Posted by: patenttranslator | September 2, 2011

A Simple Metric to Measure the Employment or Unemployment Rate of Freelancers

Every time when I see current unemployment statistics in dead tree media or on teevee news, I wonder how would people like freelance translators fit into the equation. Most people know that the official figures are fiction because the government does not count any more so called “discouraged workers” who gave up looking for work after a year or two of fruitless searching, while part time workers who have to work part time because they cannot find full time work are counted as fully employed. This means that if the official unemployment rate is for example 9%, the real rate is about 18%. As Mark Twain once said while citing Benjamin Disraeli:”There are three kinds of lies – lies, damn lies, and statistics”.

Since nobody is tracking the employment or unemployment rate of self-employed freelancers such as this patent translator, I am doing it myself. The metric that I am using is fairly simple but I believe it is very descriptive as well: Since I know how much I bill my customers every month and I also know how much I need to make every month to pay my bills, I created three categories for measurement of the rate of my employment or the lack thereof for each month.

Category A: my invoices from this month are sufficient to cover all my bills plus local, state and federal taxes.

Category B: I made enough during this month to pay my bills but not taxes,

Category C: I did not even make enough to pay all my bills, let alone taxes.

At the end of the year I can see how many As, Bs and Cs I received and I can evaluate my own performance during this year in this manner. Cs are particularly pernicious because every C means that you will have to make that much more money the next month to be able to pay your bills.

So far this year, I had straight As from January until June, I got one C in July, but August was fortunately an A again and September is so far shaping up as an A too, although it is too early to know for sure. Generally, 3 or fewer Cs a year mean that this was a good year. On the other hand, because a freelancer’s income can fluctuate so wildly, I had 4 Cs during my best year so far in terms of net income (but the As were more like double or almost triple of what I need to pay my bills and taxes on a monthly basis). I suppose theoretically, there could be also a D for months when hardly any or no income is generated, but this freelancer so far never had a D in the last 24 years or so.

I wonder how can people who still work in the traditional corporate employment structure, and I believe that a majority of people are still employees, cope when they are “let go” by their employer. Once employees lose their “safe” traditional job, they will go from As to Cs or even Ds, perhaps for more than a year. It must be an almost unimaginable hardship.

I used to be an employee for about the first 7 years of my working life starting in early eighties. But the economy must have been in a much better shape back then because I never needed more than a month or two to find a new (albeit poorly paid) job in Germany, California, or Japan.

Unlike unemployed employees, most unemployed freelancers probably can use the “down time” as an opportunity to read a book, write more posts for their blog, or get to know their family and take it easy for a change without worrying too much about money, because at some point, the pendulum is bound to swing in the other direction.

Plus the Wall Street can’t steal our pensions because we don’t have any. But for the most part, neither do employees these days, at least not in the United States, unless they happen to be federal employees whose salaries are paid from taxes paid by freelance workers whose employment or unemployment never was reflected in official unemployment statistics and probably never will be.

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  1. […] A Simple Metric to Measure the Employment or Unemployment Rate of Freelancers (patenttranslator.wordpress.com) […]

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