardly anything. People don’t care how much things are when it breaks into a low monthly payment.
    I think more and more younger kids are starting to smarten up when it comes to this.
    The return on investment is no longer worth the debt in most cases.

  6. “The return on investment is no longer worth the debt in most cases” – I was thinking of that in regard to college. When I went it was a lot less expensive. The return was obvious. You could earn the equivalent of a four year education at a state college in your first year on the job, two at best. I paid as I went along and came out with no debt. But you could do that back then. Today, kids are taking on the equivalent of an unsecured mortgage to pay for an education that might result in a job on graduation paying only 20-25% of the cost of their educations. That’s where debt comes into the picture. But it’s a vicious cycle. More debt raises costs, which requires more debt. If I were starting out I wouldn’t go to college. And there’s so much going on with the internet that you really don’t have to, as far as both training and income opportunities.

  7. That is what I meant by ROI.
    Agreed I wouldn’t go either. I didn’t go back then but it wasn’t because of debt.
    Yes, I can see where in our day it was worth it but unless it’s a highly skilled field with a big payday and a job waiting at the end I would never go now.

  8. Hi Kevin, I love your website. I somehow stumble upon it while looking for creating extra income since I am over 50 without any pension. I have been debating back and forth about purchasing your online blog you advertise. Is it worth my money and will it teach me how to really get started. I’ve wasted to much time searching for things that are just a waste of money. I truly am desperate to create multiple streams of income. I trust you will advise me correctly. Thank you, Lynnette.
    I also subscribe to your newsletters.

  9. You brought up quite a few really good points! I am in my late fifties, and have student loan debt. I looked up statistics, “On a percentage basis, the largest increase in student loan debt has come from a surprising age group: 60 to 69-year-olds, who have experienced an 71.5% increase in student loan debt. However, on a dollar basis, this age group represents a $35.6 billion increase over the same period, which is the lowest increase among all age groups”, the link for this is https://www.forbes.com/sites/zackfriedman/2018/06/13/student-loan-debt-statistics-2018/#2866c5be7310. They can actually take part of a person’s social security income in retirement if you are not able to pay the loans. A lot of people are unaware of this. Many of my friends in their late 40’s, 50’s and 60’s have high amounts of student loan debt. I was talking to a friend recently who is almost fifty, with $45,000 in student loans, and no feasible way to pay this back as she lost her job several years ago, and now has a much lower paying one. While I do have a plan, plans are always subject to life circumstances. My job, for instance, is continuing to outsource at a very high, and consistent rate. (without being too specific, these are healthcare jobs that most people would be very surprised to learn about). I am trying to come up with some ways to create extra income, and feel like, after so many years of working so hard, there is very little to rely on. You mention healthcare, and that is another concern. With job losses, gig economy, part-time jobs, etc, reasonable cost health insurance is difficult to find until you can qualify for Medicare. Even Medicare is continuing to decrease their coverage for services, with higher co-pays being required of their members. My plan is to work on another stream of income, have my student loans paid off by age 65 (hoping!), and try and find a way to pay off credit card debt (which I do, unfortunately have). Thank you for continuing the great articles, they give me pause, and make me take time to think a little more!

  10. Hi LA – The healthcare layoffs don’t surprise me. Every industry, no matter how “safe” it seems is subject to staff reductions. That’s how businesses remains profitable. I also think healthcare is getting squeezed. I’m hearing that rising deductibles and co-insurance provisions are leading to more personal debt, and much of is is going unpaid (I’m still paying off the last remnants of my $5k portion of an appendix surgery I had last year, and that’s with coverage!). Meanwhile costs are rising for healthcare providers as well. And with the high cost of health insurance, millions are choosing to go without coverage in favor of food and housing. They don’t seek treatment unless it’s major, then they’re charity cases. That’s why I believe the bubble in healthcare will go off at some point. Being on the front line you’re seeing it play out. I think you’re smart to look for additional sources of income, even and especially in your late 50s. We can’t know what the economy will look like in 2-3 years, let alone when we reach retirement. It’s always best to have a Plan B (and C and D…).

    On the student loan side, I’ve heard the same thing. People have cosigned (or provided) student loans for their kids and now they’re stuck. And the standard advice on making career changes is “go back to school”. So middle aged people are hearding back to college to get new degrees, and incurring 10s of thousands in debt. Maybe they get a new career (and maybe they don’t) but they also create a big debt that largely offsets any gains from the extra education. Personally I think it’s unethical to recommend to a 50 year old to go back to school to get a new degree. Maybe a one or two year certificate program in something hands on, sure. But how much return will you get on a new degree if you’re 50-something, under the assumption that someone will even hire a 50-something rookie. This is why I despise so much of “conventional wisdom”. It’s not wisdom, it’s consensus, which is very different.

    My own suggestion is if you get an extra income source or two going, and you lose your job, you may be able to take a part-time job with health insurance. They ARE out there, and in more places than we commonly think. It won’t be a perfect solution, but it can get you to Medicare with coverage. And who knows, you may be able to land a full time job along the way – never give up hope.

    You know what I do for a living, so there’s no health insurance from my end. But my wife has been able to maintain a series of part-time and full-time jobs that have family coverage. So it’s like I work to cover most of the bills, and she works for the health insurance. Fortunately, she loves the job she has and that helps a lot. Our kids also contribute toward the employee cost of her plan. Like me, she has no plans to retire, but when we turn 65 she can take any job she wants and not worry about health insurance. But somehow I think she will anyway.

    And if I can offer this, my wife and I are Bible believing Christians and have learned to trust God. We’ve gone some short spells without insurance, but it’s been virtually supernatural how over the years we’ve almost always had coverage, despite the fact that neither of us has ever had a truly stable career. Somehow, no matter what happens, we survive, and often thrive. But it takes faith, teamwork, flexibility, and a never-say-die attitude. When our kids were younger I was usually the one who had the health insurance. But as I got older and my occupations became less stable, my wife stepped in. My current occupation of blogger/freelance blog writer is the most stable occupation I’ve ever had, but it doesn’t provide low cost health insurance. If my wife and I didn’t have this tag team thing going on over the years, things could’ve been a lot worse. All of that is why I try to remain optimistic despite all the dysfunction that seems to be overtaking the world. Faith, family, community – they’re never irrelevant, despite how the culture degrades them.

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