Already more than a third of working Americans are contract/freelancer/temp workers, and we're rapidly approaching the point where the majority of American workers will be freelancers with zero benefits in under a decade.
If freelancing continues to grow at its current rate, the majority of U.S. workers will be freelancing by 2027, according to projections in the Freelancing in America Survey, released today by the Freelancers Union and the giant freelance platform Upwork. The survey found that 50.9% of the U.S. population will be freelancing in 10 years if a current uptick in freelancing continues at its current pace.
But those American workers still get paid nominally, and that means one of the fastest-growing industries in the US financial sector is payment services. If you thought payday loan sharks and mortgage giants were predatory parasites, wait until tens of millions of us start getting paychecks in the gig economy through companies like WorkMarket that exist literally solely in order to take a healthy chunk of your income.
“Now for the first time, thanks to Fast Funds Mobile,” as WorkMarket VP Mousa Ackall wrote in January of 2017 when announcing the service, “freelancers can gain instant access to their funds via the WorkMarket mobile app – offering the level of flexibility and effortless mobility that modern workers crave.”
Ah, finally, the level of flexibility and effortless mobility I deserve.
I did not happen to be in dire need of the money right away that particular month, but as a freelancer, there have certainly been times in my life that I might have been tempted to take the devil’s deal. There are no shortage of people in more tenuous financial situations that might not be able to turn it down. In fact, as Jens Audenaert, general manager of WorkMarket explained to me, it’s proven to be an exceptionally popular feature and its use continues to grow. Weird!
Michael Sainato is one of them. He’d written a piece for the Huffington Post about Standing Rock activists in July. After a month of waiting to be paid, he was told to sign up for WorkMarket as well. A couple of weeks later, he got a notification that the $400 he was owed was available to him, but the only clickable option to withdraw the money was on something called FastFunds, something he’d never heard of. Confused and clicking around on the site he said he somehow selected the payment option, and $30 was subtracted from his invoice. He told me that while it was a mistake, he would have taken the cut regardless, because the payment was already exceptionally late and he was hard up for cash that month.
“It’s absolutely predatory,” Sainato told me. “You shouldn't have to be charged to get paid in a reasonable amount of time and HuffPost is well aware that freelancers tend to have financial issues in that they can't push off being paid several more weeks, few people can.”
“No one would reasonably spend $30 or more on [getting paid] unless they were financially put in a position where they couldn't afford not to.”
While the idea of early payment discounts aren’t novel in large industries like construction or manufacturing, where suppliers might arrange to let a company pay less than full price of an invoice if they do so in a prompt fashion, and factoring is a longstanding tradition, in which businesses sell their accounts receivable to a third party in order to facilitate having cash flow on hand more quickly, the concept coming to individual creative industry workers is novel, and yet another example of how media professionals, and freelancers in particular, are being preyed upon.
Ahh, but should you think this is only for freelancers, think again. The rest of us will be getting these "new payment options" very soon.
The early payment model WorkMarket is using is part of a movement across the economy at large to let workers, often hourly workers, access the money they’ve already earned earlier than usual. Walmart announced last year that its workers would be able to withdraw from their paycheck early up to eight times a year for free through a service provided by PayActiv, one of a fast-growing number of instant-pay apps that look to be the future of hourly employment. PayActiv likens the fees they charge employees accessing their own money ahead of payment schedule as akin to an ATM service charge.
Fifth Third Bank was savaged when it offered the exact same service a few years ago and charged $10 bucks to get $100 early, when you needed the money up front this week to pay a bill, it was cheaper than A) the late fee from missing the bill payment, B) the overdraft fee from the bank for trying to write a check Friday for a deposit that wouldn't clear until Monday. But the bank was sued when people realized that it was a 200% APR loan with a 35-day period, and payday lenders were pissed that real banks were getting away with their con.
That was during the Obama years. Now in the Trump era, the wild west of "payment services" to access your own money is here to stay.
And everyone will get their cut before you will ever see a dime.