TEXT OF COMMENTARY
Kai Ryssdal: Today the White House was looking ahead to what’s going to be the big economic story come Friday. The July unemployment numbers. Echoing the conventional wisdom, the White House press office said it’s sure several hundred thousand more jobs will be lost before the economy recovers. There are actually some worries it may be more than several hundred thousand and that what we’ll have is a jobless recovery. Commentator Amelia Tyagi says a government agency we all love to hate might be a contributing factor if that does happen.
AMELIA TYAGI: The workforce is changing, probably forever. Gone is the twenty-five-year career and the predictable 9-to-5 routine. Contractors, temps, consultants, and virtual offices are as commonplace as iPhones.
We’ve known this for a while, but the jobless recovery may bring it into sharper focus. Business is starting to pick up, but companies are skittish about committing to long-term hires. Many are looking to contractors to fill the gap.
This is pretty much old news to everyone except the IRS.
According to the tax code, there are exactly two types of workers. Either you’re an employee — fixed at one company, working an 8-hour day, getting benefits and a regular paycheck. Or you’re an independent businessperson, running your own company and setting your own hours.
Sounds simple, right? But today there are millions of people who work in the grey zones in between.
This isn’t just a bit of arcane tax law. If a business mislabels an employee as a contractor when the IRS says otherwise, the business stands to bear substantial penalties.
I understand that many Americans are worried about the trend away from steady, long-term employment. But the IRS can’t reverse that trend, and they may be making things worse when an already skittish company decides that they’re better off not hiring any employees or contractors, or opts to use them for shorter periods — just to “be on the safe side” with a confusing tax code.
If you think the line between contractor and employee is a clear one, guess again. Consider the computer programmer who works from home. Maybe he shifts from job to job every few months.
Suppose he takes a long weekend at the beach, and then works 15 hours the next day.
If the tax code calls him a contractor, it’s no problem. But if he’s an employee, he’s probably due overtime pay, which can be a big problem.
It’s time for the IRS to adapt the tax code to a reality we’ve been living with for decades. The at-home computer programmers, the consultants, the interim-execs-for-hire, and a host of other new job categories are here to stay, and they deserve a real designation in the tax code. It’s time for some sensible shades of grey.
RYSSDAL: Amelia Tyagi is a co-founder of the Business Talent Group.
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