Ah, the ‘special relationship’. From Ronald Reagan calling Margaret Thatcher “the best man in England”, to Tony Blair’s “with you, whatever” to George Bush, it seems like the US and the UK have always been holding hands. Recently, of course, some would say we have been holding hands while jumping off a cliff – into our two… unusual… political futures: Brexit in the UK, and the Trump presidency in the US. (Trump is even supposed to have based large parts of his campaign on Vote Leave.)
But it’s not just our politics that have run down parallel lines: our economies, too, have much in common. Self-employment is one area where there are major similarities.
In the last 20 years, both countries have seen explosions in the number of self-employed people in their workforce. In the UK, official Office for National Statistics (ONS) data shows that the number of self-employed people rose from 3.3 in 2001 to 4.8 million in 2017 – approximately 15 per cent of the workforce.
In the US, the numbers are also impressive: today, there are approximately 15.8 million full-time freelancers – 10 per cent of the workforce. What’s more, when you factor in people who are in part-time self-employment or ‘moonlighting’, the number rises to an astonishing 56.7 million – 36 per cent of all people working in the US today. In both the US and the UK, then, there has been an enormous boom in the self-employed workforce.
Last of the twenty-first century optimists
Back to the politics, interestingly today’s unusual political situations seem to be having very different effects on freelancers either side of the pond. In the UK, the Confidence Index by IPSE showed an enormous dip in confidence after the Brexit vote – both in terms of freelancers’ own businesses and the wider economy. Their confidence still hasn’t recovered, and since the vote they have consistently said Brexit and government policy are the two factors doing most damage to their business performance.
In the US, on the other hand, there seems to be nowhere near the same pessimism about the economy under President Trump. A 2018 study by the Freelancers Union found that nine out of 10 freelancers in the US think the industry’s best days still lie ahead. Meanwhile, research by PayPal found that 65 per cent of freelancers expected to do more business next year, while another 33 per cent expected roughly the same amount.
Without exactly wanting to endorse Trump’s tweets that the US economy is the “greatest ever” now, or that it is “setting records on virtually every front”, it does seem like there is widespread optimism about it – especially among freelancers.
It’s true there have always been strong ties between the UK and the US – right back to the days when American patriots decided to turn Boston Harbor into that most British of drinks: a massive cup of tea. But that’s not to say that the two countries are structurally that similar.
In fact, the stark contrasts between their legal, health and welfare systems mean that British and American freelancers often face very different challenges.
For most people in the US, for example, both healthcare and dental insurance are provided by their employers. But obviously this option isn’t available to freelancers, so most pay for it themselves – often at huge expense.
In fact, the Freelancers Union report found that access to affordable healthcare is the top concern for US freelancers. It is clearly a pressing matter for the self-employed and policymakers, because Virginia Senator Mark Warner recently introduced a congressional amendment on the subject.
The idea is basically to establish a system that would allow the self-employed to take worker-style employment benefits like healthcare and pensions from one contract to the next.
In the UK, on the other hand, it’s almost the opposite problem: freelancers’ biggest concern is the tax system they have to navigate. For many UK freelancers, just the mention of ‘IR35’ sends a shiver down the spine. The main reason is that the off-payroll tax rules – designed for clamping down on false self-employment – are so complex they often catch out legitimately self-employed people too.
It's a small world after all
Beneath major structural challenges like healthcare and tax, however, freelancing doesn’t seem to be that different either side of the pond. British and American freelancers have the same difficulties chasing payments.
In the UK, IPSE research has found that freelancers spend an average of 20 days a year chasing invoices, while 43 per cent say they have done work they have never been paid for.
Meanwhile, in the US the figures are slightly worse: 50 per cent say they have done work they were never paid for. Shockingly, of these, 44 per cent believe it was because they were not taken seriously. Bad clients, it seems, are hard to avoid wherever you go.
Another very familiar stumbling block on the other side of the pond is pensions. Saving for later life is a major problem among the UK’s self-employed, but it seems to be even more extreme in the US.
In the UK, 16 per cent of self-employed people say they are not saving for later life at all (31% are paying into pensions, while the other 53% are saving through other means). In the US, however, a Freshbooks report found that almost half (42%) of freelancers are not saving for later life.
It’s not just the challenges though: in both the UK and the US, the overwhelming majority of freelancers choose to work for themselves – most often because they enjoy the freedom and flexibility of freelancing. And on both sides of the Atlantic, very few would consider giving up the freedom of freelancing to go back to traditional employment.
A Trumptastic future
Like the oh-so special relationship between UK and US leaders over the years then, British and American freelancers share many positives and negatives – both challenges and rewards. And as for the future, well, Trump has told the UK it is “so smart” for voting for Brexit and that we are “doing great” now. So, perhaps we can hope for a deal – and an even more special relationship between the freelancers in our two countries…
We shall see.