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Tuesday, April 17, 2012

Scott Newcomer: Protecting the right to be independent


By Scott Newcomer
Across Wisconsin, thousands of independent contractors are working hard to provide for their families and contribute to our local economy. You may know them as hair stylists, software engineers, package deliverers, home inspectors – even emergency room physicians. Their roles are extremely diverse, but they share an important commitment to earning a living by working for themselves and, in many cases, providing jobs for others.

Unfortunately, tucked away in the president’s 256-page budget proposal is language that would make it difficult for people to have the option of working for themselves. The net effect will be restrictive and unnecessary oversight that would limit job growth and possibly even eliminate existing jobs. Obviously, given our tenuous economic recovery, this is a move in the wrong direction.

Independent contractors work in every city and town in Wisconsin and every other state across the country. Many of the Independent Business Association of Wisconsin’s members work as independent contractors, utilize them or, in some cases, do both. Working as an independent contractor brings additional responsibility, but also allows us to make our own decisions on work schedules to match our personal situations. And, some of us simply like being our own boss.

Independent contractors are essential to our economy, accounting for $473 billion in personal income, or one in every 10 dollars earned. And the sector is rapidly growing. In fact, economists predict that at least half of the total workforce will be independent contractors by 2020.

Just as importantly, many independent contractors eventually expand into small businesses that create jobs for others. According to the U.S. Department of Commerce, small companies – many of them arising out of independent contracting beginnings – create three out of every four new jobs. They are the key to job growth and economic recovery.

There’s no question that independent contractors should obey all laws and pay taxes as required. But broad-scale attempts to reclassify independent contractors and turn them into company employees, as some have proposed, is harmful to those who play by the rules.

President Obama’s recent budget submission takes a step in the wrong direction by proposing items that will make it more difficult for people to run their own businesses. One of the president’s recommendations is to spend $14 million to put businesses that use independent contractors under a microscope. That means lots of red tape and time lost that that should be spent making a business more successful.

The president also wants to broaden the ability of the IRS to reclassify independent contractors as employees. If approved, the result will be fewer opportunities for the self-employed because businesses won’t be willing to risk the wrath of the heavy hand of the IRS. And who can blame them?

Independent contractors, like everyone, deserve the right to choose a job and a lifestyle that works for them. The president and Congress should not do anything to risk driving away innovation, job creation, entrepreneurship and the opportunity for greater work-life balance.

-- Newcomer is the executive director of the Independent Business Association of Wisconsin and the president of Newcomer’s Consulting Group. Newcomer has owned several small businesses and has both been an independent contractor and utilized them.

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