Should you go 1099 in a recession?

The economy is in a weird state right now. Inflation is pretty high, the stock market is a bit sluggish, and yet there is still robust demand for workers.

The question is, if we enter a recession or hit a rough economic patch, is it too risky to go 1099? Should you just keep your W2 job?

I can make arguments in both directions.

In the "don't wory about economic factors" column I'd say

  • The government is not cutting spending any time soon so there is always money for contractors
  • The government workforce skews a bit older and is retiring (and my hunch is it's the same with government contractors) so they will need more people
  • Government contracting companies might want to de-risk by adding more 1099s to the mix rather than W2 employees

In the "keep your day job" column I'd say

  • Employees may be less likely to leave their current jobs so there will be less opportunities to fill in a vacancy as a 1099
  • Other W2 employees might be less aggressive in salary negotiations, meaning you might have to charge lower rates as a 1099
  • It just feels scarier to go out on your own in a bad economy

The truth is that while I can't predict how hard or easy it will be to get a 1099 gig in poor economic conditions, the steps you'd take to get one and the risk management principles I advocate for in my book will apply no matter what.

For example, let's say you were planning on converting your job to a 1099 gig. In my book, I take great care to say that you shouldn't quit unless you have back up options, like competing job offers or enough savings to last long enough to get your to enough gig.

That's good advice in either good economic conditions or bad conditions and is sort of binary. It might be harder to get a competing job offer in a bad economy, but if you do, you still have enough leverage to take some risks in negotiations with your employer.

Another example, if you started to do some networking to set yourself up to get a 1099 gig, there is no reason you couldn't do that during a recession as well.

The actions you take in any economic environment would be the same, and the decision criteria to actually take a 1099 gig would remain the same.

So don't worry about the economy. Focus on the process and making risk approriate decision using data relevant to you.

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