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Unleash the independent workforce: The hidden engine of small business growth

It’s commonly known that the independent workforce, frequently referred to as the gig economy, is a growing and important part of the US economy. Less frequently discussed is that this workforce doesn’t just consist of on-demand workers (like Uber drivers), or tech workers in Silicon Valley. Self-employment represents a major structural change in the way America works, in every industry and in every part of the country. Even as this boom in entrepreneurship drives economic growth, it is necessary to reexamine America’s policies toward independent workers and the companies that engage them in order to unleash independent workforce growth and the small business jobs it creates.  

Despite that, presidential candidates have been conspicuously quiet about how, if elected, they would enable this major group of American entrepreneurs to thrive. As it stands today, industry experts know that America’s regulatory and tax systems are not set up to make it easy for these entrepreneurs to do business.  And yet, debate moderators aren’t asking about it, candidates aren’t making it a key component of their jobs proposals, and it has generally been treated by the press more as a novelty than a critical issue with broad implications for America’s future.  Crucially, while candidates eagerly discuss ways to promote small business growth, they neglect to mention that over 50% of small businesses start with a “solopreneur.” As America adapts to the future of work, it is important to understand that the independent workforce is the hidden engine of small business growth.

{mosads}At this very moment, the United States has 30.2 million full- and part-time independent professionals who contribute $1.15 trillion in revenue to the economy each year—a figure equivalent in size to the GDP of Mexico. Self-employed professionals work in a wide variety of industries—nearly every field available—they are everything from doctors and lawyers to real estate agents, business consultants, graphic designers and other creative professionals, and more.

Research from the 2015 State of Independence in America indicates that more than 3 in 4 independents plan to stay independent, or to build bigger businesses. In the next two to three years alone, 2.8 million independent workers plan to grow from solopreneurs into small business owners. This trend will only accelerate as Millennials—already the second-largest group of independent workers—age up to independence. Already one in five Millennial independents intends to build a larger business. As independent workers become employers, they will create millions of jobs. This entrepreneurial spirit should be encouraged, especially as this workforce continues to grow.

Politicians and the media alike should take note – the independent population is large and growing fast. Over the past five years, the independent workforce has grown more than five times faster than traditional employment, and there is no evidence that this growth will slow down as the job market recovers from the recession. In fact, the contingent workforce is projected to reach 45% of the private, non-farm workforce by 2020.

The government must enable the independent workforce to promote small businesses and job growth in the future of work. There’s no doubt that the current system has room for improvement—companies that hire independent workers face uncertainty in how to properly classify this category, workers are unsure how to access benefits, and the government, as currently set up, has difficulty sizing and defining the independent population.  Companies stepping in to serve the independent workforce are a start, but the fact remains that America’s regulatory and tax systems are set up for a post-World War II economy based on traditional employment. Our political leaders must recognize this structural change and discuss how they will promote the growth potential that a robust independent workforce can unleash.

Zaino is the founder and CEO of MBO Partners, the largest provider of business services and technology to the independent workforce.



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