Any time the economy drops 63,000 jobs in a month and the Dow slips 10 percent in 10 weeks, I’d say we’re in a recession–whether the president wants to admit it or not.
It’s gotten to the point where I’m almost afraid to look at The Wall Street Journal. If it’s not a front-page story about the biggest wave of foreclosures to hit this country since The Great Depression, it’s $100- a-barrel oil, the credit crisis claiming one more hedge fund or people who stashed their cash in what they thought were super-safe muni bonds who can’t get access to their money.
It’s enough to make you want to stuff your Euros in your mattress and pull the covers over your head.
But there is another side of the story–one I haven’t seen reported in The Journal yet. And that’s the fact that recessions are often good news for small-business owners and self-employed professionals. Because corporate America still needs somebody to keep the lights on and the machines running, big companies often turn to people like us–independent contractors who will work harder, longer and for fewer (if any) benefits–when the going gets tough.
Shortly after I quit my job as a business writer at The Miami Herald in 1990, I set up shop as a home-based freelance writer and began offering my journalism services to business magazines and trade publications.
Then the recession hit.
For me, the timing couldn’t have been better. Rather than pay a full-time staffer $40,000 or $50,000 a year plus benefits, magazines jumped at the chance to hire me for $1,000 a month to write a story–no payroll taxes, benefits or strings attached. Quality journalism for $12,000 a year? That was a no-brainer.
But, while corporate America was getting a great deal, so was I. When I left The Herald, I was making $38,000 a year plus benefits as a full-time reporter. As a freelance writer, I picked up the phone and, within a few years, had assembled a core group of eight to 10 newspaper and magazine clients that each paid me about $1,000 a month. Though I was putting in twice the hours I’d been logging at my full-time newspaper job, I was also making twice the money. While I had to pay my own taxes and find my own health insurance, I was certainly better off than I was before.
Now, I’m not saying that this strategy can work for everyone — especially not sales clerks or factory workers who can’t retail their services on a freelance basis. And I’m really going to be upset if John McCain or any other Republican tries to hold me up as an apologist for big corporations looking to shirk their social responsibilities.
But it never ceases to amaze me in times like these, when I read about people who’ve dipped a toe in entrepreneurial waters when times were flush–such as the Silicon Valley engineers interviewed in a story The Journal ran last week–leaving startup companies for “safe” jobs at big companies with steady pay and benefits. Because these are the same large corporations that wouldn’t think twice about laying off 8 percent of their work force in one day to save their CEO’s seven-figure jobs and wouldn’t know a 10-year employee from a number on a spreadsheet.
Looking back on my five years at The Herald, I don’t think there was a single week when I didn’t hear a rumor of some impending layoff. Fortunately for me, I had already left and gone into the internet business before my old industry got hit by the perfect storm. Some of my friends from the newspaper business have fled to fields such as law, finance and public relations; others are reporters and editors fighting for their jobs.
My point is this: When a recession strikes, there’s no place to hide. And anybody who seriously thinks he or she can flee to the safety of corporate America may very well end up like those thousands of New Orleans residents who got stuck in the Superdome during Hurricane Katrina. In volatile times like these, there’s only one sure-fire strategy to pursue–and that’s to spread your risk among multiple clients and customers.
The big guys call it portfolio theory. I call it small-business survival.
This entry was posted on Monday, March 10th, 2008 at 7:46 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.One Response to “The Recession’s Silver Lining”
Leave a Reply
March 15th, 2008 at 8:36 am
I have been saying this to my wife for years. There is way more security in being Self Employed. I one of my 500 or so customers “Fires” me I still have 499 more, if her one employer laids her off or fires her, she’s screwed.