Welcome to Middle-Class Poverty— Does Anybody Know the Way Out?

The surge in freelancers and the new "sharing economy" are part of a new national movement to reclaim the wages and lifestyle that the Great Recession stole from millions of Americans.

615 american protest middle class.jpgREUTERS

Many years ago, Freelancers Union ran ads on the NYC subway that read, "Welcome to Middle-Class Poverty" - a nod to the fact that health insurance is often prohibitively expensive for the self-employed, who don't benefit from an employer subsidy. We thought we were being provocative, but the last year made us prescient. Since that ad campaign ran, we've seen two trends emerge: significant growth of the independent workforce and growing income disparity. Combined, they have created something that seems paradoxical and should be impossible in the United States: Middle-Class Poverty.

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You've probably seen middle-class poverty, if not experienced it firsthand. It's a young woman a college degree and crippling debt. It's a young man with a dream job but no health insurance. It's owning a smartphone to keep up with clients when you can barely keep up with rent.

About one-in-seven Americans are officially in poverty, but many more find themselves squeezed between rising expenses, stagnating wages, and thin benefits. Currently, close to one-third of the U.S. workforce is not linked to a traditional, 9-to-5 job. While client-to-client work used to be the purview of just the creative industry, it's becoming commonplace in everything from accounting to technology to health care. Though a shifting economy initially set this in motion, the more the workforce trends toward flexibility and mobility, the more attractive and viable freelancing becomes.

In fact, Freelancers Union's survey revealed that the top 5 reasons people work independently reflect personal preferences: the opportunity to work on a diversity of projects with higher income potential and the chance of being one's own boss.

And this workforce is not only potentially happier, it can be a boon to the economy. It's obvious that businesses save when they hire freelancers (since they don't provide benefits and can hire only when they need the work), but what's less obvious is that new jobs are being generated from this sector. In 2010, we reported that 27% of freelancers hire other workers. And whereas Detroit's factory jobs used to be the source and model of secure work -- jobs that no longer exist -- the Motor City is now building a reputation as a hotbed of creative and entrepreneurial activity.

It's time we sit up and take notice: middle-class careers are becoming freelance careers. But freelance careers, at present, cannot sustain a middle class. A college degree and a regular old job used to be your meal ticket. Now you're lucky if you earn enough to eat - and if you want fries with that, or health insurance, you may have to go into the finance sector. If you want proof of where middle-class jobs are headed, look no further than the New York Times, which just reported that median household incomes dropped 2.3 percent last year, from levels that were already 7 percent less than their peak in 1999. With the top 1% of the country controlling 40% of the wealth, we've created such an atrocious distribution of income that we've left the middle class completely vulnerable. In fact, today we have the worst distribution of income in 100 years.

Presented by

Sara Horowitz is the founder of Freelancers Union, a nonprofit organization representing the interests and concerns of the independent workforce.

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