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Federal Contractors Are $600 Screwdrivers
ideonexus writes "Last month an article appeared on Slashdot about how the government pays IT contractors twice what it pays its own workers. Missing from the article was how much the IT contractor pays its own workers. After working for a federal contractor for 10 years, a document accidentally leaked to employees by the contractor illustrated the incredible disparity between what the contractor was paying us and what they were charging the government. Like most contracts according to the GAO, the government provided our offices, utilities, computers, and training, leaving our salaries as the only overhead to the IT contractor, giving them an incredible incentive to keep them as low as possible to maximize profits. When the top 100 defense contractors cost taxpayers $306 billion, eliminating the federal contractor middle-man seems like an obvious place to start the austerity measures."
...haven't we pretty much known this for some time now?
Labor unions have had policies put in place by which government employees are impossible to fire if you don't fire them within one year. Administration is way easier with contractors, whereas the unions have made employee management a nightmare. Dude here punched his boss in the face and they were unable to fire him, so transferred him to another department instead, same pay grade, no demotion.
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Nice article, how long until some CNN/Fox News/ random-astroturf-blog starts explaining why it's GOOD for economy that so much money is "spent" in middlemen? Sure, they get rich, but if we cut them off, the financial system will fall apart, and communism will win!
blah blah blah OBAMA blah blah.
YANATL (you are not a tax lawyer).
You also have to pay the corporate income tax on the cap. gains. But, IANATL
The Flat Tax proposal is nothing but a very poorly disguised tax break for the wealthy. Unfortunately, many otherwise reasonable people will be snookered by the misinformation being promulgated by the Koch brothers, and vote for it. This would be a mistake. When I was young, I didn't believe that money could buy political power. Now, I'm seeing it firsthand.
The salary is just one factor of the cost of employment.
If the government hired all of these sub-contractors as employees, then they would all be members of various federal unions, and the government would then be on the hook for all those unions' juice benefit plans and pensions. Also they would be paying payroll tax for them all (yes the government has to pay tax too).
If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.
Maybe someone else on here can help me understand why the government apparently paid out $460MM to a tobacco company? Perhaps this was all for helping government workers quit the habit or payouts for the healthcare costs? In any case, wouldn't this be off the bill for B-2-G contracts?
When the top 100 Defense Contractors cost taxpayers $306 billion, eliminating the Federal Contractor middle-man seems like an obvious place to start the austerity measures.
Instead of borrowing $306 billion from Wall Street and giving it to defense contractors (owned by Wall Street), the government could create the same $306 billion and give all 300 million of us $1002 apiece.
This would be something like Cook's A Bailout for the People.
Learn the rules so you know how to break them properly.
www.teslabox.com
Every time a worker leaves the Federal Payroll to become a private-sector Federal Contractor, the President and Congress can claim to be reducing the size of government. They publicize the fact that âoe1990 total government employment⦠was 5.23 million,â which fell to âoe2.84 million in 2009.â
There you go, here's what happens when you voters keep asking for small government. That's why I've said time and time again, the problem is not quantity. It's quality. It's not the quantity of Government that matters so much as the quality.
You can have these jokers reducing the size of Government to near zero, but if everything is done by such contractors, it makes no difference or it's even worse.
Private Corporations don't even have to pretend to listen to the voters. The Government does, hence this "small government initiative".
Part of how corruption works is you create a job and then fill it with the party of your choice at the rate of your choice, and bill the taxpayer for the whole thing. Then you make the "free" media shut up about it by threatening to cut off their privileged access to the inner circle. We have created an incestuous government that no longer has regard for us. The only solution is to elect real patriots and then limit even their terms in office.
You're not supposed to reveal that "privatization" is a scam...that's "top secret".
Orwell: "In a Time of Universal Deceit, telling the Truth is a Revolutionary Act"
There are a few things here. The cost to the federal government/employee is not your salary. Its approximately 3x your salary. This includes benefits, infrastructure and so forth. Further even if all things are equal that is 3x your salary is the contractor price it is still often the case better go the contractor route because it offers hiring / firing flexibility for jobs that may be one offs or have huge temporal variances in workload. Namely the contractors can be hired for a few months of the year and then let go in a way that employees can not be.
I Contracted at the Air Force Army Exchange Service and did get about twice the pay of the staff for the same job. But they got health benefits second only to the US Congress, have a fantastic retirement plan that let them retire after 20 years at very close to their top pay with COLAs given regularly, got to park in the AAFES parking lot instead of scrambling through a rubble field near the building, got to use the onsite gym & other facilities that contractors could not visit, and had a sick leave policy that had many folks coming in when they felt like working. And if anything burbled, they had a union to go to bat for them while contractors were routinely sacrificed when a Peter Principal manager screwed up and needed someone to take the fall.
This summary is a confused mishmash of thoughts. First they talk about how the government pays for offices, utilities, computers, and training then they bring up defense contractors, who aren't the kind of contractors that the earlier statement is talking about (I assure you that defense contractors pay for their own overhead costs). Secondly, in what world does a company having many significant expenses mean that they don't try to optimize the largest one? Companies minimize costs and maximize revenues wherever possible, it is the one thing that they are good at (and why capitalism comes as close to working as it does). Removing some expenses doesn't especially encourage companies to reduce costs in other areas, just like increasing costs doesn't encourage them to gouge their customers, if they could get away with gouging their customers (or employees for that matter) they'd already be doing it.
In the name of increasing equality, our government gives priority to women, minorities, gays and small businesses when it chooses its contractors. While these companies in turn higher independent IT contractors for relatively low rates, the difference in cost goes to furthering our goal of equality for these people. You may see it as $306 billion dollars wasted, but I see it as an investment in our future by increasing equality in America.
Smedley Butler tried to warn us...
President Eisenhower tried to warn us...
Question is, what are we going to do about it? Either through political means or revolutionary ones, we can't wait around for other's to solve this problem for us. It's time to make the change ourselves.
YANATL (you are not a tax lawyer).
Yea, but he's seen like, every episode of Law & Order, that's practically the same thing. Right?
YANATL (you are not a tax lawyer).
TYCO (Thank You Captain Obvious)
You also have to pay the corporate income tax on the cap. gains.
Haha, like GE?
Remember 6th grade math class? Show your work.
What you get with contractors is freedom from salaries, benefits, leave, and liability. Depends on what you are wanting. As someone who has worked for the state, I can say the contractors we hired were worth 3-4 internal employees. The contractors have incentive, the in-house never did, they got paid the same no matter how hard they worked, just as long as they kept that seat warm between 8-5.
CS: It is all sink or swim...oh and did I mention there are sharks in that water?
You're a tool. Union benefits are paid for BY THE EMPLOYEE. Pensions and benefits are cheap too. And don't give me that "private sector folks don't get benefits" bullcrap. I'm a professional and I know for a fact that other professionals do better in benefits on the outside in private sector. Compared to the average Walmart drone, yes you get better bennies, but look at the comparison.
Then they should be subject to thrice as much scrutiny and thrice as many penalties.
Yeah, damn unions getting pensions for their members. It should be criminal!
I worked for Raytheon as an IT Architect in Baghdad for a year. I was paid 244k for the year, which included housing, food, and travel back and forth to the states 2x a year. I don't know, but have been told that Raytheon charged the government 450k for my time over there. I can definitely say I didn't do nearly that much work, and the living conditions weren't really all that bad.
The expense ratio for federal workers is 22% on top of salary. This will not get you there.
The government has the ability to force contractors into full disclosure agreements. A federal law should be passed that forces any business that accepts a government contract to fully disclose how the money they received is spent. A federal web site ( ie. contractors.gov) should be implemented so contractors can easily journal receipts, wages, and other payments, without specifying the names of employees specifically of course. The journal should be kept during the entire process and maintained on the site for no less than 10 years. The web site and all information should be freely accessible to all U.S. citizens.
Having to work for a living is the root of all evil.
After working for a Federal Contractor for 10 years, a document accidentally leaked to employees by the contractor illustrated the incredible disparity between what the Contractor was paying us and what they were charging the government.
It's a for profit company. Does he seriously think they were not charging any sort of a markup on his services? Furthermore there is a LOT more cost that just the salaries. Even for companies whose main cost is labor, overhead is huge and can easily double costs without even considering profit margins. This is especially true for business with high insurance costs. Furthermore if you've ever dealt with the government, the amount of bureaucratic cost can be off the charts. Doing business with the federal government involves all sorts of red tape and bureaucratic hurdles (some necessary, some not so much) which are very expensive to deal with. Frankly with my own dealings with government contracts, I wouldn't touch that work unless there was a fairly steep markup on it. Not worth the hassle otherwise.
When the top 100 Defense Contractors cost taxpayers $306 billion, eliminating the Federal Contractor middle-man seems like an obvious place to start the austerity measures."
$306 billion is a lot of money but that doesn't establish whether it is cheaper or more expensive for the government to provide those tasks. It might very easily cost the government more. It might cost less. There is no evidence here one way or the other aside from a unsupported insinuation that there must be some sort of inefficiency here.
And when they talk about how much Federal employees make vs Contractors they never factor in that a Contractor doesn't get any benefits, any life insurance, any health insurance, or anything. The Contractor has to buy his or her own and receives none of the fancy government benefits. In reality the government employee might get less in take home pay, but they get way more in benefits.
Exempt food and medical. That would reduce the percentage impact on the poor. Put a flat tax on everything else including services. Then at least everyone would have confidence that "the others" weren't able to lawyer their way out of their fair share.
Boy are you guys gonna regret bitching about this article when the saucers arrive.
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
The salary is just one factor of the cost of employment.
If the government hired all of these sub-contractors as employees, then they would all be members of various federal unions, and the government would then be on the hook for all those unions' juice benefit plans and pensions. Also they would be paying payroll tax for them all (yes the government has to pay tax too).
If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.
Contractors are actually CHEAPER.
You do know you cannot pay yourself a $1 salary, right? It doesn't work that way.
This whole concept of contracting is like outsourcing, looks good on paper as it saves costs. Then politicos can brag how they are reducing costs because there are less govt workers (though there are a zillion more contractors), i.e. NASA or number of troops overseas (much of those positions replaced by contractors). Only advantage of contractor is it is easier to fire someone than a civil servant. Don't think unions are all powerful and all members have juicy benefit plans and pensions (they don't). Now people like to say how much better contractors are at saving money (uhmm, J35 fighter has doubled cost in past five years and its contractors have a lot of political power like lobbyists and work less regulation than before so don't blame govt people. Oh, did you know the J-35 began as CALF, Common Affordable Lightweight Fighter?).
Others say contractors are good because it is private enterprise, you gotta work hard to make it successful unlike govt which don't have to make profits or deal with customers. However, pretty much all federal contractors have only one customer, the federal government so they are government. I see almost all these companies could never compete in the "real world." And those that do work in the real world are highly dependent on government contracts. Which I think is why federal spending has skyrocketed because it is the only big thing in town, as all other industries have collapsed.
There was a time when becoming a police officer or working some other govt position was considered low pay (especially NASA civil service in the 80s). Right now it looks really good because all other middle class jobs have collapsed. But even for them salaries and bennies are dubious.
mfwright@batnet.com
No way do those benefits add up to a doubling or tripling of expenditures. Show us the numbers.
-Clio
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And unless you want to establish a Soviet-syle Department of War Production, you'll have a lot of that no matter what. Most of that $306B is spent on acquisition of military hardware that costs an incredible sum of money because it is all custom-built for a single, specialized market. There is no "adjacent market" for a F22 or nuclear air craft carrier ($5B+/ship).
Obviously, there is room to get rid of a lot of that, but the most effective process would be the following which neither liberals nor conservatives would tolerate:
1. Make civilian employment at-will (liberals: booooo)
2. Fire the dead weight left and right (liberals: boooo)
3. Change the law so that government agencies can legally poach government contractors as new employees (conservatives: booo) even if there were pre-existing non-poaching agreements.
4. Liberalize the procurement regulations so that federal managers can hire 1099s on a no-bid basis for temporary work with the caveat that the federal manager can be fired on a performance basis if their contractor cannot or did not do the work (both: boooo)
Been working Federal IT at various agencies for 20 years and the story is the same today as it was twenty years ago. You can't reach high quality/niche programmers on the Federal pay scale in the DC area. Scoff if you want, but we just had a top notch contractor successfully apply and get an offer for Federal work, only to turn down $137K plus bens. Great candidate, couldn't reach his rate. I've seen this time and time again.
That same contractor bills out near $300K per annum.
The system is skewed towards the contracting companies. Keeping Federal IT pay rates down below the industry average for our area guarantees big pay days for the contracting companies. These companies were supposed to be a panacea for the inefficient Federal worker. All that they have become is YAFE (yet another Federal entitlement).
And yes, some of the contractors have been in the same position for DECADES. Same lifetime entitlement.
I run a small business where we have contractors. I have been a government contractor in the past, but my company hasn't done any government work since we got started a year ago. Our employees know their billing rates vs what they're actually paid and haven't complained.
Our top rate is $120/hr, which would work out to be 240k/year if the person worked 40 hrs a week for 50 weeks (2 weeks pto) .. 2000 hrs.
But, we don't always have our contractors out full time. Sometimes they're on the bench (working on internal projects).. We have to cover that cost, or we have to lay them off. Essentially we're building up a bank account so that we can afford to keep employees that aren't working for the client at the moment. That plus the other overheads we have really eat into the company profit.
So.. even if we're paying $110k/year to the guy we're billing at $120/hr, it can be a close thing.
So the answer is outlawing unions and having all workers negotiate their own contract terms?
Depends on the situation. Sometimes yes, sometimes no. There is no one size fits all answer. Unions have their place but they aren't the answer to everything.
Sure, that worked really good for the industrial revolution. Welcome to your 112 hour work week, don't like it? Fuck off, there's a line of people behind you waiting for a job.
Nice straw man. That's not really an issue in the current world.
What benefits do unionized federal employees received that non-unionized do not? Most federal employees are not in unions. Federal employees can not be compelled to join a union. Federal unions can’t advocate striking or actually go on strike. According to the U.S. Federal Code, federal employees are not allowed to strike. It is deemed an unfair labor practice which can result in the employment termination and the revoking of the union’s status as a recognized labor organization. Recall how all the air traffic controllers were summarily fired and replaced thirty years ago.
He wouldn't have set foot on that government installation again. It is insanely easy for government to get an under-performing contractor kicked off the job.
Now if the guy was actually good and he got kicked off only because an irrational government employee was having a bad day, then a good contracting company will find him work elsewhere or roll him onto a different contract and keep him on the payroll until that can be done. Bad employees are just dropped, not worth the trouble.
This ability to provide a cushion is one reason for the company overhead in many cases. IIRC, EDS was very good at taking care of its people. Other companies, however, drop employees the second they can't bill their hours directly to a contract.
The moment you do this, you lose the right to claim insurance benefits and other benefits of working at the job. You have to pay it all yourself. You also forfeit the ability to take any paid leave/sick time, the ability to participate in contribution-matching towards retirement funds, and a host of other benefits (though granted, with the Republicans in charge, those benefits are getting cut by greedy legislators every day).
Individual insurance is a BITCH to get. Something like 20% of all claims are rejected, with another 40% "quietly rejected" by the agent who tells you "I'll just shred this so there's no record, because other companies can use our rejection as a reason to reject your application."
On top of that, if you have ANY health condition whatsoever, good luck finding insurance to cover it without an incredibly long wait period or incredibly high monthly costs and deductibles.
Got a heart condition? Family history of any form of neurological disorder, even Alzheimer's? How about a grandparent or two who's a diabetic? Hell, even a family history of asthma can hurt you if you're trying to get your kid insured.
Oh, and good luck EVER finding dental insurance that isn't from an employer.
There's a reason most people don't go the way you suggest - if you ever get hurt or sick, it's fucking suicide.
Once again, Top 1% profiting ridiculously... stealing, from the 99%.
Off with their heads!
And you're basing this on what evidence? I see no figures on this.
The fact is, people are pocketing a significant portion of government contract payments, and it's not the people doing the actual work. It's the guy in the suit who "manages" the teams, and says "You let ME worry about that" to everything while driving a fucking $200,000 Mercedes.
The unions and payroll have absolutely nothing to do with the inflated cost of government contracting, they're just an easy target recently vilified by the far right and other class-warfare commencing scumbag motherfuckers. So go join your party on the right, tea bagger.
For what it's worth, most union dues/benefits are paid for by the employee themselves through dues and fees. It is a rare occurrence that an employer takes care of all the costs.
Pensions are a stupid employment incentive all around, but it's not the unions' faults. Keep paying people's salary even after they retire? Yeah, that's a marvelous idea for the bottom line.
If the only way you can accept an assertion is by faith, then you are conceding that it can't be taken on its own merits
Follow the money, follow the greed, find the power, find the corruption. It's a pretty common theme and has been going on for decades. Most of you may be too young to remember (http://www.wnd.com/index.php?pageId=4314)
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BTDT. As an IT contractor, you were lucky to make half the rate the Feds were paying the contracting company, whose benefits were always far less than those of the gov't folks we'd work with. Most of the jobs I worked should have been government jobs, the positions were there for decades in some cases. But the people changed every time the contract was let to a new company who managed to bring a new low to what they could get away paying their peons, and all that institutional knowledge gained over the previous one to four years evaporated.
Has anyone ever seen an actual (and credible) study of the benefits of contracting versus direct gov't employment? I've kept on the lookout since Reagan started this process in earnest, and am hardly surprised not to have found any: Contracting companies have the purchasing power in Congress to quash it.
Yes you can. Its done all the time, for a variety of reasons. Usually the CEO takes a $1 salary becuase the company is struggling, but there's no law that says they have to be paid market value.
Python: 'And then suddenly you have a language which says "we're all stuck with whatever the whiniest coder wants".'
You can get group health insurance from professional organizations like IEEE. Requires 1 year of membership before you are eligible so think ahead.
It's not like employers are the only people who can define a group.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
By using contractors the government is converting all the various costs (salary, benefits, tax costs, personnel management, leave, pension etc...) into an up-front payment. Much easier to manage year to year.
From the company's perspective, keeping you on staff costs a lot more than just your salary. Insurance, 401(k), employment taxes, tuition reimbursement, etc, are all "hidden" costs above what they give you on your paycheck.
It's not unreasonable for it to cost an employer 1.5 to 2 times the salary amount for an employee.
I don't like the idea of a contractor overcharging the gov't egregiously, but if their costs are 1.5x the employee's salary, then charging the gov't 2x means they make 1/4 of that amount in "profit," not 1/2.
I have a better, though perhaps revolutionary idea. Why not save nearly the whole $306 billion by being less of an aggressive warmonger?
If you remember the stories about the $600 hammers, and you actually read the details, what you find out is that the hammer cost $10, and the contracting overhead cost about $500. That includes all the rules for government procurement, Federal Acquisition Regulation compliance, EEOE, small and woman/minority owned business requirements, limits on subcontracting, requirements for exhaustive financial/time accounting, etc, etc, etc.
Most of those overhead requirements are placed for good reasons, either for social policies (e.g. small business/minority business) or for fiscal or technical accountability (e.g. time accounting, facility security, etc.) But when you add them all up, you have a lot of overhead for doing government contracting that you don't have in business. It's part of the reason why government is inherently inefficient.
I have worked for the Navy as a contractor and I can say without question that the contracting teams do at least double or triple the work as the government employees do. I literally have come across five different individuals sleeping in their cubes during my 2.5 year contract. Most people they had in IT positions had almost zero IT skills and often dragged down the projects. We were having to both train on basic topics while developed. I do not see how the government gets by without contractors.
I love being wrong. It's always a reason to learn something new. :)
how is babby formed?
Higher skill workers are more likely to be contractors because contracting/consulting is more competitive. You can't get away with "floating along" like you can being a government employee, which is fine for self motivated, highly skilled workers. Government has a disproportionate amount of unmotivated employees, which is why government departments are so eager to deal with contractors. Furthermore, working at a contractor is generally boring, frustrating, and risky, so the job market is very employee-centric.
Hot tip: if you're an IT guy, you should be looking at a government contracting job. If the job market for contracting becomes flooded, the government will pay less for the same amount of work. Everyone wins.
Steve Jobs was paid a $1 salary. Not sure about the USA, but I'm pretty sure that you are also supposed to declare non-monetary compensation. I vaguely remember one tech CxO (maybe Steve Jobs, possibly someone at Google) getting into trouble for not declaring free use of the corporate jet as taxable income.
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The salary is just one factor of the cost of employment.
If the government hired all of these sub-contractors as employees, then they would all be members of various federal unions, and the government would then be on the hook for all those unions' juice benefit plans and pensions. Also they would be paying payroll tax for them all (yes the government has to pay tax too).
If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.
The big question is, would you rather the money go to a middleman contractor company who turns around and gives employees the bare minimum of benefits and keeps all the profit for the only real benefit of shielding the government from additional unionized employees, or would you rather the workers just get those (arguably over-provided) benefits themselves? This looks like more ammunition for union reform, since the perceived benefit to society is obviously backfiring.
Amazing how I got insurance when I started my own corp and it had absolutely nothing to do with my income. It was never even asked. They only cared about how many people I wanted to cover, what types of coverage, and any health conditions they needed to be aware of. Within 30 days of starting the company, all of my employees (7) and myself were covered. It would have been EASIER to get coverage had it been only myself, but they required 2 of my employees with children to had physicals done on the kids, which they paid for. This was medical, dental, vision and life.
We have a similar situation in Canada. The problem isn't government employee vs contractor, it's large contractor vs small one. I've worked for both the top 10 government contractors and small (less than 20 employees) contractors and my income doubled when i moved from large to small. Large contractors have a TON of overhead, from generating reams of paperwork that impresses the client, to paying for the pyramid-like structure of the company, to "entertaining" the government managers who hire them (free trips, expensive dinners, even more expensive hookers). Small contractors only have a smallish "entertainment" expense (couple of nice dinners here, a hooker there), they're lean and mean and rely mostly on their skills and track-record to get the contracts, so less overhead, flatter internal structure, more money to the on-site workers.
I was a government IT worker in the U.S. Treasury for decades. Before I retired, contractors were being brought in to replace workers in my position. One guy comes to us fresh from a front-line support position at, believe it or not, Best Buy. After a long while, he turned out to be not so bad, trainable, and useful. It took about a year to get him up to speed.
At some point, he decided he trusted me enough to talk about pay. I was shocked. Why should he treat salaries as some sort of secret? As a public employee, my pay is known to anyone who wants to look it up. I showed him how to look up what anyone in the organization made, showed him my salary, and couldn't imagine why anyone would think of this stuff as proprietary information.
In his case, though, I can see why his employer had gone to great pains to create the impression that salaries were some kind of secret. He was doing the same work as a first-tier support employee but was being paid roughly one-fourth as much money. The contract to his employer was sufficient to support employees like me (the agency was paying roughly twice the annual salary of a senior computer specialist for each contractor who reported to a job site) yet the contractor simply took the contract, took a cut, and subcontracted the rest out. The subcontractor took a cut and subcontracted the rest out. The next level subcontractor took a cut and hired an out-of-work Best Buy leftover to report to the job for a pitifully small percentage of the original contract payment.
It was a multi-level sham. I was annoyed at the waste. The contract guy was annoyed that he wasn't making any more money. Overall, contracting for these positions was a completely stupid thing to do that only accomplished just one thing - slicing off shares of pure profit to a few middlemen. Ultimately, the workers on the ground and their customers got screwed and the U.S. government got a *very* poor return for the money spent.
Naturally, once the guy was fully trained and providing real value to the organization, budget cuts forced cancellation of the support contract and he was gone in a flash. All that training time, all that productivity diverted from helping customers to bringing him up to speed was, in an instant, flushed down the toilet.
I'm sure it's not always the case, but contracting for services like this by the government is, in every case where I've gotten a close look, a completely stupid thing to do.
...(though granted, with the Republicans in charge, those benefits are getting cut by greedy legislators every day).
And what, exactly, are the Republicans "in charge" of? Last I checked, they run one half one one of the three branches of government.
Hardly "in charge" by most standards.
I was around in the Government when the Reagan administration came in, RIFed a bunch of people, and put in hiring freezes all over the place, nominally to reduce the size and cost of government. However, they didn't really reduce either departmental budgets, or the tasks that those departments had to fulfill. The result was a vast hiring of contractors, replacing people making X with people making 2X, which (with burden) was billed to the US government as 4X+. I thought at the time that this was not about cost savings at all, or better efficiency, but about funneling cash to politically well connected contractors, and I have seen nothing to make me change my mind since.
If the company is making a profit and you pay out distributions equivalent or greater to what you should be earning as an employee in order to avoid payroll taxes, you can get in trouble. And yes, there have been court cases about this very issue. See here, for example.
I call that common sense...
What kind of retirement plan are those Federal workers getting? I bet if you factor that in, they are paid much, much more than the contractors.
I am an Oracle DBA and I have done alot of government contracting. First off, in general federal contracting pay is higher because it requires US citizenship and you can't use H1Bs. There has been so much immigration, H1B, L-2 visas, etc... in the US that most IT people are not elligible for these jobs. So there are less people who can do them. Also, there is always a lack of people with high level clearances. Vendors do NOT want to pay someone while they go through a background check. So there is always a shortage of cleared people. Projects usually staff up by offering more money to people on other projects with clearances to get them to quit.
There are times when the markups are MUCH larger than that. Alot of contractors use sub-contractors that go down 2-3 levels. So by the time the money gets to people doing the work, it is alot less. Plus it is often paid monthly (at best. subs often don't pay too often) and on a 1099. You can be billed at $150-200/hour and paid $40/hour on a 1099 and maybe get paid every 1-2 months.
This doc also leaves out that most contractors are not paid for more than 40 hours of work HOWEVER, the contract company charges the government for that work and pockets that as 100% profit. Since contractors are tax payers, they are essentially paying for their own overtime. I worked on one government project recently where the government required that all hours billed be passed along to the contractors. They wrote it into the contracts. This is really a scam.
You can see the margins when you do top secret work. Rates paid by the government do NOT increase for classified work. However, rates paid to staff go up alot. A DBA who would make $110k/year on a job that requires a low level background check, could get 180k/year on one that requires a top secret clearance. The government does NOT pay more for this.
Also note, that IT contract companies make money in 2 ways:
1. increase the margin on what they pay staff and what they charge
2. add as many bodies as they can to a project
You often get contract companies playing the 'we' card and try to get IT staff that are onsite to give them leads. The IT companies does not care about you. There is no we. Having more people the pimp that sends you the check does not ensure your job security. They just lie to you. The vendors also often play games with other contract companies to try to make them look bad so they can win business. This puts regular staff in awkward position. You have to constantly work to 'not my fault' and no further or you leave yourself out there. When federal managers manage a project (sometimes a vendor will win the whole project and sometimes the federal government will manage the project), they are often afraid to make decisions. I had one federal manager who was hire as a government employee from the company I work for. He was afraid to make a decision about anything. He just mumbled. We all knew this, but no one could say anything or we would be fired. So other groups did not know.
There is often alot of fighting between IT managers over work and this really does hurt productivity. Since each vendor wants to add as many bodies as possible to a project. Federal contractors are temps and treated like temps. There is no reward for hard work. If you have ideals that will lead to changes you may make people look bad and this can get you fired. So this leads to working to 'not my fault'. Everyone's first priority is to maintain their income and you will usually work with in the bounds of what is allowed. Federal IT managers and government employees have typically only done federal contracting and are not smart enough to realize they are doing this. So what staff often does is try to find a some sort of project knowledge of skill and hoard it. Since that gives them a little bit of job security. The only reward for sharing this information is opening yourself up to termination and being replaceable.
Contract companies do NOT have any products or intellectual properties. Service companies are
Hate to post AC, but... having worked at the state level and been close to workers are the federal level, I can say there's more going on here than just contractors screwing employees or governments just shunting off all work to contractors.
First, federal employees and some state employees are almost impossible to fire. A contact of mine has been trying to transfer (not even fire) an insubordinate employee for about 3 years now. In that time my contact and the employee have been to three mediation sessions, which is effectively paid time off for the employee. The employee is a vet, which counts for a lot, so nothing but a transfer will ever come of this, in the best case. The contractor's ability to fire the incompetent is worth something.
At the same time, I've had friends at the state level realize that they were much more competent and less well paid than the IT contractors. They managed to get their shop into the twenty-first century, even got a the head contractor drummed out, but ultimately went over to contractor companies because it pays more. Same for the people I know over in law enforcement. The state pays shit, because it's impossible to communicate the gravity of "people are leaving left and right" up the chain to the governor or Leg. When a crisis does arise from of a failure of the overworked remainder, it just proves to them that state employees "can't hack it," and that they should use a contractor in the future.
There are some in the government who will not be happy until contractors do _everything_. Because contractors can fire people from projects, lay people off between projects, and get most of their money in large milestone payments, they will always be an easier sell when drafting a budget than government staff is. Also, even if they don't have a contractor for the job, states don't want to pay for personnel; not unless they never expect a cost-of-living raise. Fundamentally, the entire way US governments approach employment and financing of those employees is pretty fucked.
This is to say nothing of the way we approach choosing the _best_ contractors, which is an entirely different problem fucked in several other ways.
Ryan Somma, since you admit to being "waste, fraud, and abuse", you should return your ill gotten gains and turn yourself in to the appropriate law enforcement agency. Otherwise, just STFU since you're just an envious little ankle biter.
No need. Large corps just plead with a judge that they will be bankrupt unless they raid the pension fund. If I worked for a bank, I would tell the judge that I would be bankrupt unless he let me rob the bank. It seems to follow the same logic.
This is all you need to know.
System A, employees work for the government: Employee gets a cut, employee union gets a cut, the business cronies of politicians don't get a cut.
System B, work all subbed out to contractors: Employees get a smaller cut, unions get no cut, business cronies make bank and the taxpayer is on the hook for a lot more money than System A. It's basically a looting of the treasury.
All you need to know is this is crony capitalism and graft. Look at who runs these companies and you'll see they're asshole buddies with the politicians calling the shots. It's all a circle-jerk of glad-handing and corruption. But you can bet the politicians who are making this shit happen will cry crocodile tears of nostalgia for small government and the businessmen who are sucking off the public teat will fund conservative media figures who inveigh against minorities on welfare and entitlement programs.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
(though granted, with the Republicans in charge, those benefits are getting cut by greedy legislators every day)
Your statement makes absolutely no sense. You can't blame Bush for everything.
Godaddy is a scam and a ripoff.
I disagree with your conclusion / placing of blame on the unions. Managing people isn't easy and it takes thoughtfulness and time, and quite frankly many govt managers at the local level do not do it -- and managers aren't fired for being poor managers or for being completely incompetent. As such, in my experience managers and a lack of accountability for HR negotiators are a huge part of the problem and make the work environment a nightmare. After all, many directors and senior managers make decisions based on available staff time and short term political risks. So in many org cultures there are lots of incompetent managers that can be fired but will not be because they aren't bad enough for someone to take the time to do so and find a replacement...or, because having them around is politically expedient or non-threatening. It also means that union negotiations for stupid rules seem to sail right on by...especially if the negotiator has political goals.
For the record, I don't have union protection and my job is all sorts of ridiculous.... while my boss works 9-4 or 9-5 every day with a full lunch. So maybe I'm biased, but I don't think regular anecdotes about work rules (and I've got my own ones) means it's all a union problem.
Essentially, there seems to be a debate regarding government employees vs contractors (at 2x the rate).
But the truth of the matter is those contractors never see that double income. All the talk of how 2x let's you pay for your own benefits is hogwash.
Here is how the system works for the most part. Rather than having government employees hired for a task which is likely to be short-term (1-5 years). The government contracts it out. Instead of hiring a $50K-$75K employee they pay a major contractor (Northrup, Lockheed, L3, Accenture, etc, etc, etc) $100-$150K to fill that position.
These companies then hire from vendors adding an additional tier to the puzzle. (If the contractor is a foriegnor there may be a third party involved in sponsoring their visa.) So of that $100K-$150K paid by .gov for that contractor. The contractor might see $40K-$75K. All the rest is eaten up by middle-men.
But it doesn't stop there. The way the contract system works, it is not uncommon for one of these contracting firms to mass hire dozens of people toward the end of a fiscal year. They do this so they can use up (bill the government) for every dollar the contract allows for. Upon the end of the fiscal year many of those contractors will be let go. No severance. Nothing.
Essentially, the contract system allows for an at-will hire and fire. Which in an economy that has 9%-16% unemployment becomes a gross abuse. You literally watch people hired for two weeks only to be let go. Positions are advertised as part of a long-term contract. New hires are often misled into thinking there is an element of job security. Some even leave jobs for these positions only to reach a very rude awakening.
Seriously, Unions need to quit wasting their $$$ being campaign fundraisers and get on the ball with what unions were all about. Defense of the worker.
In the current market, a potential new hire has little to no ability to negotiate on contract. And if misled, lied to, etc - has even less recourse.
There needs to be a fraud law that mandates whether a position is long-term (min. 1 year) or merely short term. If fraudulently mis-portrayed, than the hiring firm would be obligated to pay the employee for one year of time.
This would help end the abuse of contractors that is rampant in government work.
So, what you're saying is, some of the difference would go to the (supposedly undeserving scumbag) union management instead of the contractor (supposedly undeserving scumbag) management, and some of the difference would go to the workers in the form of higher wages or benefits.
IF the gap was smaller or non-existent, where exactly is the downside again versus the status quo? And that's assuming the gap actually is smaller.
The difference between a contractor and a perm employees esp. a civil servant is the a contractor can be changed out or eliminated at any time.
This gives contractors a massive incentive to be useful and provide what is needed and pleasing to the soldiers ( consumers). That is the reason many soldiers prefer to work with contractors. ( as I have been told by a few of them).
To quote:
'When civilian's did the work I had cold showers and MRE's most days, once the contractors came in their were hot showers and good food.'
Also, if you are not actively fighting a war the contractors are no longer an expense, it is much more difficult to eliminate full time govt employees which is why Pres. Clinton put the plans to use contractors into place in the first place. It was a way of ensuring operational readiness and still cashing in on the 'war dividend'.
If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.
Except that they are accounted for already.
http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html#Summary%20of%20Methodology
Because the contractor billing rates published by GSA include not only salaries but also other costs including benefits contractors provide their employees, POGO added OPM’s 36.25 percent benefit rate to federal employee salaries and BLS’s 33.5 percent loading to private sector employee salaries to reflect the full fringe benefit package paid to full-time employees in service-providing organizations that employ 500 or more workers.
upon the advice of my lawyer, i have no sig at this time
When the other side cowers and concedes everything without a fight, it's safe to say that they are in charge. But let's face it, we all know that the ones in charge are corporations and the wealthy.
As a former contractor/consultant (not for government but industry) with my own S-Corp at the time, I will say that a consultant has to charge double or more the hourly payroll rate compared to a full-time employee, in order to break even. The contractor has his/her/its own insurance, facilities, computers, support staff, networking costs, telephones, etc., various taxes (local property, sales and company income taxes, etc.), and has to pay for his own travel and both halves of FICA not just the 1/2 that employees pay. And the contractor gets zero paid vacations or holidays - so that cost has to be factored into the hourly rate.
Also, most consultants have to do about as many hours developing the business as working on the project - for one guy that means eight hours generating business, after working eight hours on code (or whatever). If it's more than a one-man shop, then just look at it as 'cost of sales' (standard term) - most businesses have a cost of sales between 45% and 55%. And it's hard for a contractor/consultant to actually bill a full eight hours per day, five days a week.
For another data point, when I worked at a large high tech company in Oregon, the fully-loaded cost of a software engineer was 2.5 times salary. Buildings and janitors cost money, as do mainframes and managers, etc.
So, when you really add up all the hidden costs of having someone working at a desk, double for contracting is not surprising. The standard rule for consultants is charge double the hourly rate you would want for salary. If you actually manage to work the full 2000+ hours per year, you'll almost break even.
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You've taken an incredibly simplistic view of the situation. I'm guessing you're currently dissatisfied with your pay and find yourself feeling entitled to as much of what your company charges the government as possible, since "I do all the work, so the pay should be mine." You mentioned that government provided you with computer, office space, training etc. Contrats. That's not always the case, so you got lucky. I've been on contracts where the government provides lower level training (A+, Security+ in the IT world for example), but the contractor had to pay for my CISSP and CEH certifications. I would now like to ask if you have any benefits at all through your company? Medical, Dental, Vision, LTD, STD? What about a 401K with matching? Do you want your company to turn a profit, or just stagnate? If you feel that they're still getting the better end of the deal, then it's time to switch companies or get yourself some more training so that you bring more to the table when negotiating salary.
As for the contractors earning more than the government civilians. True. The government folks also have more stable jobs, 30 days or more of leave and decent retirement packages. On the government side you will also find people put into positions they're not really qualified for more than you will with contractors.
I guess your post worked well if you wanted your daily rant to be posted, but it didn't really do much to add to the slashdot experience or help the community at large to grow. If you want to whine, write a blog.
You, sir, are a tool. The U.S. Gov't doesn't pay state taxes. There were a number of supreme court cases on that point. Even if the the U.S. Gov't did pay taxes, payroll taxes are taken out of the /employees/ pay, not gifted by the employer.
Ultimately this is the result of bad management by employees that are being told to keep headcount down as a primary driver. This happens in the private sector all the time, big boss says "fire ten employees so we can be more efficient and cost effective" said employees are term'ed only to have the remaining employees suddenly become much less efficient and significantly overworked (because they had to pick up the term'd employees workload) -- projects slip so gunslingers are brought in to finish them off -- at twice the cost with no gain in the institutional knowledge or expertise of the organization -- because the gunslingers take their pay and ride off.
It's stupid, regardless of job sector.
-GiH
WOuld that mean that in the case of a contracted employee, the government is paying for FICA twice, while with direct employes, they are only paying it once?
-Clio
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The difference between what an employee working on a federal contract is paid as wages and what a contractor charges is explained by the Negotiated Indirect Cost Rates (NICRAs) that a contractor negotiates with a relevant contracting agency. These NICRAS are typically 3 multipliers on salaries and direct costs that account for the overhead costs, fringe benefits, and profit margin of the contractor.
while there are a number of contract types, the predominant contract is cost plus fixed fee (CPFF). Since the labor rate is the predominant cost, the contractor actually has a perverse incentive to pay employees as much as possible so that the base costs on which the NICRA is multiplied is bigger.
They include the benefits package to come up with that 2x figure.
upon the advice of my lawyer, i have no sig at this time
I think you guys are thinking more so of private contractors where such incentives and the like pay off.
But what's being talked about here is mass contractor employment. Low-pay, zero incentives, in fact often they couldn't care if you sat at your desk all day and did nothing. So long as they can legally bill the government for your time.
It's an entirely differently system than corporate contract work.
If you transition all the contractors to public employees you'd have to report them as public employees. No one wants to REALLY admit that 60% of the US working population works for the government...
Today, total compensation (defined as the total costs spent on an employee) is often twice the actual salary of the employee. Compensation includes required elements such as employer part of Social Security, unemployment insurance, workers comp insurance, as well as non-taxable standard benefits such as health insurance and life insurance.
I don't know about Federal government compensation, but here in California, they had a state prison nurse earning three times her regular pay due to massive overtime because it was far cheaper than hiring two more nurses (and putting away for their generous future pensions, etc.)
When you're jailed for assault...
Why not charge him?
Because the government is a start-up without an HR department to handle that paperwork?
Okay, so I'm hearing "doubling might actually be sane". But tripling?
-Clio
Karma: Bad (mostly from not giving a fuck)
Blog: http://clintjcl.wordpress.com
It's really easier than that, happens in my corporation all the time - departmental capital budgets (especially IT) do not allow you to hire more permanent headcounts, but you can expense consulting and professional services until you're blue in the face. Obviously those are going to cost more than hiring a full time cubicle monkey, but capital budgets are capital budgets and IT departments are doing what they are forced to do, to get the job done.
Bow before me, for I am root.
Um, pensions are not a way to keep paying people after they retire. They are, and always have been, "deferred compensation," that is compnesation they earn during their working years but do not collect until after retirement. MOST employers put that deferred compensation into some sort of investment plant each payroll period, and the investment plan manages it and pays it out. I don't know anybody anymore who has a defined benefit plan; mine was liquidated twenty years ago and changed to a 401(k), which is what I get now.
It works the same: my employers puts in x percent of my total compensation, and I get to choose the percentage, which I'll collect after retirement.
The idea that pensions somehow pay people after they quit working is another right wing meme that needs to be killed. It's part of the social darwinism that right is pushing to assure people have to work longer and die sooner.
Do you think when a garage charges you $55/hr for labor, the mechanic is paid $55/hr? No employer charges for an employee's labor what he pays the employee; if he did, he'd be broke in months. The employer has taxes and other overhead, takes risks, and pays his employee even when said employee has no work to do.
When a contractor deals with the government, he faces additional risks and costly regulations. He has to charge for those, and also charge for the risks and expenses involved in dealing with corrupt political organizations.
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The IT contracting companies here in the Netherlands do very well for themselves. They work for the government and all kinds of other organizations, but always the story is the same: per employee, contracting companies regularly get paid around EUR 100.00 an hour, while the employees receive less than half of that (and probably more like a third). There are a number of reasons I can think of why this practice continues:
1.) The employees know that the contracting companies generally pay more money than other employers, plus they give you perks like company cars that other employers only consider for their management staff.
2.) It's hard for the employees to go freelance, and thus bypass the contracting companies, because the end customers tend not to shop around, instead tending to stay loyal to certain contracting companies.
3.) Since most organizations seem to be terrible at recognizing good IT personnel and paying them what they're worth, many of these folks tend to look for jobs elsewhere, often preferring to work for IT contracting companies.
4.) Many organizations that work with IT contractors do so because they are not allowed to hire any more people for permanent positions. So, when they're required to do more work for which they have no staff available, they will argue that they have no choice. On the bright side, IT contracting fees are not counted as fixed labor costs.
5.) Once an organization has been using a certain number of IT contractors for long enough, they come to depend on these people, which is natural. Thus, it eventually becomes very difficult to get rid of them and they often end up staying indefinitely.
6.) The Dutch labor laws, which make it easy to hire personnel but difficult to fire them after 6-12 months, probably don't help either.
It looks pretty insane, because the only real winners are the owners of the IT contracting companies who walk away with tons of cash in profit every year without adding much in the way of value. The only reason I can think of why it continues is because, well, that's the way it's always been done.
Corps, Super Rich, The Unions, and the Bureaucrats.
These are the people in charge.
Your leftist propaganda is showing.
The problem is the politicians from both sides are owned.
Your problem is you can only see the problems with "The Other Side."
It is voters like you that keep these shitheads in power. Gratz.
Why is it so hard to only have politicians for a few years, then have them go away?
If it costs that much, maybe we don't need one that badly...
PS A contractor is not part of the pay budget therefore isn't a political problem for the head of the department. Employees are. Hence paying lots for contractors: the political problems are nonexistent. It is, after all, someone else's money. And probably going to a big friend of the Senator...
It would have been EASIER to get coverage had it been only myself
ONLY if you are in perfect condition. My MS (ac for obvious reasons) makes it impossible for me to get insurance on my own. Having 6 other people is what makes you a "group" (two is the minimum, for obvious reasons). And my being in the group would automatically double (or more) the quote. Every year, my company (all three of us) shops around for a "better deal" (read: increase the deductible another $1000 so the premium only goes up 5% instead of 20%) and every year after the initial round of quotes based on our ages and genders, once we send in the pre-existing condition paperwork, the insurance company revises the quote upwards due to "demographics".
If you think my case is bad, women of childbearing age have it rough, in or out of a group. Some insurance companies just flat out charge them a higher premium than the males.
Now that's just the worker - no computer, office space, etc.
Now I worked for one of the big DoD contractors a few years back. Between me and the corporate officers were about 7 layers of management and business units (just to the Sector level of the company; the company also had a corporate sector that oversaw all of the sectors, of which I have no idea how many levels there were - but we'll assume at least 2 levels) - so that's 9 levels of management that they would account for - so $35+ 9*$5 + 9*$5 + $5 for $130/hr for someone at even a relatively low "grade" level - i.e. it only goes up from there.
Now, I don't know the exact numbers for the above, so it may work out a little differently but it basically does add up that way.
Truth is like the sun. You can shut it out for a time, but it ain't goin' away. - Elvis Presley (source: imdb.com)
I pretty sure the $1 was so that he could get benefits. And the Jet belongs to the Jobs family, Apple gave it as a gift and he leases it back to Apple.
Here's a good starting point.
http://www.fedaccess.com/8%28a%29-sdb-minorities-women-disabled.htm
Eligibility Criteria for 8(a) and/or SDB Program Participation
In order to qualify for access to the 8(a) or SDB program, a company must qualify as a small business with potential for success that is owned and controlled by individuals who are socially and economically disadvantaged. The owners of the company must submit an application to the SBA which details how the company meets these criteria. Here are a few tips on meeting the SBA's requirements.
1. Small Business
To qualify as a small business, a company must compare its status with other companies operating in the same (or similar) line of business. The U.S. Department of Commerce maintains a regulatory matrix for use in determining if a company qualifies as a small business. Visit our page entitled, "What is a Small Business?" to find out more.
2. Social Disadvantage
Social disadvantage refers to any circumstances under which the owners of a company have faced racial, ethnic or cultural bias within the U.S. to the detriment of their ability to establish or grow their business. Clear examples of social disadvantage include race- and gender-based discrimination, as well as discrimination on the basis of physical disability or lack of access to traditional education.
The government has determined that a presumption of social disadvantage applies to certain racial and ethnic minorities including African Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent Asian Americans, and Native Americans. Other applicants, including non-minority female, veteran, and disabled business owners, must affirmatively demonstrate social disadvantage by a preponderance of the evidence.
3. Economic Disadvantage
Economic disadvantage is measured in terms of the personal income, personal net worth, and fair market value of all assets owned by each individual claiming social disadvantage in an application for 8(a) or SDB certification. In calculating personal net worth, the SBA excludes an individual's ownership interest in the company, as well as any equity held in a primary personal residence. An individual's net worth must be less than $250,000 to be eligible for the 8(a) program, or less than $750,000 to be eligible for the SDB program.
4. Ownership and Control
The ownership and control of a company are critical eligibility factors. Owners applying to the 8(a) and/or SDB program must demonstrate not only unencumbered ownership of at least 51% of the value of the company, but also that they have full control of the company's day to day operations. The SBA looks into a range of matters in assessing a company's ownership and control.
There are a number of government statutes and programs which demand that disadvantaged, small business and minority contractors be considered before others.
I don't see this as unfair. It's a way of fixing the past two centuries of injustice. If you have a better way to do that, by all means speak up.
I have worked at NASA and ORNL and I can tell you that the government has been charged as much as 4 times my actual employee cost. Having been an executive with access to my total employee costs and the charges to my customers I can tell you this is a factual story. What is something worth? What you can sell it for and the government is at a disadvantage because their budgets are essentially public. The sales person knows what the government needs and how much the government has to pay. Imagine walking into a car dealership with the maximum amount you can pay for a car tattooed on your forehead.
Then you have to add additional costs for doing guvmint work - the paperwork shuffle is immense, plus the costs of meeting all of the regulations that cover whatever it is you're doing. And now you're getting into one of the extra costs - most companies don't bother to even try for guvmint jobs because it impacts everything you do, all your OTHER business. It essentially means that the government wants to know everything about your company, down to what kind of toilet paper you are using at home (OK, I'm exaggerating). Not only do you have to comply with the regulations, you have to prove you comply. And if you forget something, type a number wrong, etc. the government can and often will hound you and your company with audits and requests for information - indefinitely. They can come back 10 years later and take everything because you forgot to change the price of a widget soon enough back in the day, and maybe send you to jail.
Not only does all that increase the cost, and therefore the price, it also eliminates the competition. The only companies that are willing to jump through those hoops are the ones that - surprise!! - are tuned to being government contractors, who only compete with each other. And there is a level of comfort that goes both ways - governments LIKE to work with the gov't specialists - it gives them confidence that they won't get into trouble, get burned by a fly-by-nighter, etc. (Big companies do the same - they prefer to work with other big companies, big unions, and big government agencies.)
In the one semi-government contract I worked on, my company was hired by PRC, a so-called 'beltway bandit' that specializes in projects for local governments. We could not qualify for the job on our own - we didn't do gov't paperwork, we only made stuff and did projects. So the customer (Fairfax County VA) hired PRC to hire us. PRC paid us (IIRC) $1.5 million for the project, and billed the county (so I heard) $7 million. I don't recall every meeting or talking with a PRC employee after the contract was signed, but I wasn't in the loop so I can't say that was true of everyone in my company. We would have been perfectly happy working for the county directly, but the county preferred to pay PRC triple the cost.
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
You're kidding, right? You think a billionaire needs (needed...) benefits?
With the government trillions of dollars in debt, it would seem like the best use for $306 billion would be to not borrow it in the first place. It seems a bizarre notion that we'd look at money allocated to banks and such and look for other ways to have spent it. However the mindset does explain why personal debt is at an all-time high in this country.
>plus the costs of meeting all of the regulations that cover whatever it is you're doing. But the government is beholden to the same regulatoins, isn't it? So wouldn't that cost the same either way?
-Clio
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After a 2nd read, I am very compelled by your points. Thanks.
-Clio
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Blog: http://clintjcl.wordpress.com
Needed no, Got yes.
Then you haven't checked in a long ass time. They're in charge of many of the state legislatures, and in many of those states as well, they hold the Governorship.
The ONLY way that has a remote chance of being true is if you're in perfect health. And I'd be interested to hear how well that plan was at responding to actual claims.
Thanks. Nevertheless, it is a sad state of affairs. This is why business folks keep talking about the cost of regulations. Working for the guv is the extreme case.
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
I work for a small defense contractor. The money we got from a contract allowed us to weather hard times by still having money in the bank to keep paying us when we were between contracts.
Are you fine with getting rid of federal highway and bridge spending, subsidies for public schools, massive airport subsidies and bailouts, and other things that directly benefit you? Most tea partiers seem to just want to do away with the stuff that doesn't directly benefit them only.
Actually, there is a law. In particular, for S corps, that don't pay corporate taxes of their own, the IRS requires all compensation in total (salary, pensions, stock options, etc, all taken together) to fall in a range that is "reasonable and customary for the position" . If that's not exactly pegged to a market value for executive compensation, that's because there is no standard amount for executive pay. This means the auditing agent has a fairly broad range to decide whether the total package is reasonable or not, but he or she has a table of dozens of cases that set precedent to go by.
For "C" corporations, a CEO taking a $1 salary is doable, because the corporation also pays taxes of its own and the money not paid to a CEO is profit to be taxed. It's not capital gains, its direct profit.
For those posting about stock options:
You can't pay at capital gains rates on a standard non-qualified stock option (which is what most executive options are). You may qualify for the better capital gains rate on the profit from sale of stock, if you hold the stock for at least a year, but that's not exercising an awarded option.
Here's an example: In 2008, CEO Bob gets a 1$ salary, plus the award of a stock option to buy 1000 shares of his company at 50$ each. That option spans a period that is part or all of 2009. In Sept. 2009, Bob exercises that stock option. He has turned the company around as the saying goes, and that stock is normally worth $63.47 a share. When Bob files his 2009 taxes (in 2010), he has to pay on that profit of $13.47 a share, and he pays at his normal rate, not long term capital gains. If Bob holds that stock for a year or more, he can sell it, say in Oct. 2010, and get the better capital gains rate on the sale, so if in Oct 2010 the stock is worth $68.47, Bob makes $5 profit at that time, and when he files his 2010 personal taxes in 2011, he gets the better capital gains rate on that profit.
That 1 year rule means that Bob is never even paying the same year's taxes for exercising the option and for selling the stock. If he sold the stock in the same year he exercised his option to buy it, he'd have to pay the full rate on all the profit in the same tax year.
There are Incentive stock options. There, the time from the granting of the option until it is exercised has to be at least a full year, and then the sale has to happen at least a full year after that.(Making 2 years minimum total). Here capital gains rates can apply to the whole thing as though, in some ways, the exercise and the sale were a single operation. This has some potential for the sort of abuse people are suggesting, but one of the many additional limiting rules about ISOs is that the employee must not, at the time of grant, own stock representing more than 10% of voting power of all stock outstanding (with some additional modifiers). So a corp held by a single person or small group can't do an ISO. Another rule is that the offer has to be made to an actual employee (so you can't offer it to yourself as Chairman of the Board, for example). There are dozens of other restrictions.
Who is John Cabal?
Looking at the article from the original story, it doesn't seem like the IT contracting firms are billing outrageous rates to the government. $260K/year works out to being a blended rate of $125/hour. While on the high side of the market, it's still in range of prices you typically see firms billing for onshore, onsite IT workers. The post and accompanying chart are a bit misleading, because it is comparing the cost of purchasing services from a firm to the average salaries (minus benefits, PTO, etc.) of individuals in those positions.
From TFA:
"This list begs the question: What service is the Federal Contractor providing to justify charging double what it would cost the Federal Government to employ these same personnel directly?"
If you have a problem with your plumbing at home, a plumbing company is billing you at least $100/hour for the time of its employees. You could hire a full time plumber 1/4 of that rate, but then you're on the hook for that plumber's salary, even though you only had one plumbing problem. I realize that it's not entirely apt metaphor -- after all, you could just fire the plumber as soon as he was finished (but then you'd better hope you never have a problem again). But with the federal government, it's even worse. Most federal employees are virtually untouchable once they are hired. There are exceptions -- in agencies of high political visibility and sensitivity you have a lower screw-up threshold than in most jobs -- but for the most part, if you're in with the feds, you're in for life. So the choice is really, pay a contracting firm their markup for an IT worker for 1-2 years, then wipe that expense off the books once the project is over, or hire someone in-house and keep him/her on payroll for 30-40 years (plus you're on the hook for benefits, regular above-market raises, and rather generous pensions). That alone is a pretty valuable service provided by a staffing firm. Also, the firm is doing the acquisition and vetting of talent, which is not without cost.
It seems like the author of this post is making a half-hearted attempt to demonize the contracting firms themselves, but it's hard to come to that conclusion -- it's not like they're blatantly gouging the government, but rather charging the government their market rates for professional services. Granted, it is eye-opening to see the scale on which the government is consuming professional services. If a private company had IT operations on that scale, they'd be hiring in-house. From a straight-up cost perspective, it is certainly more effective to hire your own. But the flipside is that there would have to be a huge cultural shift in how the government views its workforce to be able to pull that off. You can't be "in for life" on a short-term project, and you can't be tied to one agency or office. But there are so many politics interwoven in government projects, that I don't think that can happen.
as a contractor you can write anything you want into your contract.
if someone is telling you they have (long term employment) and are unwilling to pay a penalty for early contract termination then you can be pretty sure they are not sure if you will be long term or not.
Whoops: To clarify my own post: A corp held by a single person or small group can't do an incentive stock option to that person or to one or more of multiple people who have more than 10% ownership. Such a corporation could offer an ISO to some other person who doesn't have more than 10% share of the corporation and is a bona-fide employee. So if Steve Jobs was on the board of Apple, he could vote to offer himself a regular stock option in a year when he was CEO, but once he held more than 10% of Apple shares, he couldn't offer himself an ISO anymore.
Who is John Cabal?
"The Government" - which government? Don't be so ambiguous! There's a /lot/ of governments. What country? What level? All of them?
So, a give-away instead of at least getting SOME effort for the money they pay out? Sounds like a bad deal to me. If they've really got a spare few hundreds of millions kicking around, they can use it elsewhere in the busget to cut the deficit, or just reduce our taxes a tiny bit.
"When the top 100 defense contractors cost taxpayers $306 billion, eliminating the federal contractor middle-man seems like an obvious place to start the austerity measures."
That statement reads like every penny given to those contractors is waste. Like somehow getting rid of those companies would save $306 billion. While there is _definitely_ waste, abuse and outright fraud, the percentage is not 100%. My guess is it's more like 10-15%, which is still a respectable $45 billion.
Individual insurance is a BITCH to get.
Really? Because I have had two different individual insurance policies, and neither of them even required a medical checkup or anything. I dropped my companies health care coverage because it was too expensive compared to what I could get as an individual. i was with HumanaOne, but they got kind of pricey so I went to Assurant. Both are about 1/4 what i was paying for coverage at work.
If you are not allowed to question your government then the government has answered your question.
...worked 6 years full time for the same customer... That would amount to some $100 dollar per hour for the last (220 days * 8 hours *6 years) - approximately 1 million US$. Including overhead (car etc.) I cost the company some 500K US$, still leaving a nice margin for the company of 500K US$ for those 6 years. That is the price of flexibility, yes, but for 6 years it is becoming a bit steep, especially considering that you could have gotten 2 persons employed for that amount of money (plus indeed the fact that overhead costs are mainly on the part of the company that hired me).
Oh noes! Unions actually fight to keep decent benefits for their members! The horror! They should be willing to gut everything for the enrichment of their employers, just like everyone else has!
Next time you want to rant against union benefits, remember, the correct position is not "Why do they still have this when I don't!", it's "Why do I not have this while they do?" Don't be pissed off because someone was able to negotiate a better deal than you.
Tax evasion is not paying taxes that you owe. What you have described is avoiding paying taxes by not generating a tax liability. This is not illegal and is fully supported by the tax code and is meant as an encouragement to start and run businesses which in the long run leads to greater tax revenue.
If you are not allowed to question your government then the government has answered your question.
Quit your job and become an independent contractor, then you can enjoy twice as much income.
You do however, lose your job security and aren't protected by any employment laws which are vastly in favour of the employee. Its also much easier to get fired if you're useless at your job.
Guess what, most companies that hire contractors through contracting firms pay about double. It works out about even because they don't have to pay benefits, and there is one boon to the company in doing so. They can terminate a contractor for no reason without having to fear a big lawsuit afterward. I've been on both sides of the arrangement at a fortune 500 firm, this is reality. The fact that the government is doing the exact same thing as private industry seems like a good thing to me.
Not buying it. Tell me another one.
Where do you think those excess profits go?
The contractors don't get to keep all of it. That is why the systems works this way.
Money buys power. Every time, in all times and places. It is the limit to scaling government.
This is just another positive feedback loop we have built into our system. We effectively turn up the fuel to the furnace every time the temperature rises, and wonder why the house is burning down.
When I was contracting for the NHS a while back I was paid £300 a day for 6 months, the company I was working for were charging me out at about £700 a day to the approved supplier, the actual approved supplier (who did nothing) were charging about £900 a day...
They don't call them "man in the middle attacks" in IT for nothing, do they?
Facts rarely register on the radar of a True Believer Rushtardian.
So, say the government pays $100,000/year for a contractor position that they would pay a government employee $50,000.
The contractor first pays the employee $50,000, leaving them with $50,000.
Then, they pay some overhead, including your health care, 401K etc. Let's say it is 10% of the original $100,000. That leaves them with $40,000.
Now, on this $40,000, they give $14,000 back to the government in taxes.
Now, they are making $30,000, which represents a 30% profit. But, keep in mind, the contractor has a lot of risk. They have to bid for the contracts. They often spend a *lot* of money researching, writing proposals, and if they lose, then all of that that results in no income. There are also other costs. For example, to bid on software development projects they have to become CMM Level 3 certified or whatever. Then, they need high-priced lawyers to protest when they lose the contract and such.
But, the big cost for the government is, if they hire a bunch of civil servants for while and then are forced to downsize. In that case, getting rid of the civil servants is costly.
A 30% profit seems pretty reasonable, considering the risks.
You must be in perfect health, aged 25-35, with no wife or kids then.
I spent a couple years having to try to find private coverage in my early 20s. Congenital heart defect, minor food allergies. The ONLY way that I was able to maintain coverage throughout that time was to take a token college course and maintain the student health insurance plan from my alma mater during that time: I was turned down by every coverage agency for "unspecified reasons" each time I tried to apply for private insurance. Whenever I apply for work, I have to watch the fine print for the (usually 2 years in my state) "time we won't cover preexisting conditions" bullshit where I have to cover ANY expense that they claim "could be related" to a preexisting condition.
You ever looked at the list of how many conditions they can ascribe to a congenital heart defect? High cholesterol, low cholesterol, low blood pressure, high blood pressure, ocular illness, anything to do with joint degradation, anything to do with immune function... pretty much everything in your fucking body they can deny based on "oh that's related to the heart condition." The "individual illnesses that could be related" list is LONGER THAN THE FUCKING CONTRACTS.
This is the problem with the health insurance industry in general. If you are in perfect health, and are willing to take an insanely fucking high deductible, then they're happy to sign you up. If you have ANYTHING that they could say "preexisting condition" to, either they won't take you at all, or there's some fucking insane wait period along with even higher deductibles and premiums that are worse than my relatively modest mortgage payment.
So, since 80% of the US has some form of "preexisting condition", they're ALL tied to their fucking job. Praying they can't get fired, since the only other option is COBRA, which - at 110% of "what the employer paid" while you're being given a maximum of $400/week in unemployment - is a fucking unaffordable joke come up with by heartless Republicans to fuck over the poor at a time when they are most vulnerable.
This is by no means unique to the government. Firms like Accenture or EDS (now part of HP) sell contracting services to private industry. For the hourly rate you pay, you'd think you would be getting a highly skilled and experienced person. But this is frequently not so - they don't pay the person doing the work enough to attract top talent. So you pay the high rate and you get someone who has minimal training and will try to fit some canned solution to your problem.
The first time I did it, I looked up an insurance broker in the yellow pages who offered a number of plans. It was relatively simple, and they paid a couple of high dollar claims without question (CT scan and a surgery). The cost was less than a policy through an employer, with employer contributions considered. They charged me about 20% more because I was a smoker.
The second time I went with Kaiser. It was, and still is, less expensive than my share of my employer provided insurance. HMO's have their share of problems, but the same problems as an individual or as a group.
I know there are people who are uninsurable, but the idea that most people can't get individual health care is a myth.
Godaddy is a scam and a ripoff.
I was a federal IT contractor and didn't get paid much. The federal employees get paid more and have better benefits. The contracting company hires subcontractor companies for the real work and the subcontractor hires IT contractors. Sometimes the contracting company screws the subcontracting company. But because the contracting company gets paid so much people assume the IT contractors get paid a lot.
I remember when working they posted posters on the bulletin boards that contractor employees were capitalists in it for the money and not for the government as federal employees are. But I couldn't get a federal job, and applied at a contracting company and got a job that paid less and had less benefits and had to work three times as much as a federal employee because we were under a microscope while the federal employees weren't.
A friend of mine killed himself in 1999 after the Dotcom crashes. His employer was a subcontractor and got screwed by the contracting company and federal government and they fired all their employees and then went out of business. He couldn't find a job and was mentally ill. I was trying to come up with a home based business at the time to help people by fixing their computers and do IT consulting to help him get a job. But he died before I could do that and the other friend I was helping in 2000 had a heart attack. Then I developed schizoaffective disorder and had to close my business and then I got fired for being sick and mentally ill and ended up on disability.
Contractor employees get screwed by the IRS as well, because the IRS thinks they are wealthy due to the contracts, but not so as only the contracting company gets wealthy and not the IT contractor. The contracting IT job will pay a 1099 with no health insurance and IT contractors will have to pay for their own health insurance and find times when they are out of work due to contract issues with the contracting company or federal government.
So basically being an IT contracting employee is a hardship at times, we aren't millionaires, we don't get the benefits, and we get the short end of the stick. Worse possible case we end up really sick mentally or physically and end up dead or disabled.
It's called a Loaded Labour Cost. Back the last time I had to deal with this (back in the 90's), the LLC for a staff member, regardless of salary ended up being around $150k/year. That's how much it cost the _employer_ to have you in a seat, pretty much regardless of your salary.
So, the federal government can either pay that themselves and have a full time employee on their staff, or they can pay that plus a markup and have a contractor they can get rid of whenever they want.
The contractor is typically better if only for the ease of downsizing.
http://scienceblogs.com/goodmath/2008/12/another_bad_metric_error_wages.php
http://answers.onstartups.com/questions/10624/calculating-loaded-labor-cost-for-roi
I have over a decade with a government agency. During that time I have increased in skill and capability. I do all the things I did when I started as well as all the new stuff. The only thing that changes is who owns me when the contract gets rebid. Every few years I get a new pimp. Because I am valuable to my org I will get picked up on the new contract. In effect I am a permanent government employee. The Government however is losing it's ass paying for me. Currently my pimp charges around $140k/year to the government for my services. A GS15 civil servant tops out at about $129k/year, most of the ones around me are masters or PhD level folks. The Contractor who owns me is making upwards of $50k just to funnel my salary from the government to me. At the same time they never miss an opportunity to cut benefits. (Yes I know they have to cover some extra costs like employer social security and such but I pay for my own health plan.) I'm a profit center for them and help pay the overhead for my immediate supervisor, his boss and the local project manager. There's a lot of fat here the Government could trim but that's hard to do in our heavily Corporatized system. This is just an FYI (so leave my karma alone!).
you can save a lot of money by hiring the person directly instead of as a contractor. Of course, that would require them to dismantle the entire contractor infrastructure that is currently in place, and that would hurt corporate profits, so nothing will ever happen.
Every contract I've seen specified 6 month exemption for preexisting conditions, and that's waived if there's no prior break in coverage. Yeah, that really sucks if you get laid off, but if you're job hopping it doesn't matter at all, and your new employer doesn't have to know you're about to clobber their group rate until after they've hired you.
When Obamacare ends the whole concept of preexisting conditions, health insurance is doomed. Anyone with any math skills will dump their insurance immediately, pay out of pocket for general care, and then knock on Aetna's door when something serious happens - who will be forced to take them in. Insurance companies will bankrupt, and President Pelosi will step in to socialize all medical care. That's my tinfoil hat theory on our new health insurance "reform".
Godaddy is a scam and a ripoff.
Oh, and if people think it's bad now, wait until the $600 screwdriver is applied to medical care. Wait until we have to take our appendicitis and go stand in line at the Federal Department of Government.
Godaddy is a scam and a ripoff.
Every contract I've seen specified 6 month exemption for preexisting conditions, and that's waived if there's no prior break in coverage.
You must live in a Democrat-run state. Here, it's 2 years. The Republicans during their last session tried to push it to 4. Oh, and the "no prior break in coverage"? Meaningless. You switch carriers for any reason, you're fucked, previously covered or not.
Yeah, that really sucks if you get laid off, but if you're job hopping it doesn't matter at all, and your new employer doesn't have to know you're about to clobber their group rate until after they've hired you.
Try living in a "right to work/at-will-employment" state created by the Republicans. The moment the assholes find out your PEC means the group rate goes up, you're right back out the door.
When Obamacare ends the whole concept of preexisting conditions, health insurance is doomed. Anyone with any math skills will dump their insurance immediately, pay out of pocket for general care, and then knock on Aetna's door when something serious happens - who will be forced to take them in. Insurance companies will bankrupt, and President Pelosi will step in to socialize all medical care. That's my tinfoil hat theory on our new health insurance "reform".
You know, if you'd said that 5 years ago, it might have meant something. Today? I have friends in Britain doing just fine. I have a friend in Canada who was diagnosed with breast cancer 4 years ago, she has NO problem getting care. I have friends in Germany who do just fine when they need to see a doctor.
The problem is not "socialized medicine", because those countries pay LESS of their GDP than we do on care, and they manage to cover their people just fine with LESS horror stories than we have under our psychopathic current system. If you think screaming "aaugh president pelosi will step in to socialize all medical care" as a boogeyman is going to get me to agree with you - sorry, but our current system is the equivalent of something designed by a Republican Golgothan shitting all over anyone who winds up with any sort of an unexpected medical problem. "Socialized medicine" won't be perfect, but it'll be a definite improvement, as well as very nice to eliminate all the fat assholes who are taking 30% right off the top of our current system and giving NO benefit to anyone in return.
I have a friend that was doing help desk work for a large software company around the time that the whole Iraq thing started. He was a competent guy, but he didn't posses any special tech skills. I suspect that he was making about 35k a year with a few benefits. He caught wind of a job that was providing help desk support to the troops in Iraq that paid something like 90 or 100k per year, and jumped on it.
At the time, I was rather shocked at the rate of pay. He was making something like 2 to 3 times what you would realistically pay someone for the same thing stateside. Then I heard a few stories from him as time passed. They were sequestered in a military base 24/7 for the duration of their time in country, so they wouldn't get murdered. I asked him once about why he slept in a tent in their base, and his reply was that 'The buildings tend to draw mortar fire', so there were some dynamics that made life more interesting than most help desk gigs.
As an outsider who just sees the 100k a year job without understanding what it entails, it seems like a $600 hammer. The government isn't stupid (well, mostly not stupid), so there is usually a reason for things.
I could have taken the job, but getting possibly shelled, shot at, and trapped in a desert base surrounded by 18 year old marines with SAWs for 10 months, no benefits and no promise of a job past the current contract wasn't worth the money.
HA! I just wasted some of your bandwidth with a frivolous sig!
Perhaps you should find another state to live in. Perhaps another country.
I'm in a mostly republican controlled state. It's 6 months and as far as I knew the state government had nothing to do with that number. "No break in coverage" is just that. I went from one job to the next and for a few weeks actually had 2 policies. I could have projectile leprosy and the new plan has to cover it. If I'd been laid off, I could COBRA the old policy until I found a new gig (yes, $400 a month would be very painful) and still not lose to "preexisting condition".
Honestly, you sound like you're still angry at Bush and your making up your facts.
Or move. I know people in New Jersey that say it's $600/month for base coverage. They should go somewhere that doesn't screw it's residents, or they should stop voting for the democrats that banned nationwide insurance shopping.
Godaddy is a scam and a ripoff.
Sure 1 to 4 is great. As long as you can solve.
Nepotism.
Selling jobs.
forced kick backs.
hiring unqualified friends.
ect.
Goggle it. It is far from perfect but it is better than the free for all it replaced.
by the way if you pay as little as the conservatives want only idiots will apply. A self fulfilling proficy?
The first thing I see is:
Project Manager – Senior, Billed: $322,455 Paid: $101,690
That employee is getting paid roughly 1/3rd of the price of the contracted work, but I'm not sure what people are expecting here. Having worked with numerous types of consulting agencies both as a contractor with them and managing contracts it's not unusual that the agency that bills us at a rate of $120/hr is paying their employees/contractors anywhere between 10-60/hr depending on their responsibilities. The part-time social media intern is getting paid around $10/hr and the full-time web developer is getting around $60/hr, regardless of what is being done, and by who, the agency will bill the clients at a rate of $120/hr. This is pretty standard.
Ave Molech Setting
And levels of subs just make it even bigger mess.
So what if you have a issues but it needs to go though 2-3 firms to get back to the client how much time is lost there?
Some Contractors shift workers from contract to contract or site to site so it's takes up time getting up to speed for how that site works.
Look at how bad Contractors handled in the cable tv systems.
What the article again doesn't mention is that the people that actually do the work are the contractors. If you are a DoD contractor, you know exactly what I'm talking about. The closest thing to work that Government employment in IT gets you is Deputy Director. Most of the government positions are Management. The rest, aka the Systems Administrators, the Sys Engineer's, etc. are all contractors.
So why do they do this? As the article mentioned, cost. It's still cheaper than hiring a full time employee with eternal benefits that can never be fired as they suckle at the tit of the federal government. It's entitlement central, and you're the birthday girl.
So, if you want to fire all of the contractors(with no benefits) that make more money than government workers(that aren't actually there), then please do. But if you think running out of money shut down the government, you have no idea how fucked you'll be when there are no contractors to run it. This isn't arrogance. This is fact. Walk into your favorite federal building, get a guided tour of their operations center, and do a head count of who's government and who isn't. You can thank Vennevar Bush and Raytheon for getting this ball rolling with the "contractors" at the Manhattan Project.
Honestly, you sound like you're still angry at Bush and your making up your facts.
No, I'm presenting the facts that I run into. In our state (run by some of the dumbest Republicans on the planet) there are almost no controls on the abuses the insurance companies can get away with, thanks to a "waah deregulate deregulate deregulate" spree from these idiots a decade ago.
COBRA, for me, would be over $900/month. Unemployment benefits are capped at $1600/month. Think about that. It's a scam, pure and simple. Nobody unemployed could pay it.
They should go somewhere that doesn't screw it's residents
Funny thing about that: not everyone has the option to simply pick up and move. People are tied to their job. They are tied to family members - either as a caregiver, or helping to make ends meet, or because their spouse is also working, or because their spouse is in school (college undergrad or grad) and unable to leave the program, or because they're tied to a mortgage, or any of a large number of other reasons, usually a combination of several.
or they should stop voting for the democrats that banned nationwide insurance shopping.
Now who's making shit up? If the Republicans were actually interested in interstate health insurance shopping - which would, by the way, help fix our fucked up system only until the carriers started charging "adjusted" rates to match the in-state rates of each state - then they wouldn't have attached it to a bill with a dozen poison pills designed to ensure it never fucking passed because even half the Republican house delegation wouldn't vote for it.
On top of that, if you have ANY health condition whatsoever, good luck finding insurance to cover it
You know, if it has already happened, then you are not looking for insurance. You are looking for subsidies.
How inappropriate to call this planet Earth, when clearly it is Ocean.
are they $600 sonic screwdrivers?
If so, I'll take 2.
I love it how the PM was the highest paid. How do they convince big coprs they are so important. I am the IT manager for a large company, first thing I did was fire 2 PMs (out of 4) because they were just time keepers... man they suck...
$1002 doesn't go real far. You know what I'd do if they gave me that amount of money? Buy a new computer and play more video games.
Obviously you have no understanding of why, exactly,there are contractors in these positions in the first place - even with their overhead contractors are typically cheaper than full-time employees, and the rules for hiring and firing contractors are different than full-time workers.
Ken
Whats even better.. he suggests that the government create (I guess.. print?) 306 billion dollars. Making us each 1002 dollars richer in a very numerical sense. But making us poorer as the purchasing power of all dollars drops to make up for the fact that printing money contributes no wealth to the economy. With the end result that we're no better off after printing 306 billion dollars, and we could've saved ourselves the bother of printing 306 billion dollars by ... not printing 306 billion dollars.
Great job of backing up your assumptions. That was a nice trick. Let me try it with something
Starbucks charges $3 for a cup of coffee, but the beans to make that coffee cost $.50. But Starbucks isn't making a lot of money. They have to pay for the physical space, the employees, the chair, the crappy music, the cup, the milk. "If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent." (Even if you account for EVERYTHING, and I do mean EVERYTHING the profit is still about 9%)
The truth is that the gap would never be "non-existent" or even small. Why? Because companies like to make money, and they like to make a lot of money. If you research this a bit, you will find many cases of government contractors cooking their books so that they can charge insane amounts of money for a contract employee($75/hr for a secretary). A lot of federal employees are not union members, and even if they are....the federal pension plan is pretty moderate(1% of salary per year worked). The stupid thing about your post is that you assume that somehow the contractor will perform the work for cheaper than the federal government AND with less job security. The only way a contractor could do that is to hire sub-standard quality employees. The job security for federal employees is pretty good, but they also get paid less than industry average(even if you consider benefits). Federal contractors are expecting a profit of roughly 20-25%.
Individually it's not a lot, but injecting $306 Billion into Mainstreet, USA would be huge.
Many people might not care about an extra $1000 in their pocket, but people at the bottom of the economic ladder would really benefit - the long-term unemployed, and the people living entirely on food stamps.
Learn the rules so you know how to break them properly.
www.teslabox.com
When I hire an outside firm to come do something for me, I have a specific task in mind and I pay thru the nose for that task. But after that task the person is off the clock for me.
What the govt is doing is paying for 40+ hour weeks on year long (and longer) contracts. At the point you are doing that, it makes NO sense to be hiring an outside firm.
My hobby: attempting to extrapolate the method in which easily discredited world views are formed.
The government buys all the software, hardware, and pays for any training we need to bring our skills up to date to effectively do our jobs
The government buys software licenses and hardware, but those remain the property of the government. The government does not pay for any training. That is why they pay so much - they expect us to be already trained.
government employees serve as supervisors. In fact, it’s policy in our department that government employees supervise the contractors directly.
That is either a blatant lie or a massively illegal operation.
I had to explain what I had been working on for the past year and why I deserved a raise
Don't spend that 2.6% all in one place now!
I quit a few months after I saw the numbers
You quit your six figure job as a senior software engineer because you "saw the numbers" and were offended at the waste?
When I confronted management about what I considered fraud and demanded solutions, the answer was we will not pay for training
Didn't the author say that the government paid for training?
Sorry Slashdotters, this is a work of fiction.
...or they should stop voting for the democrats that banned nationwide insurance shopping.
So every insurance company could move to the state with the least regulation, rendering states powerless to regulate insurance in their own state?
Brilliant!
I don't always use unix-like operating systems; but when I do, I prefer FreeBSD.
Your problem is you can only see the problems with "The Other Side."
It is shocking how you can say that being the far-right shill that you.
At which point America might end up with a healthcare system as capable and accessible as every other civilised country. The horror !
Fair point, and I certainly would not be opposed to a policy like that. I'd love to be given $1000, as a college student who has almost no money, and not much in the way of job prospects in my area. I'd really probably end up using it to pay for classes/books, though I'd be severely tempted to blow it on a new PC.
"...eliminating the federal contractor middle-man seems like an obvious place..." this would imply that the worker should contract directly to the government. This usually wouldn't work - the government (and may large corporations) often *require* a vetted firm to be the contract holder with the government (or corporation). The single contractor usually doesn't have much of a chance to get in the door without an existing contact that already has a contract...
I had a three month contract at a steelworks to cover the tasks of some engineers that were off over Christmas. In that place their productivity metric was tonnes of steel per employee hour. That metric went through the roof and there was a lot of backslapping, raises, parties etc in management becuase they used the trick of getting as many employees as possible to be rehired as contractors. That pointless busy work and the requirement of paying various middlemen leeching off the deal (contracting companies that the workers were transferred to) changed wages costs to be lower than the maintainace costs on the site buildings to be not only relevant but expensive. The contracting companies started playing little games and jacking up the charge out rates for essential workers without actually paying them more - so their hours were cut, productivity suffered, very expensive downtime happened and basicly it all went to shit.
The performance metric of tonnes per employee hour looked wonderful right up to the day they closed the doors because the place had gone from hundreds of millions in profit per year to a loss.
Don't blame me (as idiots here will attempt to do if you dare point out that there is even one bad manager on earth) - I only came in during the early stages of that and saw it happening - plus the section I worked at was the only part that remained anyway, which is how I heard about it from ex-workmates.
At another point some years ago, I was getting contracted out at $100 per hour and getting $10, plus at times pay was late or the paycheque bounced. I didn't stay in that situation for long. Some of those contracting companies are utter bastards.
I have been a federal and state gov't contractor for the last 9 years. The company bills my time at $135-$150/hour for Technical Architect and Lead Developer positions. My salary is about a third of my billable rate.
In my opinion we generally justify the expense. Most of the state workers I see have outdated skills and are much less efficient. The efficiency losses are not only due to individual skill level but bureaucracy and internal politics as well. Add that to the fact that we can frequently reuse some of our internal knowledge and code, and we generally can deliver production applications faster and with higher quality than internal teams. I have seen some absolutely ridiculous hardware and procurement policies as well that often result in the clients purchasing through us to avoid internal strife. The cloud is only exacerbating this issue.
As a career, it is good for paying my bills. As a taxpayer, I often shake my head and sigh at what I see.
And I've seen the opposite over 20 years as a contractor. Govvie after lazy govvie that I was brought in to compensate for. In one vase half a dozen incompetent government gs-14s and 15s that no one wanted to drop because they had to burn 6 ftes to meet their budget allegations. So bring in an sme contractor to do all the work half a dozen incompetent highly paided government employees couldn't do. And decade after decade I've seen the same thing,
So no, it's not over paid contractors, it's over paid useless government employees I've seen. And instead of one year to train them up, how about incompetent and untrainable for you. No hope, no end of the waste, all govvie. And I've worked with a small tiny handful over government personnel that were awesome, and they all quit because of the caustic negativity that is government work. Filled with judgement people that stab hard workers in the back to keep their jobs. Work too hard? You're making us all look lazy! Time to go!
That's why contractors cost more. You have to work or you get fired, unlike the to govvies who are eternal, incompetent and scheming to get rid of anyone that workout of fear that it shows them to be the lazy overpaid powers that that they are.
He suggests this be balanced by reducing the increase in money supply from fractional reserve banking. I have no idea if it actually balances as he claims, but he is certainly aware that printing money doesn't get you free money.
You're being WAY too kind to the republicans. Small R is intentional. I am a professional (pharmacist). All job contracts are now requiring that I sign on as an "at will" employee, meaning I can be let go for any reason, or no reason at all. Guess what happened when a disc in my back "blew out"? Since I did not claim it as work related, I was fired, oops, let go, so fast it would make your head spin. I can keep "COBRA" by paying the insurance premiums my self. All I have to do is sell my home so I can pay my alimony and insurance payments. Still cheaper than paying for the surgery myself, but not much.
I worked for the DoD for 10 years, as well. It was my first job out of engineering school. I had a Civil Engineering degree, and I was hired as an environmental engineer at one of the Air Force's large Superfund sites. This was in 1990, when Regan was out and Dubya was in. Of course with the politics at that time, big government was bad, bad, bad, so there was a hiring freeze on. That posed a small problem for the department that wanted to hire me. See, they were under this hiring freeze, but they needed someone to do the work, or face fines of $10,000+ per day from the EPA and state for not cleaning up the mess they made of the water supply. So what can they do: hire contractors!
I worked for the University of Tennessee, Knoxville as a "graduate intern". (To this day, I've never been to Knoxville, TN, by the way. The job was in California.) My first day on the job, I was tasked to walk paperwork around the base to get about a dozen signatures. It was the paperwork that secured the funding for my position. Our salary was about $27,000 per year at the time. The paperwork in my hand said they were paying about $65,000 per year for me. It was a similar situation to the OP - the government was providing for all computers, offices, and other overhead. Ooooo - bad contractor taking the US taxpayer to the cleaners, right? Not necessarily...
See, to do any procurement - i.e. let a contract - is a major hassle, involving lots of regulations and procedures. It would take in the neighborhood of 2 years to go through the process from start to finish, and take lots of government employee man-hours (they really did have other real hazardous waste cleanup work they would prefer to be doing). So it is common practice in these situations to look around in the government and see who _already_ has a contract, and piggy-back on that. Well, as it tuns out, the Department of Energy had a big contract with Martin-Marietta to run Oak Ridge National Labs, and Martin-Marietta has the University of Tennessee, Knoxville (UTK) on subcontract. So, this Air Force base in California had a Memorandum of Understanding with DoE to use their contract to get warm bodies through UTK.
So who's getting all of that extra money I'm not seeing? Well, each layer in the contracting process takes it's own service fee for managing this arrangement. Marint-Marietta adds their percentage, the DoE adds their percentage, DoD adds their percentage, HQ Air Force adds their percentage, our command (AFMC) takes their percentage, and my base adds their percentage. After all that, we're up to $60,000+ per year for a graduate intern, so the base can avoid $10,000 per day in fines and do the cleanup work they should be doing in the first place... because some bonehead politician has to cater to a constituency that whines about big government, implements a hiring freeze, and still demands that that same government fly big, expensive (but very technologically cool) machines around to blow up people.
Now, the OP was likely in a somewhat different position, but given my experience, it's not surprising. It's been going on for a long time, and there are reasons for it. Not good reasons, but insting that the problem is simply "big government" and "greedy contractors" without looking at our own expectations of that government is stupid.
Incidentally, a year later I was hired into the position as a Federal employee, and took a $500/year pay cut. I wrote the position description for the job I was applying for, and spent about 4 month shepherding that paperwork through the process, so the department could get someone who they know could do the job - me.
Mmm, it's nice to think that, but a lot of poor people at the bottom of the economic ladder are poor because they are really, really bad with money. Lots of articles about homeless people panhandling so they can spend a night at a hotel every few days. With that kind of money, they could easily afford actual rent, but they blow it on the short term night out with TV and a bath and someone else to clean up and do laundry afterwards. Hell, my mom would be like that if she wasn't living off the support of her rich family and I wasn't attentive in canceling her Bankfee of America accounts and thank god she doesn't have enough of a credit history to successfully apply for her own credit cards. And yet we can't really offer her too much financial support because she just goes off and spends it on designer clothes to gift back to us :-P
My theory is the defense-industrial complex is a good way of keeping middle-class engineers employed and out of trouble, because if they got upset or bored and had the freedom to get involved in politics their "fix-it" mentality and capability would be instrumental in moving revolutions forward, as it has in, erm, other countries.
Anyway, I'd say the best way to help the poor would be to guarantee them a good education if they choose to take that path.
Eye opener to members of capitalist religion.
it works only with so many opportunities around.
if opportunities are less, dog eats dog.
Surprise.
Oh, no, its not like that :)
Like your theory about the defense complex keeping engineers out of trouble.
But as for poor people... Stress and malnutrition are the biggest obstacles most such people face. Stress alone is rather disabling. Most place require a full month's rent and deposit to move in...
Rather than handouts, I actually like the idea of having Job Projects to do things that need to be done. These would be paid for by issuing currency into circulation. I think the guy I mentioned in that post is incapable of holding a regular job. I overheard him talking with someone at a later date - he used to work in a turkey slaughterhouse. He was either replaced by mexicans, or got run down by the slaughterhouse grind...
Learn the rules so you know how to break them properly.
www.teslabox.com
I worked for the NHS for ten years, and have had several semi-governemnt jobs since.
The first rule - union reps earn more than anyone else. Fine if a union rep is working away to bring you benefits - not so good when they're your manager, get paid twice your salary for half the hours and ultimately get you to do their work as they have been hopelessly left behind, techinically. And that's before they fail to secure you a rise year on year.
Then there's the second rule - contractors don't get paid more; permanent staff get paid *less*. Whenever a permie has complained about their wage, my immediate advice has been "you're absolutely right - if you're good at your job, why are you stil here?". As a permie at the NHS, I installed over 1000 PC's in major London hospitals (replacing typewriters, for we are talking that long ago), but didn't get a rise above data-control level for three years. I ultimately ended up with a team of people that for various medical reasons needed to be near a hospital, and any staff I was presented with were really students on work experience (I used to call them Jedi-learners).
Goverment jobs are at the low end of the scale - and it's only those in power who have the gall to pretend that the salaries they offer are in any way competitive - so ultimately, the government has to pay through the nose in order to get staff that can (or will) do the job so that they can carry on pretending that paying regular staff a pittance is in any way productive or saves money.
... is that most people think they understand economics, but they really don't.
The threads here are fascinating, with one poster making an assertion, then the next one saying, "no, that's not so, the actual cost is 2.5 times so and so and yadda yadda." Response follows, and another correction. Preconceived notions are the order of the day anytime this subject comes up.
One thing you can take to the bank: the vast majority of the Occupy [insert-name-of-city] protesters don't have any idea how Wall Street and business actually work. In fairness: mitigating that is the fact that most of those who despise and denounce the Occupy people don't really understand how it works, either. :)
If we could figure out some way to teach these things in our schools, without ideological bias (it'll never happen, but I can dream), that would go a long way toward solving the problem.
My wife and I ran a small business in NC years ago. (An insurance agency.) I was endlessly astonished at the number of customers who would drop snide comments about how we "must be rich" (no, I'm not making this up) because we "owned our own business." All they saw was that even a basic auto policy cost them a minimum of $40 a month, and assumed that WE pocketed all of that money.
In fact, we were in debt to our eyeballs and I finally changed careers because I was tired of long hours and endless hassles.
Cogito, igitur comedam pizza.
Maybe so, but when was the last time liberals overwhelmingly supported a measure that brought accountability to any major bureaucracy? Instead of just harping on how NCLB would make teachers teach to the test, where was the liberal counter at the state or federal level? Where are the liberals demanding that police review boards gain independent authority to fire (and block them from being rehired!!) bad cops even if their department wants to keep them?
The system the liberals set up in their states has created an environment in which local and state officials often cannot be purged for gross, even criminal, misconduct. Their moral authority, in practice, is zilch on this issue.
I had to compare salary plus benefits against working as a 1099 contractor. My previous salary was $95k (including bonus), my health and life insurance cost the company about $15k (based on COBRA costs), 401K contribution was about $8K per year, my employer paid fica would have been about $8K, an estimate of HR cost would be about 1/50 of an HR salary and benefits (based on the ratio of HR to total employees) so toss in another $2K, so about $128K total.
The cost of day-to-day supervision, project management et al. is paid for separately, your $37 per hour rate is for you. Either your contracting house is billing for someone to do this or the customer is doing this. Either way, the costs for the day to day management is not part of the overhead.
I kinda question how a $100/hour billable rate ($200K per year) barely breaks even when the employee is getting paid $37 hour ($80K per year). There is an admin cost to preparing the bills and handling the receivables, and the benefits (maybe $33K based on above), but it probably is not close to $120K per year.
When Obamacare ends the whole concept of preexisting conditions, health insurance is doomed. Anyone with any math skills will dump their insurance immediately, pay out of pocket for general care, and then knock on Aetna's door when something serious happens
That's funny, that is what I thought insurance was? You pay for the general day to day stuff, and insurance steps in when you get a huge thing that you can't pay for. This is why the only valid form of insurance ought to be catastrophic care, aka "high deductible". I have a $10,000 deductible. I pay everything out of pocket up to that, and there is no upper limit or lifetime cap after the $10,000 deductible is met. I pay out of pocket, but I get the insurance negotiated rates. My insurance costs less than 1/4 of what the "Full coverage" I used to have. Even when I had full coverage, I still had copays and deductibles. Now that I am paying 100% out of pocket, i would estimate I am saving about $7,500 a year on my medical/insurance budget.
If you are not allowed to question your government then the government has answered your question.
Yeah, during the last great depression, we had the Civilian Conservation Corps running around basically providing work and shelter camps for young unemployed persons. The work basically built the infrastructure in national parks using labor-intensive but low impact methods, things that wouldn't really put them in competition with the construction companies that would whine about not getting paid to do that kind of thing. It's kind of silly that we're spending so much money trying to "save" the economy from this bubble when all we really ought to be doing is giving people something worthwhile to do to ride out the fall and gain some XP until the bubble hits bottom.
As a side note, I refuse to believe we're in any sort of recovery until the federal reserve returns interest rates to more believable levels. Wasn't the whole low-interest rate thing one of the primary causes of the housing bubbles? People couldn't make money off of traditional savings, so they threw everything and more at real estate investments, because getting subprime loans for real estate properties was basically free money. So maybe banks are now a bit stricter with approving loans, but the primary driver is still there.
I like what Obama says, but so far all of the actions we got out of the administration has pretty much been like having Bush #3. More bailouts to failed companies, the same old for DMCA / ATCA type EFF issues, and Obamacare basically got neutered to essentially a guaranteed handout for the health insurance companies. But that's pretty much right in line with Medicare being originally created in the 60s mostly to protect health insurance and pharmaceutical companies with federally-guaranteed revenue rather than help the old people who use it.
What's awesome is that it's still going on today even with all these OWS protests that somehow "can't convey a clear message." There's some bill going around to make a long overdue cost of living adjustment to increase Social Security payouts by 3.6% ... which will pretty much go straight into paying increased Medicare premiums. FTW!
But yeah, I'm employed, not really much affected by the "bottom 10%" or even by most of my fellow "bottom 99%", so what am I going to do about it beyond whining on a messageboard? :-P More of the middle class has to get involved for any kind of ground-up revolution to be successful, and our form of 2-party democracy is pretty successful at making everyone believe they can have a virtual revolution every 4-8 years without having to do any actual work or even changing anything ;-D
You must be in perfect health, aged 25-35, with no wife or kids then.
Nope, I am 41, my wife is 46 and I have 4 kids aged 9-19. But we are generally pretty healthy. We compared rates at ehealthinsurance.com and did everything electronically. I recommend high deductible insurance where you pay everything out of pocket up to $10,000 per year. Insurance companies will be more lax on the pre-existing conditions if you are basically covering everything except a worst case scenario yourself. But then, if you see my history, I ALWAYS recommend high deductible insurance, as that is what insurance actually is.
If you are not allowed to question your government then the government has answered your question.
Oh.
Yes, some of those companies are doing IT projects (and of course, even physical work is becoming increasingly IT-based.) But most of them are designing and building weapons or other military hardware - it's not the kind of work the government could or should be doing themselves. Look at the list - it's Boeing and other aircraft companies at the top.
A purely separate question is whether the US should still be paying billions of dollars a year for weapons that are designed to beat the Soviet Evil Empire in the next phase of the Cold War, or whether Eisenhower's comments about the military-industrial complex apply here. (My answers would be that no, it's a scam, and Ike was right.) But that's not the question here.
Also, a large fraction of the military-contracting system is that the government wants lots of specialized weird stuff tested to badly-written specs in ways that don't get economies of scale. Sometimes the $600 hammer is just an accounting issue - the customer's buying a jet engine and a jet engine hammer, and the $1000 in administrative costs gets split 50-50 between the $10m engine and the $10 hammer, and maybe it costs $90 to express-mail the $10 hammer to Diego Garcia. Sometimes it's because the military wants a hand-milled-titanium hammer with a carbon fiber handle for no good reason. But sometimes it's because they only want two hammers, and it costs $1000 in labor to set up the machinery to make this shape hammer and $200 to buy a batch of the right kind of metal, and if they wanted 100 hammers instead of two they'd amortize out to $12-$15 each.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
What's depressing to me is that I don't even get paid at the proposed "national average". I'd like to see 1x the income, nevermind 2x the income.
Given their track record what will happen is they'll chop bits off the government/State and give the profitable bits to corporations owned by their cronies (I believe this happens in Russia and elsewhere).
yes it does, yes it does :(
If that happens you'd have a small government with less revenue, less spending, lower page count in the US Code, heck lower page count in your Constitution too if enough of you ask for it. And you'd be as screwed or worse.
Even if the crazy Libertarians took over there would be little they can do, since the government by then would be a weakling with no practical power over anything.
you seem to be making your judgement from assumption that governmental power and law enforcement efficiency comes from share number of governmental employees even though:
1) most governmental employees have no connection to managing regulations, law making and enforcement either way
2) those that do, have such entangled relations with each other and all other branches of government that it shapes a giant mess where almost no one can track down who's really in the position to make any difference and who is responsible for every consequence of every action
i think that this assumption is simply wrong and effective governmental management is not mutually exclusive with its decreased size.
for that you need:
1) make relations inside governmental structures simple, comprehensive and as open/transparent as possible. also getting rid of most clueless and/or useless officials in the process
2) and only then to lay off workers in private hands while making sure that they get what's theirs there
pretty much any big governments of any political ideology is a giant, fat, mismanaged corporate-like turd. and they do what every giant corporation does - mock their workers, whore out their officials and lie to everyone about everything.
and when shit hits the fan they promise to make things right by making cuts at the expense of their workers and customers. that being everyone else, except of cunning whoring bastards who are calling the shots, hiding behind backs of clueless shmucks and have ruined the whole thing in the first place.
this is the same thing they do when they announce a decrease in the size of your government. just skipping to step 2 without punishing themselves.
it's a sham. a mockery of the concept of small government and you can't judge that entire idea from the looks of this perversion. even though size matters, and reducing it is most noticeable change, it's only a part, and not a biggest part, of the problem of shitty governance. the biggest one is always in 10 layers of unnecessary management, but no one cuts that.
governments, there is no getting rid of them and there is no living with them like that.
who dares wins
Yes, and this is the type of operation we can assume the OP is referring to. A sole proprietorship.
In theory....
In a job market with 16%, contractor doesn't mean you negotiate a contract. It usually means a) you're paid via a 1099, b) you're hired out by a 3rd party vendor to a major contract holder.
You don't have opportunity to negotiate. This isn't like being hired by Google or some glorious company. You might be able to push for $5,000 or so more on the salary. But that's about it.
Sure you could ask for a guarante of long-term employment, 6 months, etc. You're not going to get it.
With 20 other people wanting the same job. There is little negotiation. This is an issue Unions should have been advocating for rather than playing politics. But that's another argument.
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I think people are confusing factory IT contractors in government related work. With consultant contractors in the private field who often bring in 6-figures, and negotiate for their skills.
It's a very different thing. The first is 70% internationals on VISAs. Many with 2-3 parties taking a portion of their pay. The government might pay $150K-$200K. But the actual contractor see's a mere $50K-$70K.
Most states have an uninsurable option already in place. They require insurance companies operating in the state to pay a certain percentage of the premiums the receive and place it in this pool. This goes to the uninsurable who can then receive this insurance for the average premium rate in the state. Obamacare is so not needed.
www.joshferguson.org