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

Thirty million Americans, more or less, work for themselves. They freelance, do gig work, have solo LLCs, or — as a certain economist says — participate in “ non-employee employment.” The economics of their situation is harder than it needs to be. Making self-employment more viable is good for everyone in the labor market, because when workers have options, they also have more power. Plus: Kathryn Anne Edwards testified before the House Ways and Means Committee, and a congressman implied she wasn't a real American. She has thoughts. Chapters: 0:00 — Start/Announcements 1:21 — Retcon: Bad banks, good overtime, and testifying before Congress (again) 18:17 — Big Pilcrow: Freelancers & non-employer businesses 44:42 — Executive orders: national anthem singing rules, Congressional attendance policy 47:20 — Spiritual sponsors: Supportive listeners and horchada + cold brew coffee 49:01 — Credits Donate to Optimist Economy: https://optimisteconomy.com Video-curious? Watch the Optimist Economy YouTube channel⁠⁠ https://www.youtube.com/@optimist_economy. We’re also on Instagram at ⁠⁠@optimist_economy https://www.instagram.com/optimist_economy or TikTok at ⁠⁠@optimist_economy https://www.tiktok.com/@optimist_economy. Chat with other Optimists on Substack. https://substack.com/chat/4604257?utm_source=pub-nav-bar Find utility with our merch: https://merch.ambientinks.com/collections/optimisteconomy Got economic questions, concerns, or executive orders? Send them to [email protected] mailto:[email protected]

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Mitt Romney and Ted Kennedy were about as different as two politicians could be. The lanky businessman and the stout old senator, the conservative darling and the liberal icon. But did you know they once teamed up to tackle an elusive challenge: universal healthcare?

• 0:16Speaker 01

  This is a politician's dream.

• 0:18Speaker 00

  In season four of the Big Dig podcast, we tell the story of Romney Care and the odd couple alliance behind it. Find Mitt and Ted wherever you listen.

• 0:30Robin Rauzi?

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

• 0:37Speaker 03

  I could use a beer. I could really use a beer.

• 0:45Speaker 03

  Hello and welcome to Optimist Economy. I'm economist Catherine Ann Edwards.

• 0:48Robin Rauzi?

  I'm editor Robin Rousey.

• 0:50Speaker 03

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

• 1:02Speaker 03

  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-employed. That was new when I learned today, non-employers. Businesses without employees. We'll figure out who they are and what they need.

• 1:19Robin Rauzi?

  There are about 30 million of them, apparently.

• 1:22Speaker 03

  There are dozens of 30 millions of us.

• 1:27Speaker 03

  Announcements.

• 1:27Robin Rauzi?

  Announcements. I want 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 Charlotte, 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.

• 1:54Speaker 03

  Production says, "Thank you so much for all of your contributions, since it goes right to Andy and Sophie." Okay, retcon, retroactive continuity, where we revisit past things. I have two small ones and a big one.

• 2:05Robin Rauzi?

  Okay.

• 2:06Speaker 03

  Like, two truths and a lie, but two smalls and a big. Two small ones. First one would be, 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, I have to say that the comment section became just a beautiful space of, like, "Say their name, that's clearly Bank of America." And someone's like, "Yo, I know Wells Fargo, when I hear Wells Fargo." And they're like, "But don't forget US Bank, that one was bad." I mean, it was hilarious to hear people revel in terrible banking stories and how much it hit a nerve.

• 2:48Robin Rauzi?

  We also got letters that, 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."

• 2:59Speaker 03

  "Should have mentioned credit unions as an alternative." Not that credit unions don't also make mistakes, I have another bad banking story that is from a credit, it's from a credit union.

• 3:08Robin Rauzi?

  But, yeah, credit unions certainly are one way to avoid the biggest banks.

• 3:12Speaker 03

  Okay, overtime.

• 3:14Robin Rauzi?

  We had a lot of letters about overtime as well. Most of them saying, "Hey, you know, people need overtime, people rely on overtime. It isn't just about misclassification of people. You need to recognize that, that this isn't just flexible income for most people's lives."

• 3:31Speaker 03

  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.

• 4:03Robin Rauzi?

  Yeah. Somebody also asked an interesting question, or for clarification, about how we had suggested that the no-tax-on-overtime created an incentive for employers to use overtime more.

• 4:15Speaker 03

  So it's pushing more workers into overtime at taxpayers' expense, rather than your employer's expense.

• 4:23Speaker 03

  And that's the part that I think is very manipulative of the labor market because it's basically telling employers that we're going to subsidize your use of overtime as opposed to having you, employer, pay for overtime. And I don't think we said that plainly.

• 4:43Robin Rauzi?

  I think we tried, but maybe.

• 4:46Speaker 03

  Oh, we certainly tried. Try it and miss it. I know we do that. But you 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 me, worker who doesn't get overtime? Why am I subsidizing someone who does? Like, that should be the employer's expense.

• 5:07Robin Rauzi?

  Yeah. Okay. Big retcon?

• 5:11Speaker 03

  The big retcon was that I testified in front of Congress last week.

• 5:14Robin Rauzi?

  Yeah. Which is why if you didn't get an episode last week, that's why. Because somebody was busy.

• 5:19Speaker 03

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

• 5:37Robin Rauzi?

  Which they have renamed.

• 5:39Speaker 03

  Yeah, about four days before the hearing, they posted the hearing information and it was called the Working Families Tax Act, I think was what it was called. And I was like frantically emailing the Dem staff and I'm like, 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 Working Families Tax Cut Act. And the name of the hearing was Your Paycheck Returned. So this is what it's like. Like, I have to prepare 10 pages of written testimony. It has to be in 48 hours at least before the hearing starts. So Monday, 10 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 over the weekend, pulled like really late nights because children don't work on the weekend, which is like.

• 6:24Robin Rauzi?

  They'll go to school.

• 6:26Speaker 03

  Yes, Andy, I did in fact work overtime to get the testimony out. 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 and you can only speak when you're called on. You can't just like hit the mic and start talking. You, they go through each person.

• 6:48Robin Rauzi?

  It's not like Jeopardy.

• 6:49Speaker 03

  It's not like, yeah, it's not like you get to buzz in like Jeopardy. Like, what is a [bleep] piece of legislation, Ken? Um, yeah, you don't get to do that. And then 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 who is there also gets five minutes. And when it's their turn, they can call on the, one of the witnesses versus not, so...

• 7:11Robin Rauzi?

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

• 7:14Speaker 03

  Oh, a lot of, a lot of them will just yell for five minutes and get up and leave.

• 7:17Robin Rauzi?

  They just pontificate, yeah, they, yeah.

• 7:19Speaker 03

  So that's fun, because you have to sit there and look polite while they're yelling.

• 7:23Robin Rauzi?

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

• 7:28Speaker 03

  You should have to be there the whole time.

• 7:31Robin Rauzi?

  The room was pretty empty by the end of that.

• 7:32Speaker 03

  Well, they come, once they ask their question, they leave. I, I, I mean, it just so happened that the day that I was there was the day after mainly Republican Party primaries in a handful of states in which everyone who was not an avid Trumpeter lost.

• 7:45Robin Rauzi?

  An avid Trumpeter?

• 7:46Speaker 03

  And if there was, yeah, whoever Trump endorsed won.

• 7:49Robin Rauzi?

  Okay, got it.

• 7:50Speaker 03

  Whoever had ever stood up to Trump, lost. So this was the, Cassidy lost, Massey, is that that guy's name?

• 7:56Robin Rauzi?

  Yeah.

• 7:57Speaker 03

  He lost, they all lost on the same day, 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.

• 8:09Robin Rauzi?

  No tax on tips and overtime.

• 8:10Speaker 03

  So this hearing, like, I'm, you know, a good little girl here, I've got like 10 pages on like economic implications of debt financing, a permanent revenue reduction, and like what that means for economic policy because it's quite weak, and I'm like, 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, and if you, if you didn't know anything about the bill and you had gone to the hearing, you would have no idea that it had anything other than a tax that reduced tax on tips. They didn't talk about any other part. It was no tax on overtime.

• 8:41Robin Rauzi?

  Well, that's the truth, they talked about the tax credit for adoption expenses.

• 8:44Speaker 03

  Yeah, tax credit for adoption expenses, no tax on tips and no tax on overtime. And like, that is the entire legislation, according to them. So, most of the Republicans did take the chance to yell at me about how wrong or bad I was. I mean, obviously, the best one was the chairman of the House Ways and Means Committee, who was on this subcommittee, Jason Smith from Missouri, who has an amazingly, nasally, high pitched voice, 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. I mean, y'all, he is 10 feet away from me, looking right at me, as he's like, "Real Americans benefit." Oh, my God. I, um, I was like shaking with rage.

• 9:29Robin Rauzi?

  Should we roll the clip?

• 9:30Speaker 03

  Yeah, roll it. Thank you, Congresswoman. I'm going to quickly, uh, correct the record. I am a real American. My profession does not disqualify from be, from being any less American than the other person. It doesn't require any adjective afterwards. Doesn't matter what my profession. 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 US history is 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 for forever. Thank you for letting me correct the record. Investments in children and family tend to have a much- You know, they talked about this in the movie You Got Mail, where it's like, in

• 10:15Speaker 03

  the moment, you never say the right devastating thing to a person. It's only after they walked away that you think of like, the actual perfect devastating comeback to whatever it is someone said.

• 10:24Robin Rauzi?

  Are you guys still working on that?

• 10:25Speaker 03

  Yeah, but in my head, I'm like, on, I'm on day seven of like, what I should have said to this [BLEEP] who said I wasn't a real American, because I pointed out that he's bankrupting the country. Yeah, I, um, I'm still coming down from all that rage. And actually, my editor at Bloomberg, who watched the hearing, said that he could see I was upset, because my hand, holding the pen, taking notes, at one point was shaking, and then I just put it under the table, so no one could see. Oh, man.

• 10:56Robin Rauzi?

  Yeah.

• 10:56Speaker 03

  Oh, man.

• 10:57Robin Rauzi?

  It was a day.

• 10:59Speaker 03

  It was a day. Why do I do this? Like, why go if it's just this moment? I think is a fair question.

• 11:05Robin Rauzi?

  That is a good question. Actually, I'm glad you put that up.

• 11:09Speaker 03

  Do I get anything out of it? I.

• 11:11Robin Rauzi?

  Yeah, I mean, they don't, you don't get paid to go do this. You.

• 11:14Speaker 03

  No, they don't. I had to pay everything out of pocket to go.

• 11:16Robin Rauzi?

  They don't pay, they don't fly you there. They don't put you up in a fancy hotel.

• 11:20Speaker 03

  No.

• 11:21Robin Rauzi?

  Then to go be accused of being not a proper American. American.

• 11:27Speaker 03

  Mm hmm. I did have these like. 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. I mean, it might surprise you all to know that my dad would not have gotten up to defend me. And 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 be like, how dare you disrespect your office? And he, I mean, growing up, he always said, you have to respect the office, even if you don't respect the office holder. And, you know, people's power comes from the respect that is given to that seat. And I'm like, when he got up and walked away, in my mind, I couldn't help but think of

• 12:10Speaker 03

  like, there is a version of the world where my dad is alive, following you out of here. And I'm, and I'm, and I'm trying to get him to call me so I can listen in on speaker when he chews you out. Because like, man, did that guy have a temper? And you would have heard it. And he's not, he wasn't easily intimidated because he was an elected Republican official and a judge. So. We do this because you never know who's listening.

• 12:31Robin Rauzi?

  Yeah. In the course of putting your testimony together, did you kind of come to any new realizations or conclusions or insights?

• 12:41Speaker 03

  Yes, I think I came to three realizations. One was, I have been undercounting the number of tax cuts that we've had this century. I've been doing this on social media and I do this in my newsletter and I talk a lot about the amount of money we spent on taxes.

• 12:54Robin Rauzi?

  On tax cuts.

• 12:55Speaker 03

  On tax cuts, sorry, on tax cuts. And when I sent my testimony, I don't have an employer, right? I'm just like a one woman shop. So I sent it to friends to fact check for me. And one of them wrote back like, you know, you're missing like two tax cuts. I was like, are you kidding me? I had seven and I was missing two. The biggest ones were 2001, which was followed by 2003. And then also 2012, which made the 01 and 03 cuts permanent. And then 2017 and now 2025. But there were like three other ones in like 04 and 05 and 10. And then in 14. They were smaller, but they all also cut taxes. And the first bunch were about accelerating the Bush Tax Cut Phase N, if that makes sense.

• 13:38Speaker 03

  And then there was another one that happened in 14. And they're all called like Jobs and Families and Workers and Tax Act, I mean, growth. So, you know, brushing up on my tax bills and missing some minor pieces of legislation. That was.

• 13:53Robin Rauzi?

  That was one.

• 13:53Speaker 03

  That was one. The second thing I got was just the articulation of it should not be your taxpayer's responsibility to subsidize low wage employment.

• 14:07Robin Rauzi?

  Yeah.

• 14:08Speaker 03

  Which is what No Tax on Tips and No Tax on Overtime is trying to do. It's you're subsidizing somebody else's employment. And it kind of cemented to me that the tax system is really used for almost like protecting capitalists from capitalism.

• 14:24Robin Rauzi?

  Yeah.

• 14:24Speaker 03

  My husband came in one night. It's like 11:45 PM on a Saturday. And I am at my desk, just like buried in documents. And he's like, hey, how's it going? I'm like, I figured it out. He's like, you figured it out? And I was like, yeah, I got the Joint Committee on Taxation's Expenditure Survey. And then I put that into a document and I decided I was going to typify it for every type of tax expenditure that exists. And it turns out there are 271. And he was like, uh huh.

• 14:50Robin Rauzi?

  Okay, honey.

• 14:52Speaker 03

  Okay.

• 14:53Robin Rauzi?

  I'll do that now.

• 14:55Speaker 03

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

• 15:18Robin Rauzi?

  There are 271 coupons.

• 15:20Speaker 03

  271 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.

• 15:32Robin Rauzi?

  Holy cow.

• 15:33Speaker 03

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

• 15:38Robin Rauzi?

  Wow.

• 15:39Speaker 03

  I think what I realized when putting this together is I thought the problem was this makes the tax code really complicated. People don't know what they owe in taxes and it's created a runaway success of the tax preparation industry whose prices run more than twice the pace of inflation. What I realized was that this is like, 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 that scope of the problem like really laid itself out before me when I was putting that together at like midnight on Saturday with a beer next to me.

• 16:23Speaker 03

  You know, thinking about how we actually get past here. And then the third thing I learned was that you should never say to the House Republicans on the Tax Committee to their face, you are a categorical failure and you need to raise taxes. I mean, I know I got some heat in the testimony, but I did start with the tax system as a categorical failure and you need to raise taxes. So I didn't exactly like, hold it back.

• 16:53Robin Rauzi?

  No.

• 16:55Robin Rauzi?

  Yeah. And I love how you became like the face, like they, all over their social media of like, just that clip, you need to raise taxes. And it was like,

• 17:03Speaker 03

  Democrats want to raise taxes. Yeah, that was, that was good. And then I, I guess the other, like, why I do this is because you never know who's listening, but also it's a moment, this is like a test, right? You're in a class. Sometimes you don't really learn as much from the lectures until you actually prepare for the exam. And I feel like I learned so much over the past couple of weeks. Even if it was just like, what were the things that really landed with people? I was very glad to have arrived on something, even if it was just like the most difficult way to come upon a successful talking point.

• 17:38Speaker 03

  You know, and if you need an optimist bent, I will say that there were five Republican witnesses and the majority of them came up to me afterwards and said that they were both impressed with what I said or shocked and dismayed at their behavior of the Republicans, including one person who said that they were deeply ashamed. So, you know, it's helpful to remember that behind these images you see on a screen are people that are very different and nuanced in real life than they present. So maybe a Republican pulled up a big poster to tell me I don't know what I'm talking about, even though I knew exactly what I was talking about. But I don't know what hit for him.

• 18:16Robin Rauzi?

  Yeah.

• 18:17Speaker 03

  Because he's performing.

• 18:18Robin Rauzi?

  Yeah.

• 18:18Speaker 03

  And so was I. And then I just like immediately walked out of the room to go retrieve, walked out of the room in a huff to go retrieve all the [BLEEP] souvenirs.

• 18:29Speaker 03

  Including a onesie for my six months old that has a US House of Representatives seal and then says, "This is my house."

• 18:38Speaker 03

  Next time I'll do prop comedy and I'll hold up of like, "Would a real American buy this?"

• 18:42Robin Rauzi?

  "Would a real American?"

• 18:46Speaker 03

  Okay, so that was Congress. Yay.

• 18:49Robin Rauzi?

  Okay, let's take a break.

• 18:56Speaker 03

  And we're back. Today, we're talking about people like us.

• 19:00Robin Rauzi?

  Yes.

• 19:00Speaker 03

  People like me, Robin, Andy, and Sophie, the freelancers of the world.

• 19:07Robin Rauzi?

  I think-

• 19:07Speaker 03

  Who have their own business.

• 19:09Robin Rauzi?

  This whole episode is like hashtag asking for a friend.

• 19:14Speaker 03

  Asking for a friend episode.

• 19:16Robin Rauzi?

  You know, we got a letter today, 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? But we have gotten several questions about this, like, how can we make the US economy better for creative workers, for freelancers, you know, not just people who are in the gig economy or maybe abused by Uber, but people who actually choose to do this kind of work on a freelance basis for whatever their reasons are. This woman, her name is Rachel Getlevich, who's currently living actually in France, said that, you know, France has some interesting

• 19:57Robin Rauzi?

  labor and tax solutions that are much more in line with how people are working in 2026. And so she wondered if you had advice, rewards, or encouragement for freelancers on gaining any kind of economic or social benefits in the US. 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 W-9.

• 20:23Speaker 03

  My term and condition was going to be a little bit of like a, I don't know what to call these people. So imagine, if you will, like a spectrum, and like far on one end is people who have a W-2 employer, and that company could be big, that company could be small, but they're a W-2 employee and that's their only source of income. And then on the other end of the spectrum is someone who owns a business who has W-2 employees. It could be a restaurant, it could be a large company, but they have employees and so on. In between is this

• 20:57Robin Rauzi?

  Huge gray area.

• 20:59Speaker 03

  Huge gray area that has different tax filing status, different income forms from 1099, MISC, and K, and NECs. For those in the know, you know what I'm talking about. There are people who would say that they're self-employed, people who would say that they're freelance, people who would say that they run a small business. They're all kind of lumped in. So the Census Bureau has been Very much trying to understand how large this group of people is. And it's very hard to do in public surveys. So the best way to go through it is through tax records. And so in their brilliance of studying this population, they came up with the term non-employer businesses.

• 21:38Robin Rauzi?

  Non-employer businesses. So that's being self-employed? But they don't want to call it that?

• 21:44Speaker 03

  Yes. So one end would be someone who is basically shoved into being a contractor when they're really an employee, where they work for one company as a contractor, and they probably should be an employee, but all the risk is dumped onto them. And then the next one is freelancers and gig workers who would probably describe themselves as self-employed because they have a lot of--

• 22:02Robin Rauzi?

  A lot of clients.

• 22:03Speaker 03

  A lot of clients, discretion over their business, but they're not a large business. And so they file as, say, a sole proprietor. Then you have people who own businesses that don't have any employees. So this would be an LLC. This has multiple clients. And what differentiates between them is do they file their taxes using their social security number or an employer identification number? And so all of those people in between are basically running a business without employees.

• 22:31Robin Rauzi?

  And without any, frankly, the benefit of being an employer and all the, what was it? 271 coupons?

• 22:39Speaker 03

  Get that coupon. So the Census Bureau has tried to understand, like with the rise of platform gig work, like Uber, you're a non-employer business, aka self-employed. So they're going through when they're trying to figure out how many of them there are. And what they come to is around 33 million.

• 22:58Robin Rauzi?

  Wow.

• 22:58Speaker 03

  Around 8% of all workers are self-employed, just self-employed.

• 23:04Robin Rauzi?

  Okay.

• 23:05Speaker 03

  Around 83% are wage and salary, just wage and salary. And then about 10% are both.

• 23:13Robin Rauzi?

  Huh.

• 23:14Speaker 03

  Like you.

• 23:15Robin Rauzi?

  Like me, yeah.

• 23:16Speaker 03

  Yeah. So we can do, like, the Catherine is the self-employed only. That's me. And then the Robin is the self-employed and wage and salary. It's around 17% of the workforce and it's not evenly split, but it's about, if you wanted to know the actual percentages, you can find them. But think of it as around 1 in 6 workers falls into the self-employment category and about half of them will be solely self-employed and the other half will have also wage and salary employment. And some of that happens because they're looking at tax years. Some of that is going to be a function of they've switched from self-employment to work or employee to self-employed or self-employed to employee. But it's, I mean, they look at previous years' filings. I mean, it's fairly consistent.

• 23:58Speaker 03

  I mean, Americans, we love to think that we are like the small business entrepreneurial haven, but actually, it depends on how you measure it because it is, it can be hard to measure this very nebulous group of people. If you were to measure consistently in the US and all of Europe, the US has the lowest rate of self-employment out of any country in the OECD.

• 24:17Robin Rauzi?

  Oh, really?

• 24:18Speaker 03

  Yes. Now, it's that measure of self-employment. So it's measured consistently across all of those countries. But the OECD is the Organization for Economic Cooperation and Development. And it's really just our peer countries. Most of the EU will be in, or all of the EU is in there.

• 24:34Robin Rauzi?

  Yeah, Japan, Australia.

• 24:36Speaker 03

  Yeah, Canada, and then kind of a handful of Central and South American countries. It's really, you can think of it as just a function of like the richest 26 to 30 countries in the world are what we call the OECD. And the US has the lowest self-employment rate out of all of them. And even countries that you would say would like, oh, they have such like crippling labor policy, all these taxes that employers have to pay, I mean, they've got higher rates of self-employment than we do. I guess the US has a lot more startup activity, like investor-backed businesses. People like starting companies in the US, but we end up on like two sides. Because we love businesses so much, this is a great place to start businesses, especially large-scale businesses. But because we dislike workers so much, this is a hard place to be self-employed.

• 25:21Speaker 03

  And so you end up with kind of like, they want the businesses that we have, but like, we would like to have more self-employed people. And so I think, in some ways, I see self-employment as like a function of worker power. And because we have so little, we have lower rates of self-employed despite having 33 million. I mean, it should be, could be a lot higher.

• 25:39Robin Rauzi?

  That's a lot of people. Can you, how long have you been freelancing? Or how long have you had? I'm sorry, excuse me. How long have you been a non-employer business?

• 25:47Speaker 03

  I've been a non-employer business since January of 2023. So I'm entering my fourth year.

• 25:53Robin Rauzi?

  Right. So I have been a non-employer business since 2010? For those of you who are not non-employer businesses out there, we should just say like, why it bites to be a non-employer business? I mean, there's 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, like, how can we make the economy better for freelancers and artists and creatives and non-employer business types?

• 26:23Speaker 03

  Non-employer businesses? I think it's a two-way street of it's a privilege that's withheld from some, and then there are punishments to doing it. And so making it better is not just about making the actual status of being a non-employer business better, but also who gets to be a non-employer business. It's disproportionately older workers and slightly more male. So you're not going to find a lot of like 23-year-old self-employed people. It's much more likely to be an older worker.

• 26:52Robin Rauzi?

  Somebody who's developed some kind of expertise that they can take out and work on their own.

• 26:56Speaker 03

  And has like a network and things like that.

• 26:59Robin Rauzi?

  Yeah. So that's interesting. I just, I hadn't really thought about this that way. That is it because there's a certain amount of, you know, like a privilege to it that it also gets essentially penalized? Right?

• 27:11Speaker 03

  Yeah, I mean, I think the privileged side is on the point of entry. In the US, we have health insurance and retirement savings primarily brokered by your employer. So if you don't have an employer and you're out on your own, that means you have to come up with health insurance and retirement savings on your own, and that's really hard. And for some people, it's just, it's a little too risky. For some people, it feels too expensive. For other people, I mean, it is completely insurmountable. You have to have your group health insurer plan. You can't really afford healthcare without it. That really creates a barrier of almost like gatekeeping this idea of self-employment by people who can get over the health insurance retirement savings part.

• 27:54Speaker 03

  But then, once you're self-employed, then you have your own, like, now that I've gotten into self-employment, you have all kinds of challenges that come from how the tax system is set up.

• 28:03Robin Rauzi?

  Right. The taxes are a problem. I feel like we've mentioned this before, but, you know, as a, now, I have to learn to use this all the time, as a non-employer business, you wind up paying the taxes as the employee and as the employer, especially for payroll taxes, like social security taxes. And that's a lot.

• 28:23Speaker 03

  It is a lot. It's two problems. One, you have to pay both sides. That's a newer policy. That changed in the Clinton administration. And then the other problem is that you're not included on the payroll tax for unemployment. You go off into the land of self-employment, and you lose access to employer-sponsored health insurance. You have to pay double for social security, and then it's not clear you would have access to paid family leave if your state has it, and you definitely don't have access to unemployment insurance. So you lose, you're double paying for one benefit, you lose the other really good workplace social insurance benefits. So, in some ways, it is very much a privilege to be self-employed.

• 29:02Robin Rauzi?

  Yeah. I mean, and so, and it also shouldn't be a surprise that we maybe don't have as many small businesses, because we hit people on both sides of it.

• 29:09Speaker 03

  Hold on, we had to do a really quick timeout sidebar.

• 29:12Robin Rauzi?

  Okay.

• 29:12Speaker 03

  Small business is not a normal phrase, because it has so many definitions. I think the Chamber of Commerce or the Small Business Administration, if it's under 500 people, it's a small business. Or under 250.

• 29:26Robin Rauzi?

  I feel like there's some kind of, like, equivalent to sort of flattercising, like, we need extra-small, small, all the way up to triple extra-large.

• 29:34Speaker 03

  Triple extra-large small business? Yeah, but, so if you've ever heard anyone talk about small businesses, it is not clear that they're talking about what you are talking about, because they want to talk about how many small businesses there are. They push that number way up to under 250 or even 500 employees is a small business. We're talking about people where it's like, one.

• 29:55Robin Rauzi?

  Right.

• 29:55Speaker 03

  The business is one, just the person. And that is the non-employer business. But, yes, 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.

• 30:09Robin Rauzi?

  Right. Right.

• 30:11Speaker 03

  Um, health insurance is a big problem. The payroll tax is a big problem. That one we talked about in the social security episode where I spoke at like 800 words per minute about all the things I wanted to do for social security.

• 30:23Robin Rauzi?

  Yeah, yeah.

• 30:24Speaker 03

  I did have someone who tells me they listened to all the episodes at one and a half or two times.

• 30:29Robin Rauzi?

  Except that one?

• 30:30Speaker 03

  Except that one. They're like, I had to slow it down.

• 30:34Robin Rauzi?

  Run that one at .75 speed.

• 30:37Speaker 03

  Run it back. One of my proposals I had is in order to alleviate payroll tax burden on non-employer businesses, AKA the self-employed, you would have companies that use contractors would have to pay a fee for their contractor.

• 30:55Robin Rauzi?

  Oh, right, right. The 1099 fee.

• 30:58Speaker 03

  It was like a 1099 fee that 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. And so that would be a way to kind of offset non-employer businesses. All right, so we gotta do some policy [BLEEP]. Why do you like or dislike being a non-employer business?

• 31:20Robin Rauzi?

  There's a lot of reasons, I guess. I do like the flexibility. I like the variety of work that I get to do. But honestly, I mean, I like a lot of people. I think I wound up in this out of making the best of a bad situation.

• 31:31Speaker 03

  Duress.

• 31:32Robin Rauzi?

  Duress. Yeah.

• 31:34Speaker 03

  So 16 years you've been a non-employer business?

• 31:37Robin Rauzi?

  Yeah. I left the LA Times voluntarily in 2009.

• 31:42Speaker 03

  Bad year.

• 31:43Robin Rauzi?

  So I got another job and I went to pivot to a new career and I hated it so much that I was like, 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 sort of forcibly thrown out of journalism that they were all trying different things and creating their own little non-employer businesses. And so people just started to call me. And so rather than look for another job, I just began freelancing, really just because I was just offered the opportunity. And then pretty quickly I got a big client who kept me on retainer and then I never looked back.

• 32:22Speaker 03

  I had a similar point of entry, which was leaving a W-2 full-time employer under duress. And it was a duress that came from a lot of directions, but the real breaking point was I had just had my second kid. And I came back from maternity leave and I was like, I can't do this. Like it's, it was too, it was too much. The, the, the job and I weren't a great work style fit.

• 32:47Speaker 03

  And so I quit with the intention that I would go get a job elsewhere. And, uh, man, your girl did not get a job. It was like, I'll get another one, like, I'll apply, like, I'll take some time off, like, this'll be great. And I just, I never got one. And I applied to a bunch of places and, you know, it always came apart at the last minute. But 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, I mean, I was only like thirty six or thirty seven at the time and I didn't have a Nobel Prize. I didn't, I wasn't like a famous economist. I was just, they said I was a good writer and I could explain things. And so they were going to give me a chance to write a Bloomberg column, which was so exciting.

• 33:31Speaker 03

  But, you know, having an opinion column in an employer are not necessarily a good mix.

• 33:36Robin Rauzi?

  No, they are not.

• 33:37Speaker 03

  I thought it was like too special to risk and that I would take on as much work as I could on the sidelines and like basically give this column a chance. And then it's, you know, it's been three and a half years.

• 33:49Robin Rauzi?

  It's funny, I remember when I started this, when I started freelancing, people said, God, I could never do that. Like, I just don't have enough courage. But man, if you work in a business that's, that's been as disrupted as the news media, like, there's no security in being in the workplace either, right? So, I don't know, I'd rather have my fate be my, my own to a certain extent.

• 34:10Speaker 03

  I think I just wanted my voice to be my own. I was embarking on this journey where I'm trying to communicate on every platform, right? Go on TikTok and Instagram, go on, have my own newsletter, write a column, and then start a podcast. And I just, you know, wanted it to be just my name. Nobody else's words but mine, which is why sometimes they're bad. Sometimes they're okay and I mess up a lot and we have to do retcon every episode. But like, at least it's just me, like, I speak for me. I, I have an independent streak and it just, it came in so fierce. Once I left, I was like, I don't want to answer my opinion, any employer who's operating in their interest instead of mine. My interest is a better economist.

• 34:55Speaker 03

  And that's it.

• 34:56Robin Rauzi?

  Yeah, I mean, there is a certain amount of it's hard to go back if you can if you can make ends meet, but it can also be lonely.

• 35:03Speaker 03

  Now statistically, it is the case that or at least in the evidence and data we have about self employed workers, they have very high rates of part time.

• 35:13Robin Rauzi?

  They they work in their non employer business part time?

• 35:15Speaker 03

  Their non employer businesses part time because the current population survey where we get our unemployment rate, it has a measure of self employment that is going to be more limited because it misses all the people who are like formerly incorporated businesses without employees technically they are employee of their own business for the current population survey. So you miss a big chunk of people, but of the people who are freelancers, gig workers, contractors who are self employed in the survey, they're much more likely to be part time than workers overall, and they're more likely to say that they want to be part time like they're not part time because they can't find work. They're part time because they don't want full time work.

• 35:54Robin Rauzi?

  Mm hmm.

• 35:55Speaker 03

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

• 35:58Robin Rauzi?

  Hmm, that's pretty high.

• 35:59Speaker 03

  And I'm like, that's kind of like about my full time cutoff.

• 36:03Robin Rauzi?

  Exactly.

• 36:04Speaker 03

  I feel like 35 is full time. 30 is really full time, right? But you you do get people who are bringing in money, have more control and flexibility and are working less than 40 hours a week.

• 36:18Robin Rauzi?

  Yeah.

• 36:19Speaker 03

  I was looking with a set of co authors, we looked at is being self employed a choice or not?

• 36:28Robin Rauzi?

  Yeah.

• 36:29Speaker 03

  Like, is it something that's empowering that people want to do and that they move towards? Or is it something where like they would prefer to be an employee, but they can't get wage employment, or they don't want to be an employee and they prefer to be a contractor? Here's the amazing term we alighted on, non employee employment.

• 36:48Speaker 03

  It's almost as good as non-employer business.

• 36:50Robin Rauzi?

  Non-employer business.

• 36:51Speaker 03

  But it's non-employee employment. So we called it non-employee employment because we hate ourselves and people who would read our report. Because people who say like Uber gives people, DoorDash gives people opportunity to have control over their schedule, to pick their own hours, pick what they do, and they don't want to be employees.

• 37:10Robin Rauzi?

  Or is this just a desperation job because this is, you find yourself in some sort of duress?

• 37:16Speaker 03

  What we found was that it was path-dependent. Like, a lot of people arrived into non-employee employer.

• 37:24Robin Rauzi?

  Employerhood?

• 37:26Speaker 03

  Non-employee arrangements because it was like, 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, and they were from mal-employed groups.

• 37:38Robin Rauzi?

  Mal-employed?

• 37:39Speaker 03

  Are you picking up on the baby crying?

• 37:41Robin Rauzi?

  Yeah, I am.

• 37:42Speaker 03

  Mal-employed groups would be like, people who have really high unemployment rates, so workers with less than a high school degree. They have very high unemployment rate all the time, so if they have really high rates of contracting and being a non-employee, that's probably because they couldn't get a W-2 job. Certain immigrant groups had really high non-employee arrangements. But then, on the other hand, the other kind of really high rate was amongst people who have like, advanced degrees and were 60, and made incredible money and had worked in a salary job in the past year, and so you...

• 38:12Robin Rauzi?

  Just wanted to take Fridays off to go golfing.

• 38:15Speaker 03

  Wanted to take Fridays off and go golfing and bill their best friend as a contractor, you know, as their own business. Yeah, I mean, it encompasses so much. So I think one of the problems that the contractor classification fight ran into is the...

• 38:31Robin Rauzi?

  There's people who want to be in this...

• 38:33Speaker 03

  There were people who desperately wanted to be a contractor and didn't want to be an employee, who would have benefited from being an employee 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.

• 38:47Robin Rauzi?

  Well, there are, and there are a lot of people who just don't want to work for someone else. They just don't have the personality for it. They don't have the disposition. They don't have the, you know, mentally like to work in a nine to five kind of slot. They, there's.

• 39:00Speaker 03

  They had such a good first employer that they find every other management instructor to be so subpar that they become ungovernable and really hard to actually manage because their management expectations are so high and they make that clear in every meeting possible that the people who run the place are not doing a good job. That could be anybody. Yeah, this, this is the problem that you, that you have in trying to regulate this on workers' behalf is that there are lots of workers who, even if they could make more money, would opt out of it. So I, you know what it actually reminds me of? Childcare.

• 39:27Robin Rauzi?

  Yeah.

• 39:28Speaker 03

  Right now, we have this like culture war around moms about whether or not they choose to work or put their kids in care. It's dumb. We don't need a culture war around this.

• 39:38Speaker 03

  And it's also the wrong division. Because you see that women either work and pay for care or they don't work and stay at home and take care of their kids. Well, that's not the right dichotomy anyway, because there's 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 safe, sometimes quality, sometimes not quality.

• 39:59Speaker 03

  We don't know, like, what share of women would stay home or work if childcare wasn't this massive separator in between. Like, if childcare was free, universal, and high quality. The way are you hearing, is it the baby? Can you just hear it?

• 40:16Speaker 03

  She feels very strongly about this. Her mom's self-employed. But like, how many workers would legitimately prefer to be running their own place and be in their own non-employer business versus working for an employer? We don't know. Because we've never had the health and we've never had the retirement and we have this like very lopsided payroll tax structure that they get hit by. And 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 in terms of what they do and how they do it, that's bad. The economy is losing out on a better decision. Like, I would be an amazing wage and salary worker, but I have to be home to take care

• 40:59Speaker 03

  of my kids, or I have to be home for this, and so I have to run my own business. It's not what I really want to do.

• 41:03Robin Rauzi?

  Conversely, yeah, I need health insurance, and so I'm still an employee where I could be building a business that would employ other people.

• 41:12Speaker 03

  Yeah, I can't start, yeah, I can't start my business for five years because that's when, like, I'll be eligible for Medicare, or I'll be able to afford health insurance, or, you know, like, you just, those type of, they mar our decision-making, and they make our economy worse. If for no other reason, people aren't doing what they want to do.

• 41:29Robin Rauzi?

  They just be happier.

• 41:31Speaker 03

  Yeah, just be happier.

• 41:33Robin Rauzi?

  Do you think that we, can we have both? You know, in other words, if people don't want to have an employer, but they want to be contractors, are we just always going to have a system that companies abuse?

• 41:42Speaker 03

  No, not if we set good rules and policies in place. I mean, they, employer and company abuse is the moving van. You will fill it, however big it is, that's how much stuff you'll put in it. I think workers should have the same type of power that companies do, and that they get to run their business how they run their business. I think this kind of goes back to me being a capitalist at heart. You know, 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, that I, you know, I wasn't doing well at. Self-employment was almost like my backup plan, and the better my backup plan is, the more employers have to try hard for me.

• 42:27Speaker 03

  There are lots of paths that lead into self-employment, and there are lots of paths that lead out of self-employment for people. But the better off we can make self-employed people, the more employers have to be better employers. Like, even if you never want to be self-employed, if you're like, listen, it's just not for me, like, I want to have an employer, and that's it, like, you should still be really rooting for self-employment to be awesome, and for us to have more of it, because that's going to make your employer treat you better.

• 42:57Robin Rauzi?

  Yeah.

• 42:58Speaker 03

  I don't think people see it like that. I don't think they see it as, you know, the pipeline to entrepreneurship, or like, a real Clear channel of worker power, but it's both. So we can make it better. We can do this.

• 43:09Robin Rauzi?

  And we can do this.

• 43:11Speaker 03

  We can do this.

• 43:12Robin Rauzi?

  All right. Let's take a break and we'll be right back.

• 43:20Robin Rauzi?

  Shall we go to executive orders?

• 43:22Speaker 03

  Executive orders.

• 43:23Robin Rauzi?

  So my executive order is inspired by all these sport ball games I've been to in the last couple of months. Seeing the actual notes to the Star Spangled Banner. Honest to God, I don't know who, I mean, why everybody thinks that they are the new Whitney Houston. Just sing the song.

• 43:41Speaker 03

  It's a pretty good song.

• 43:41Robin Rauzi?

  It's an okay song, you know what? And it's hard to sing and it's hard to sing well. So you can just sing it well.

• 43:50Speaker 03

  One time I was on a study abroad. I was in Paraguay at a rural university. The whole program was about like urban and rural poverty in South America. And like, what are successful strategies that they use? And the Americans and the Paraguayans, like, were doing skits and stuff. And then at the end, they're like, well, why don't we, why don't we sing? And we start singing the Star Spangled Banner. And like the one girl on the trip who could actually sing was like, y'all [BLEEP] started way too high. You can't, you can't start that high. It's such a high song. And I mean, we got to the point, the land of the free. And I mean, I don't think anybody's voice didn't crack. And those kids, those Paraguayans laughed their [BLEEP] off at us. They thought that that was, I mean, they were rolling. And we, you know, we laughed too.

• 44:35Speaker 03

  It was hilarious.

• 44:38Speaker 03

  It's not an easy song to sing.

• 44:40Robin Rauzi?

  It's, it's not an easy song to sing. And I would like to see more choirs sing it and, you know, just do it in harmony and do some, do some interesting things with it. But I'm really tired of the like gymnastics, the high vocal gymnastics as, that's not the song.

• 44:57Robin Rauzi?

  Okay.

• 44:58Speaker 03

  All right. My, my executive order, inspired by my

• 45:01Robin Rauzi?

  Your recent

• 45:01Speaker 03

  travels this past week

• 45:03Robin Rauzi?

  Congressional testimony.

• 45:03Speaker 03

  Would be that in Congress, you have to be present. So you have to be present during a committee hearing. And you have to be present on the floor if there is debate. And you're going to have a mandatory attendance for all of these things. And honestly, there's going to be a lot of hearings that could have been an email as a result.

• 45:25Speaker 03

  But that, that'd be mine.

• 45:26Robin Rauzi?

  It's a win-win.

• 45:26Speaker 03

  It is very self-serving of like, you need to be there and look at me and hear the things I say.

• 45:31Robin Rauzi?

  That's right. If you're, well, I mean, really, if you're gonna have a hearing and it's gonna be a certain degree of theater, stay for the curtain call.

• 45:38Speaker 03

  Stay to the end, yeah. If it's theater, you're in the audience, like, get popcorn, watch it all go down. All right, spiritual sponsors.

• 45:46Robin Rauzi?

  Spiritual sponsors. My spiritual sponsor last week was horchata with cold brew coffee in it. Now, you might say to yourself, there's cinnamon in horchata.

• 45:55Speaker 03

  There is.

• 45:56Robin Rauzi?

  But I know that there's cinnamon in horchata, so it's not like surprise cinnamon.

• 46:02Robin Rauzi?

  No, this is really good.

• 46:03Speaker 03

  The Big Cinnamon Lobby got to you, didn't Robin? What did they do? What did they say?

• 46:07Robin Rauzi?

  Yeah, no, horchata with cold brew coffee, really good.

• 46:10Speaker 03

  Question for production, how much did Big Cinnamon pay you to say that?

• 46:18Speaker 03

  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, which I can talk about now, but I was very, I was wrecked for the rest of the day. Just like, held it together, but like extremely unhappy in how I was treated and felt like I was, like, it was pointless. I was silly for preparing so much. And I had this like, what does it all mean? Why does it even matter? Kind of moments. And all the people who reached out in response to the clips, and I posted on my newsletter, my, my written testimony,

• 47:02Speaker 03

  and so many people wrote back and posted so many nice things about that. And so it, it was helpful to remember. This is really much in contrast to the 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.

• 47:18Robin Rauzi?

  Nice.

• 47:24Speaker 03

  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. And, um, why do you change the words every time? 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. Honestly, the tote bag is the biggest hit in my family, is everybody, everybody loves the tote bag, which you didn't write about, which is something different, and I can read.

• 47:56Robin Rauzi?

  The tote bag is good. The tote bag is also good. The sticker's only two bucks. This podcast is edited by Sophie Lalonde. Our social media videos are produced by Andy Robinson.

• 48:06Speaker 03

  The four non-employer businesses today.

• 48:11Robin Rauzi?

  Andy makes all the video clips that you see on TikTok, Instagram, Facebook, YouTube, or 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 chatroom.

• 48:34Robin Rauzi?

  That's it.

• 48:35Speaker 03

  That's it.

• 48:36Robin Rauzi?

  Let's stop talking.