“The United States, are we becoming a 1099 Nation?”

“The United States, are we becoming a 1099 Nation?” by Daymond Cox (founder of the International Society for Six Sigma Certifications)

The United States is known as the Land of the Free – we have had the luxury of many freedoms including the right to earn a living however we see fit. When our country was being settled we were a land of entrepreneurs, from the saloon owner to the farmer to the local sundry store. As our country grew so did businesses, consolidating and conglomerating in rhythm with the industrial revolution. Author Jack Beatty’s book: Colossus: How the Corporation Changed America shows how corporations have changed from a mere business model to entities with their own agendas. Beatty provides a deep and insightful picture of the evolution of corporations. The emergence of the current form of corporation served to mobilize the entrepreneurial and managerial energies that filled a sprawling continent and tapped its vast resources. What has occurred over the past century is “an engine of appetite.” There is less room for the romantic notion of individualism and more of a transformation to a piece of machinery which is geared toward self-enhancement, sometimes appearing to have little regard for what is happening around it.

This is a shift that people are taking note of. They are stepping back and deciding if they really want to be part of these corporate entities. As an employee of an organization, you agree to work under certain conditions, to perform tasks needed by the corporation, for a set amount of pay. You may be limited on job progression, hours and opportunities. One avenue to begin loosening the corporate bonds is to become a 1099 contractor. Becoming a contractor has pros and cons, both from the viewpoint of a corporation as well as from an individual perspective.

From the eye of the corporation:

Corporations are their own entities and have pressures of their own. The struggling economy has put additional pressures on corporations to still produce results with less ability to pursue additional resources. Quarterly earnings target loom. One way to make numbers is to reduce workforce. By reducing headcount, corporations can bring in necessary talent and skills through a 1099 arrangement. This works well for the corporation in many ways. Through bringing on independent contractors, they have the skills at hand, can manage them as they want and do not have the overhead of benefits. The corporation can control the length of the arrangements, only paying for what they need at the time.

It sounds like a perfect scenario, but there are downsides to the corporation as well. The fact that contractors are brought in on an as-needed basis, there is a risk that the person they hire may not truly be able to deliver on the necessary skills. Because they are “outsiders” will there be a smooth on-boarding process and meshing with existing employees? Because there is no long term relationship, will the corporation receive the same loyalty and respect as they might from a long-term fully-benefitted employee? Further, employees are able to shift as needed, drawing on different skill sets to meet tasks at hand.

From the eye of the individual:

From an individual’s perspective, corporate life can be fraught with opportunities for frustration. Limited promotional opportunities, low potential to develop particular skill sets, layoffs, bureaucracies and politics, corporate cultures are just a sample of why an individual may opt to work independently. As with many choices, there are positives and negatives that follow this lifestyle.

In the positive category is the fact that you get to choose the companies you want to work. If you have certain restrictions or needs, such as schedule flexibility, days, types of work, you can be selective in what you want to do and seek employment opportunities that match your set criteria. By controlling who you work for, you are now the decision maker. You make the call on schedule, pay rate, vacation schedule and benefits and perks. Because you are the decision maker, you can tap into new skill sets. If you have a passion to deliver a product or service, but have no background in sales or marketing, this could be your chance to try it out. If you are title conscious, by working in a 1099 environment you can create your own LLC and give yourself any title you choose.

Being your own boss, setting a handsome-sounding hourly rate and touting your title of choice are great perks, but living a 1099 life also comes with challenges. Depending on your particular financial situation, shifting to a 1099 lifestyle means that automatic deposit amounts from corporate payroll are no longer in place, ditto for the 401(k) match and, oh yeah, health insurance. Cash flow is now a variable, not a constant. Financial worries are number one on a list of stressors, so this shift can place a toll on you and relationships.


Leading the 1099 Lifestyle:

Personalities that may want to try out this 1099 lifestyle are probably fairly independent thinkers (this is why they were maybe frustrated with corporate life). While this is a fantastic trait, it can have its downside. Spending too much time thinking about what you are going to do, or if it will be successful can lead to analysis paralysis and instead of getting out to the market and offering your services, you may be stuck in your basement or your head thinking about whether it will work or not. While you are sizing up your strengths, you may also start to see your weaknesses, for example, passion and energy are great, but if you have never sold or marketed anything, it can quickly become an overwhelming feeling. Our advice is that the best thing you can do if you want to pursue your new 1099 lifestyle is to get out and talk to people.

As with anything is life, your plan is not static, it will be evolving as you test out ideas, learn and assess market demands. The country is still a land of great opportunity and great people. Figure out what lifestyle works best for you and go make the most of it!