Why Freelancers Need to Pay Attention to Minimum Wage

Minimum wage is set for employees but it's very relevant to your freelance business. Here's why and how you should use it.

Miniumum wage
Freelance services should never be priced below minimum wage.

No freelancers should work for less than minimum wage. Ever.

No matter where you live, no matter what service you offer, minimum wage should your absolute floor.

If you provide a service for less than that, you’re volunteering to be exploited and you’re a drag on the freelance market.

When the government sets a minimum wage, they’re essentially saying, Look, this is the minimum amount that people need to survive (not grow, just to survive!) So we deem it inhumane and indecent to pay anyone less than $X per hr.

What sense does it make to offer your time, skills plus any equipment and materials needed for a gig below the rate of decency?

What rational person runs a business to earn less than the lowest-ranking employee?

Offering freelance services for less than minimum wage isn’t competitive. It’s ridiculous.

You may think, well if a company is going to pay me minimum wage, they could just hire someone for the same price.

Wrong!

When a company hires a $10-an-hour-employee, not only do they have to pay that rate on an ongoing part-time or full-time basis, but they also incur a slew of other costs related to having someone on the payroll.

Always keep that in mind that salary or wages are only one of the costs of having an employee. Even if a freelancer makes the same rate as an employee, the company still saves.

 

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Setting Minimum Wage as a Floor

Consider your location and that of your client, and aim to make your floor the minimum wage that’s higher.

You don’t want to sell your service to a business for any cheaper than the company can hire someone in their jurisdiction.

So, if you’re going to work for someone in Washington state, you would charge at least $12 an hour. But if the company is based in New York City, your minimum rate should be at least $15 an hour.

The same applies when taking work in foreign markets.

Meanwhile, you also don’t want to charge less than the minimum wage in the jurisdiction where your business operates.

Also Read: American English vs. British English: Are You Ready for Foreign Work

Check the Math

As freelancers, a lot of our work is per project rather than per hour. In these cases, it’s especially important to pay attention to what you’re being paid.


A lot of companies get away with paying dirt-cheap rates because they get freelancers to agree to a flat fee.

Writing a white paper for $500 may sound like a decent gig. But if it takes you all week—let’s just say 40 hours—that’s only $12.50 an hour, which isn’t so decent at all for that type of work.

Furthermore, for a company in New York City, that’s chump change. They can’t get anyone to empty the trash cans for that rate. And they know it.

So, when you’re negotiating flat-rate jobs or per-word jobs, calculate how long the work is going to take.

Minimum Wage Isn’t A Suggestion

Using minimum wage to create a floor doesn’t mean you’re advised to set your rates that low. It only means you should never, ever! consider allowing your rates to go any lower.

If you’re not in a position to demand all you’re worth, at least ensure yourself a rate that’s decent and fair.

And as minimum wage increases, don’t get left down under.

See Also: What is Amazon Business

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