Women Independent Contractors
From 1995 to 2006, the number of independent contracts rose from 8.3 million to 10.3 million, according to statistics from the US Bureau of Labor Statistics. And rising with that is the share of female independent contractors. They comprised 35.3 percent of all independent contractors in 2005.
Why are women taking on these roles? Many say for the flexibility that being your own boss provides.
What Are the Advantages?
“There are a lot of companies that are bending over backwards to create flexibility for their workforce -- for women and men, but flexibility still has its limits,” says Carroll Lachnit, executive editor of Workforce Management, a magazine and Web site that covers the workplace. She acknowledges that in many industries and for many women, the ability to meet their personal needs makes their work arrangements a black-and-white issue.
Does that mean that women are forced into contract positions? “I don’t think ‘forced’ is it,” she says. “But flexibility is not a widely distributed concept in Corporate America.”
For dual-income families where the partner receives benefits, lack of benefits can sometimes be a worthwhile tradeoff for the freedom to pursue hobbies, to travel, to care for aging parents or children, and to work from home at self-appointed hours. Once more, high-wage earners, such as former corporate executives, may have enough income to offset the cost of purchasing insurance and saving for retirement a la carte.
That was the opinion of Shannon Rapp of San Francisco who started her own accounting company, Rapp It Up Solutions LLC, in 1999.
“I can scuba dive for a month every year anywhere in the world and still make good money and be happy and not have to report to anyone but myself,” she says. “I always have the flexibility so I can take care of myself and make sure I have time to do what I need to do,” including spending time with family and friends.
Though an independent contractor, she works as an LLC. As volatile a discipline as accounting and corporate finance has been in recent years, she needs that small business classification to safely enable her to take contract work without risking her personal finances.
The empowerment that has come with running her own business is not lost on Rapp. “I would highly recommend it for women,” Rapp says of contract work. “It gives you a lot of self-confidence, strength and independence, and it teaches you a lot about business and how it works from beginning to end.”
Deb Keegan, a graphic designer based in Skokie, Illinois, also likes the flexibility work as a contractor provides. “I started working as a contract worker in 2000 after my first child was born,” she says. “I wanted to parent full-time and work part-time,” she says. “I accepted a contract job as a designer of a quarterly magazine where I could work from home and spend more time with my child. The only thing I was losing by going contract was benefits.” Keegan’s husband added her and their daughter to his employer’s plan.
“Although there is stress, I feel much more productive as a contract worker,” says Keegan. “When you work as a contract employee, you make better use of your time.”
What Is the Downside?
When you’re an independent contractor, companies are your clients rather than your employer. With that change of status come challenges.
First among them is lack of employer-sponsored benefits. Estimates suggest that employer-sponsored health insurance and benefits can amount to some 25 percent of earnings. Even if you charge higher rates to compensate, the cost of providing your own insurance can be high (insurance rates for self-employed individuals are often higher than what employers pay per employee at group rates).That’s not to mention the lack of paid vacation, sick leave or help funding your retirement account. Job insecurity also is typically more pronounced.
How Do You Get Started as an Independent Contractor?
If, despite the challenges, taking on the life of a contract worker sounds right for you, experienced women contractors suggest these tips:
- Ensure the contract worker agreement allows for change. Keegan often starts a relationship with a contract for a single issue of a magazine. Once that edition is sent to the printer, she works with the publisher to adjust the contract for subsequent issues to accurately reflect the time necessary to design the issue.
- Specify the job functions covered by the contract, and include an hourly rate for any projects an employer adds to your responsibilities.
- Set up legal protection for your business. “As a contractor you can be held responsible if something goes wrong and can even be sued by the contract employer,” Keegan says. She recommends establishing yourself as a limited liability company, known more commonly as an LLC.
- Keep good records of income and spending. You will need to keep track of taxable income and tax write-offs, and then pay quarterly estimates to the IRS.
- Define boundaries for work. Rapp is just learning this herself. “I take on a lot of work and seem to work seven days a week,” she says. “I need to have one day of no work and all play.”
Find contract work near you.