What Lies Ahead for the Indexing Profession?

by Nancy Humphreys on March 20, 2019

Please note that we indexers have been around for a long, long time.

I’ve argued that indexing is the one of the oldest professions in the world. We can trace it back to a legendary author, King Wen, who used indexing back in the third century B.C. to create the ancient Chinese I Ching,i.e., “Book of Changes”.

More recently, during the last century, indexers were often employees of book and magazine publishers. Then in the 1980s a huge sea-change took place that changed the lives of indexers in the U.S.

Out in Seattle Washington, Microsoft began laying off a lot of its computer programmers. The company then rehired these workers through a temp agency it created and called them independent contractors. 

Unlike employees, independent contractors are a category of workers who do not benefit from the economic principle of called increasing returns to scaleThis was a principle that Adam Smith, the “father of Political Economy” wrote about in  his well-read book, The Wealth of Nations (published in 1776).

The “law of increasing returns to scale” means that as a company adds employees a synergy is created that makes that company more efficient the bigger it gets. Cost-savings for the company increase.

A big company can use its employees to perform specialized tasks and get results quicker and more efficiently than an individual working alone.

Adam Smith used the example of a town putting out a fire. At first everyone got a bucket and ran down to the river to fill it and ran back to toss water on the flames. Then someone got the ides of using a bucket brigade, and the fire was quickly doused.

The example of a bucket brigade passing buckets down to the river and back along a lone of people explains why an assembly line is more efficient than a group of solo individuals working on building a car or airplane.

In office spaces, the same law of increasing returns applies. A corporate receptionist can order supplies for all the employees out of a catalog, thus getting bulk discounts and maintaining control of the company’s expenses for supplies. 

On the other hand, an independent contractor, or “sole proprietor of a business,” usually needs to have a car or truck and the time to go out shopping in retail stores for whatever supplies they need. Or else use an online store and pay retail rates.

So if there were increasing returns to scale, why did Microsoft get rid of its programmers?

Because doing that saved Microsoft millions of dollars.

Microsoft literally saved millions of dollars by passing its employee costs onto the shoulders of the programmers it laid off and then hired back as independent contractors. Here’s why:

  • Independent contractors do not get employee benefits. 
  • Contractors do not get worker’s comp (unless they are in a state where they can purchase a policy out of their own pockets). 
  • No sick leave, no vacation or parental leave either. No retirement or insurance benefits either.
  • Independent contractors, unlike employees, create their own home offices and buy furniture, equipment and supplies. 
  • Independent contractors have to wear many hats and take care of all the business support tasks that specialized employees do for big companies. 
  • These tasks are paid for by corporations by increasing returns to that company from specialization of employees, an advantage independent contractors do not have.

The IRS Steps In

In the last century, the IRS quickly went after Microsoft and forced the company to stop laying off so many of its employees. To do this the IRS then developed a 20 question test to determine if a worker was an employee or an independent contractor. (See also current IRS instructions)

Are you wondering why the IRS clamped down on Microsoft? Probably not, because we all know what the IRS does. If you are wondering…

The IRS gains and saves money when corporations and big companies pay half of Social Security and Medicare Taxes (FICA taxes) for their employees and also take care of processing employees’ money withheld each year for the employee-half of FICA tax.

Unfortunately, the IRS dictated that legitimate independent contractors, i.e. self-employed people, would be taxed at double the percentage tax rate as corporate employees pay for their FICA taxes. 

Like a lot of two-tiered schemes that government bureaucracies hatch, the IRS’s classification of workers into two different groups who do the same work, created a hierarchy of ‘privileged’ (employees) and ‘non-privileged’ (self-employed) workers.

New independent contractors that the IRS calls “sole proprietors of businesses,” quickly discover at tax time that the IRS treats them as two people in one: “employer” and “employee”.

Self-employed business owners must pay full Social Security and Medicare taxes (called SE or Self-Employed tax), while employees pay only half that amount for their (FICA taxes) each year.

An additional danger now from the new changes in the 2018 tax law in the United States for indexers and other truly sole owners of a small businesses is that bigger fish will swallow them up.

Larger small businesses which hire employees and/or use independent contractors are businesses that already gain from the law of increasing returns to scale.

These larger businesses can benefit from new IRS deductions allowing them to invest in risky stocks—while self-employed truly sole proprietors are forced to pay draconian SE taxes.

There are now two distinctly unequal income-classes of sole proprietors lumped as one within the small business arena. 

This sea change of employees to independent contractors spawned by Microsoft was soon emulated by the publishing industry. Back-of-the-book indexers are nearly all self-employed now. Even editors and proofreaders have been discarded by publishers.

Book Publishers at the Turn of the Century

But here’s the irony. Publishing companies themselves have largely disappeared.

Indexers now work for subsidiaries of giant multi-national media companies most of which cannot be bothered to hire us as employees, pay us for quality indexes, or even use our services at all.

 By the turn of the century, book publishers in the U.S. Canada, and elsewhere were struggling to survive. 

Not only did  publishers have to cope with fear of the Y2K or “Millenium” bug in computers, they also had to deal with rising costs of doing business.

Garland Press, the publisher of my second book, American Women’s Magazines (1989) even wrote me a letter in the 1990s, begging me to give them my copyright. Appalled, I said “no”. 

During the last quarter of the twentieth century, book publishers, besieged by debt and tempted by Microsoft’s lead, turned out indexers, proofreaders, and even editors, into the cold to work as independent contractors. 

But this didn’t save them. Instead smaller businesses engaged in publishing were gobbled up by bigger fish.

By the beginning of this century, Garland and many, many more traditional book publishers faded out of existence, taking advantage of buyout offers from six gigantic multinational media corporations, most of whom were privately owned outside of North America. 

According to Wikipedia in its section titled “Book Publishing”, the global book publishing industry now accounts for over $100 billion of annual revenue, or about 15% of the total media industry.

Six giant multinational media companies, most of them foreign to the U.S. And Canada, now own the bulk of the publishing industry.

During the transition, few people noticed the rising conglomeration in the publishing industry, because these six media giants that bought smaller publishers continued to use the imprint names of the publishers they bought out. 

In this century, through changes in in our legal system, the U.S. government itself has become beholden to the giant corporations that it helped spawn both here and abroad. These include the six publishing industry giants, most of whom are foreign entities.

For more on this story, see my free report at the bottom of my Authormaps home page. 

Oligopoly Undone

Fortunately, for indexers, editor, proofreaders, and authors alike, at the turn of the century there was also an explosion of computer technology that set off a a powerful wave of self-publishing of books!

This sea change in technology rapidly created a dual system within the book-author sector. With the explosion of self-publishing during the first decade of this century, there are now  more self-published than published books.

Self-published authors value indexes and most non-fiction writers know they need indexes to compete for sale with other books.

For indexers technology has created a much larger market for indexing services. And for now, computers have not replaced indexers.

But there’s no telling if digital books will continue to disregard the superiority of indexes over Search functions. Will digital books replace print forms of books? Will technology continue to aid in making book-making less expensive? Only time will tell.

Interested in indexing as a career? See also My Story here on WordmapsIndexing.

Marketing Your Book to Libraries Marketing Your Books to Libraries: An Insider's Guide for Authors by former librarian Nancy K. Humphreys includes: 
  • How to tell what kind of library to target
  • Types of librarians and books they order
  • Strategies to get past the "gatekeepers" who influence librarians
  • Right ways to approach librarians most likely to order your book

Learn more »

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