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Percentage of Self-Employed IT Workers Increasing
dcblogs writes "The tech industry is seeing a shift toward a more independent, contingent IT workforce. About 18% of all IT workers today are self-employed, according to an analysis by Emergent Research, a firm focused on small businesses trends. This independent IT workforce is growing at the rate of about 7% per year, which is faster than the overall growth rate for independent workers generally, at 5.5%. A separate analysis by research firm Computer Economics finds a similar trend. This year, contract workers make up 15% of a typical large organization's IT staff at the median. This is up from a median of just 6% in 2011, said Longwell. The last time there was a similar increase in contract workers was in 1998, during the dot.com boom and the run-up to Y2K remediation efforts."
..Anybody who finds this suprising hasnt spent any time working IT for a company. Working IT in any company is a thankless job where every problem is your fault and must be fixed 2 hours ago.
Incorporate yourself, or LLC, and get away from all the bull***t. That's the best job security and money.
As a 1099, you are not an employee and the company is not responsible for any benefits. So the company can on the fines for the ACA.
There are no loopholes. It's either legal or it's not.
I've been using "self-employed" because I'm too embarrassed to say "unemployed".
I know I'm not the only one.
It'd be interesting to see statistics, but my guess is that self-taught technologists are over-represented in the self-employed. Many companies make it harder to get hired if you don't have a degree when you're applying as an employee, but if you're an LLC doing contract work it goes through a different route and suddenly degrees aren't even in the equation.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
If you work for a salary, you're losing at capitalism.
The trend is for part-time workers - no benefits and use them only when you need them.
Basically, the trend is to put more business risk on the workers while not compensating them for it.
I'm betting that 18% includes people forced onto contracts because many companies no longer hire full time employees or require "contract" work before making a full time offer.
We are all rnin's when our daimyo is an ass.
I have a number of pre-existing conditions, that made it impossible for me to get health insurance, except through a large employer. So, I stopped being self-employed and sought a corporate job.
Now that I can buy "health insurance," I am going back to being self employed.
I wonder how many others will do the same?
I wonder how this ability of a whole segment of our population to become self employed and get "quality" medical care for the first time will impact our economy and our society.
P.S. I'm no #@$ liberal. I'm an anarchist who knows there is no such thing as a free lunch. All this will come back to bite the supporters of the ACA in the butt.
Still, it's interesting to see how (hopelessly corrupt) societies evolve. Even NAZI health-insurance-reform is interesting to someone living as a respected professional in an occupied country.
Incorporate yourself, or LLC, and get away from all the bull***t. That's the best job security and money.
First of all, getting business. Getting business is hard and if you have one csutomer (worse if it's your old employer) you could find yourself out of work easily - even permanently. Technology is fickle and one year you're pullig 120K as a C++ distributed developer and the next everyone jumps on the Java EE wagon or .NET. Learning on your own doesn't count - you must have ON THE JOB experience and a proven record of development experience in that technology.
Secondly, basically all you're are doing is changing your tax status from W2 to filing as a corp or LLC; meaning YOU will have to deal with the quaterly taxes, book keeping, and all the other business operations BS as well as doing what your customer hired you to do. So, you end up with TWO jobs.
Third, companies do not want to pay enough to compensate for the business risk - the time when you are not working. Those times WILL come and you
will not get paid during those times and you will have fixed expenses to pay.
Companies only want to pay you the hourly equivalent of a W2 employee (of course, with the SS and other taxes included.)
Unless, you are really good at rainmaking and can keep it up, being an independent contractor sucks.
No training, so people build labs at home.
No laptop, so people BYOD.
Stupid corporate standard desktops, so people do VirtualBox/Cygwin/VMWare/etc/etc
Nobody hires FTEs because of (insert reason here) so people often contract anyway with middlemen pimps.
I want to delete my account but Slashdot doesn't allow it.
black listed if are / have been sick in the past and can get a plan
A lot of places likely to call some of there workers 1099's but they like to control them like W2 workers.
Also some temps are W2's but are basically self-employed and some temp / staffing agency is just doing payroll / taxes.
So is this a good thing, or just dismal? At the higher end, daily rates for externals can be much better than internal staff salaries -- but of course, with caveats and the usual temporary nature of assignments. And clearly, some people are more suited for this sort of thing than others. I'm interested to hear experienced opinions whether you consider this headline statistic as a good or bad thing.
I'm undecided because the article (and my limited awareness) doesn't break down the types of self-employment into recognizable scenarios.
What?! Highly competitive, hard to get a job? I keep hearing over and over about there being such a huge shortage of IT workers that we need to dramatically increase the number of H1Bs.
We need an union hiring hall system for IT with
real job training
some kind of an apprenticeship system.
workers rights
the power to say no then the boss wants stuff rushed or things like QA passed over.
This has been going on for a while in the UK. Umbrella companies are common which is why toothless IR35 law was bought in. The bosses save on severance/redundancy/perks (dont laugh) and also 13% on the gross wages of each 'private contractor' and also 2% on mandatory pension contributions. While employees get to claim expenses off simply going to work like commuting and stuff.
The problem I see is there's not nearly as much college hiring as there used to be. I've been contracting since the 90's. I work with a lot of mid-cap and fortune 500 clients. When I first started we would often have a few college hires on the programming teams. I haven't seen a college hire programmer (or heaven forbid an intern) on a team in 6 years. They don't want to hire a college kid they have to train and mentor when they can get an "experienced" H1B contractor.
Off-shore and visa workers have created a tiered system where senior level contractors like me are paid a ton of cash to provide adult supervision and guidance on a project. Then the companies complain how much they have to pay domestic contract workers. They also complain about the quality of the work product. That has lead to on-shoring but they no longer have college hire's in the pipe they are leaning heavily on contract workers. Driving the rates up even higher.
What I do see is the college kids are more and more going off on their own to build a portfolio of clients. Usually small and mid-cap companies. A lot of it happens in the mobile and PHP space. Some do a really good job. Some I think are missing out by not having a mentors.
Either work for someone, making (where I live) between 30k-75k per year, working long hours, traveling around the country (yeah, the good fun that comes with airports in America these days) and doing it all wrong, due to management's idea of how things should be done (which is usually about 15 years behind the times), and then later taking an ass-chewing for customers not being happy with the result of it all.
Or, work for yourself making (in my area) anywhere between 60K-125K per year, (mostly) doing things the way you want, staying at home (with family!) and building good relationships with a small customer-base. Dunno, seems like a no-brainer to me. Besides, fuck management that hasn't a clue what we do for a living. Fuck them real nice.
Politics; n. : A religion whereby man is god.
...the freelance market is booming just like it was the year before and the year before that, because working for yourself doesn't put your access to health care at risk, or put you at risk of bankruptcy due to a accident. It's not much better under the PPACA, as individually-purchased health insurance plans can cost upward of $12,000 and even $20,000 *per year*.
Every IT professional's career should go through the following life-cycle:
Employee -> hourly contractor -> freelance/small business ( -> medium/large business)
Which mirrors the typical human life-cycle:
Childhood -> college -> adulthood ( -> own family)
Full-time employment is like childhood, your employer/parents take care of you and in return they control a large portion of your life.
Hourly contracting is like going to college, you still have a lot of constraints on your life but fewer and you have to take care of yourself. In college you have sex, as a contractor you get a big fat pay cheque.
Freelance/small business is like post-graduation life, you're now responsible for every aspect of your business/life and in return you gain a lot of independence, if only you had time to take advantage of your independence, hah.
And if you're lucky, and by that I mean really unlucky, you partner up with a few others and grow your business and start taking care of others. At this point someone will say "you have your own company? Wow, must be nice to be your own boss!" This is your cue to assume the fetal position and sob uncontrolably, again, then ask yourself "is it really worth it?" Damned right it is!
For many IT people in the US the only reason they don't venture out on their own is concerns over health care coverage. Now that it's possible to purchase affordable care on their own this will no longer be a major obstacle.
(If at first you don't succeed, do it different next time!)
IT is a pretty big field. Which positions are affected by this? HelpDesk? Desktop? Server? Windows Administration? Is this happening in Large orgs? There's really no substantial information in the article to help the reader draw any kind of conclusion for themselves.
There needs to be a lot of cross-pollination of ideas and technology between companies. It's far easier these days to get stuck in an IT rut and stick with what you know (since it works) rather than expanding into a different technology. I was at my former employer for 11 years until I got laid off over the summer. Took my knowledge, went elsewhere, and have been able to merge what I leared there with the new place and while my former employer is still struggling, the new place is doing a lot better, thankyouverymuch.
It's difficult though. Once you get into a job with good benefits and pay it becomes way more tempting to stay and stick out political BS and non-technical co-workers than strike out on your own and find something to do.
College has to much skill gaps now days tech schools fill them in but still people need real job experience.
The individual insurance market is a nightmare - recission, pre-existing conditions, high deductibles, high premiums - all so you could get a garbage plan and hope you don't get your claims bounced when you get seriously injured/ill.
Now, that is getting more regulated (and for the better) - make no mistake, I think Obamacare sucks. However, now if you can't get a plan through an employer, you can actually get insurance for a decent amount in the individual market - and real insurance not some garbage plan.
This means, more folks can go out and do independent consulting/contracting and don't have to depend on their employer for not just their salary but their health as well. Yes, you aren't subsidized like you are with an employer (I pay single-digits per paycheck at my current employer - and that's only for elected life-insurance coverage), but you also don't have people who aim to get on an employer plan for 1 month then jump off just to get the COBRA (this is very disruptive for the business who hired them as well - folks who seem "too good to be true" but who just wanted to get group-based insurance coverage and pay for it themselves but couldn't get on the group without joining a company for 1 month every 18 mo).
All the increases that you claim to have in freedom and pay are clawed back by taxes, benefits(with no benefits related to scale), and general instability(economically equivalent to Fukushima).
That and you dont get the general camaraderie from being in a group over a longer period of time. So, for most people, salary beats contract when everything is put on the table; the only time it doesnt is for the exceptional and rare few.
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Universal healthcare is another way that an employer can justify second-class contractor status and then treat you like shit.
How about eliminating the ability to force said status for any job(where any skill level can choose direct or indirect arrangements)? If you want to be a contractor so badly, you can choose it over the default(and that they cannot simply just can FTE's like contractors to get around the law)
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
The article seems to mix up true 1099 independent workers with corporations which are outsourcing to consulting companies. People who work for consulting companies can be W-2 workers. Because of this conflation, I am not sure what the article is saying - I think it's just saying that corporations are firing people and outsourcing more than they used to.
Accounting for all the things you ignore(including the fact that not everyone is meant to be in the unstable sector):
Contract work == prostitution writ large. It is something one grows out of to do more stable work.
Regularized, long-term employment ~= monogamy. It is the type of work that represents an adult level of trust between an organization and an individual. It also unlocks benefits of scale not possible in contract/self employment.
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and it has been all great pay. some companies offer me full time employment after a few months but i always said no to it.
A lot of places likely to call some of there workers 1099's but they like to control them like W2 workers.
Also some temps are W2's but are basically self-employed and some temp / staffing agency is just doing payroll / taxes.
The IRS takes a pretty dim view of this practice, but blowing the whistle can be risky in a small enough environment that they know who did it.
I am not a crackpot.
You take on paperwork, payment, scale penalties, and increased instability for going that route.
If it makes sense for someone, they are one of the fortunate few that can factor out at least one of them. The Rest Of Us, on average, do not have that good fortune and will not gain it short of a legislative act or Executive Order.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Employment is an alienation of rights. A form of prostitution or enslavement that should be prohibited.
Freedom will be gained through 100% self employment in the IT and all other sectors of the economy.
Bill Gates got rich because of his connections, not merely because he screwed everyone around him. This is a fact that a lot of wannabe scumbags don't seem to realize.
I'd prefer to be FTE, but RIFs happen. My wife is disabled and has some chronic ("pre-existing conditions") health problems so I need a good health-care program + long-term disability ins. Historically that's been through my employer. Currently through COBRA at $1150/mo, going to $1300/mo in 2014. ACA aka Obama-care may help - we're trying to find out but it is complex. I wonder what'll happen when all the technology workers who are tied to a job because of health coverage are no longer dependent on their employer for medical insurance? Retire to Costa-Rica? Join the Peace Corps? Become artists?
The Russians have won. They have made the world a cesspool of distrust, greed, fear and hate.
All things considered, I think I want to stay an FTE. I don't really need to be - my wife works and we have much better health coverage through her employer. However, one thing I've noticed with contract work is the lack of stability. Even with the high bill rates and the ability to call just about everything you purchase a business expense, there's something to be said for sticking with a company and building/fixing a product throughout the lifecycle. Also, if you can't sell, drumming up business is a lot harder than landing an FTE spot...you either have to do your own marketing or hire someone.
I've seen contractors used in 4 scenarios:
- Contract to hire -- which is the situation at my current employer now. Because there is such variability in "IT professionals" out there, companies don't want to spend the money to find out if someone's not worth keeping.
- Prostitute/mercenary model -- You're expert in the new hotness buzzword of the month, and jump from company to company all over the country/world implementing said hotness. Your employer is left dazed and confused with a little bit of documentation and a skeleton crew of permanent staff to take care of what you built.
- The Fixer -- very similar to the mercenary model -- you parachute in from nowhere, clean up someone's mess, and disappear just as quickly.
- Abuse/meatgrinder model -- No permanent employees, just a revolving code monkey/IT tech door...cycle through them and move on to the next one.
The mercenaries and the fixers end up making tons of money at the expense of a personal life. I know a couple of these guys who have tried to get me to join them (I'm a halfway decent fixer...) and they literally work 3/4 of the year or blow their copious amounts of money on expensive toys/hobbies. Only problem? I'm married and have a life outside of work.
Contract-to-hire looks good on the surface, but only if you control who you get to interview for the jobs. If you leave it up to the recruiters, you get the meatgrinder fodder who has no desire to stick with the company and watch what they built get used. We've had interviews lately where we've had to say "when we say contract-to-hire, we really mean hire."
Unfortunately, once you get that life outside of work thing, that permanent job starts looking pretty good. I've had good luck, and I tend to choose employers who don't treat their FTEs like disposable contractors. I know I'm leaving money on the table, but I think that if you pick companies that are in it for the long haul, staying on and building up institutional knowledge makes it even less likely they'll throw you out. As long as you're not the highest paid person there and still demanding more, there are still stable FTE jobs outside of government.
The first practice is illegal and it is fairly aggressively enforced. Most large companies go to a lot of trouble to ensure this is not happening and that they are demonstrating compliance.
The second practice is perfectly legal.
The problem I've always seen when working in corporate I.T. is "when it rains, it pours", but just as often, there's not a proverbial cloud in the sky.
Management justifies hiring of additional staff by analyzing how much workload there is, above pretty much everything else. This is usually a pretty sensible way to go about things. After all, if you're talking about people working in, say, your warehouse's shipping department? When they complain they need an additional employee out there? Management is going to try to figure out how busy the existing people are. Are they all working as hard as possible for 8 hours straight (minus any legally required breaks), or do you have people sitting on their butt goofing around a lot while they wait for a truck to come in? If the later is going on, then there's probably going to be a meeting held about ways to improve efficiency in lieu of hiring another body.
I think I.T. is odd, in the sense that really, people are there to keep the expensive infrastructure functioning like it's supposed to, and secondarily, to recommend and design improvements to the existing systems. When you're doing a really good job keeping things going, you tend to look the LEAST busy (because truthfully, what you've done is positioned yourself in a mode where you can read, research, experiment and generally learn on the job, to try to accomplish that second part of your job expectations). When you're sitting on a computer surfing the net for hours -- you simply don't appear to be working (or at least, other people don't really understand what you're doing that contributes to the company).
When you do have those fires to put out and you're stressed out and too short-handed to get things back to normal again in a prompt manner, you start asking for additional staff. But management says, "Huh? Just last week, I saw everyone in I.T. just sitting there on their computers, not doing much of anything. How can we justify paying out another salary? Surely these guys could find a better way to use their time!"
They don't really tend to grasp the fact that you need X amount of manpower to cover any "disaster situations" or "need this change now!" situations, regardless of how busy those people seem to be the rest of the time. That's the cost of getting quick results in a crisis.
Where I work now, we're in the middle of one of those battles. We've got offices spread out around the country, and one of them has no I.T. person working there, so their manager constantly complains he gets the "short end of the stick" with support, even though his office pays as much of a percentage towards I.T. expenses as everyone else. When we start tracking our help tickets in detail though, we see his office uses MORE of our time than almost any of the others, so they're getting support. It's just that they realize it's a slightly faster, more efficient quality of support when you can just yell across the hall to an I.T. guy right there to "come look at this" -- vs. putting a ticket and waiting your turn for a return call, followed by having to help doing a lot of over the phone troubleshooting. We know we're overworked in our dept. -- at least whenever a big change is called for like our recent mail server move/upgrade. But management's response to all of this? "If I.T. would define exactly what they do and don't support, and would document/publish this in detail, it could trim back its workload without the need to hire another staffer." (Yeah right.... We can write a laundry list of things we "won't support" anymore, but every single time it gets in the way of something deemed important enough to the company, to clients, or to business profits in general? Exceptions will immediately be made and we'll be right back at square one.)
But honestly, I've done the self-employed I.T. thing too -- and it's no bowl of cherries. Every single thing you do directly affects your potential future earnings. Get a phone call from a client you find annoying and decide, "I *really* don't want to take his call righ
How many of self-employed (or non-self-employed) out there have to deal with "employers of record"? I'm not in IT, but I am in an industry where predatory third-party employers act as a means for companies to pass their payroll taxes, workers comp insurance, etc. on to their employees. My understanding is that this sort of thing is prevalent in IT as well, so I'm curious how many slashdotters who are in IT have to deal with this.
For those who are unfamiliar, the grift is this: Company A, rather than hiring worker W, instead contracts with Evil Employer of Record E. E "hires" W, and "loans" them out to A. Since W doesn't work for A, A doesn't pay payroll taxes, workers comp, etc. (A significant amount - something like 10-20% of salary.) This is where it gets fun: E, which is now responsible for those costs, passes them through to W by deducting them from W's pay. Often, they'll charge a 2% fee on top of this for the privilege.
All of the costs of being a 1099 contractor, with vastly diminished opportunity for tax deductions. Plus you pay the max % for unemployment tax and workers comp (those costs are on a scale, and self-incorporated person would generally come in at the bottom of that scale instead of the top).
In my industry, a lot of foreign visa workers and the less tax-savvy are caught in this scam. And the gov't (specifically, the state gov't) does nothing to stop it, because they're getting unemployment tax that they wouldn't get if the same workers were 1099.
Your contract rate should be around 2x what your salary breaks down to for an hours worth of work. So if you make $100K, that's $50 an hour (include 2 week vacation) x2 = $100 an hour.
Don't shortchange yourself, there will be dry periods and you have to cover expenses like retirement, health and accounting. Get a good accountant so you can expense all your gear, they should more than cover their cost.
Keep networking so you have somewhere to go if your gig runs dry.
Enjoy, you're now the CEO of you, inc.
You might be happy for it, but most people see it as a weapon used against them - as flexibility really is employer-benefitting disposability.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Good to hear some truth.
You're only leaving money on the table if you dont count all the employer expenses now paid by yourself.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Percentage of Self-Unemployed IT Workers Is Increasing Even Faster!
All the increases that you claim to have in freedom and pay are clawed back by taxes, benefits(with no benefits related to scale), and general instability(economically equivalent to Fukushima).
I don't know what you mean. When I was working for someone else, I was paying taxes and that. I also never knew when my job was going to get cut out of the picture (I know that this is not the same for many others, but in my case it was).
That and you dont get the general camaraderie from being in a group over a longer period of time.
I think the opposite is true. Rather than work with the same 10 or so people at a job that we all hate, I work with many clients that all love it when I come in.
So, for most people, salary beats contract when everything is put on the table; the only time it doesnt is for the exceptional and rare few.
I agree, but I feel that mindset is fading away for the IT world. There's a point in every company's growth, where one person can no longer do all of the work, but you cannot afford to pay someone else for a full-time position. In this way, it's important to work with other solo IT guys in a symbiotic way.
Politics; n. : A religion whereby man is god.
The ammount of systems an IT worker has to manage these days is like running an Aircraft carrier along with launching and landing planes.
If an IT dept. is ran well they start reducing the ammount of employees required to run the company. If things are crashing every other day then the wrath of Khan comes down.
IT administrators hold the keys to the universe but get the dirty end of a used mop. Upper management cries when you are making over 100k a year but if you were to price out each job you are doing it would cost them well over 500k a year.
I make good money but man when I see sales weasels making over 250k a year I need to get out of the IT game.
Miners etc died for taking on needlessly dangerous conditions because they needed the money and "don't have the balls to say NO" which is one of the reasons trade unions exist.
A quote from an employer arguing against gun control from less than a century ago in the USA - "you can't run a mine without machine guns". Try saying no to such an employer. There's one in South Africa that could have said the same thing last year.
When custom code just works, people fail to appreciate the effort it took.
On the other hand, paying a maintenance fee on commerical software that is used solely for batch jobs less than an hour a day is kinda over the top; it either works or it does not. My boss was paying for this, approx $120,000 (maintenance fee on top of the initial purchase price) per year for about 10 hp-9000 servers, then when the servers were being replaced with newer hardware, the vendor wanted to double the maintenance fee since the new hardware was faster.
1.BBC in UK has for many years 'employed' many 'staff' on 13 week contracts. Renews if necessary , one person worked out 36 years that way. Always 'shedable' at end of 13 weeks , Actor carries his own insurance for health illness and Professional Liability to main company. Its a way of life.
2 As a (non-IT) engineer I am now into seventh year of short term contracts for one UK company. Suits me, I work only the hours I want to work. Life Ok for reward. However I base all things on Salary in year to myself through the MY Limited Company (a private Incorporation) billing the UK Client Company. This allows me to get insurance as easy to get insurance for company employees via company, but maybe no so as 'persons'. Tax saving is little, depends on how much you leave in company, but taking out say 80% billing as salary is OK in UK. There are up front yearly charges as insurance / IT stuff etc to buy before you can enter into a reasonable contract , so you need to cover that in a 'minimum expected hours' or retainer clause. P.S. I do IT as well , but that is not what they pay for.
Regards Eion MacDonald
Since we are run 90% of time by "business" majors for whom there is no difference in producing beet juice or creating and running mission critical services the only solution is find a different job and let them sink...
I don't know what you mean. When I was working for someone else, I was paying taxes and that. I also never knew when my job was going to get cut out of the picture (I know that this is not the same for many others, but in my case it was).
When working for a conventional employer under regular arrangements, one typically pays some sort of income tax. In comparison, client-based/indirect employment transfers costs(such as taxes and benefits) onto yourself (or an Employer of Record). That is what I meant.
As for not knowing when your job gets cut, flexibility is not your friend in that regard. It's the upstream employer's friend.
I think the opposite is true. Rather than work with the same 10 or so people at a job that we all hate, I work with many clients that all love it when I come in.
However, you still have the issue that you're viewed as being separate versus being part of the employer. They might be close clients, but they are still clients.
On the other hand, being part of the actual (not "of Record") employer removes that distance. You're viewed as being on the same team.
I agree, but I feel that mindset is fading away for the IT world.
Not entirely sure. I've worked for good employers that were quite large and did decently for their own if not good.
There's a point in every company's growth, where one person can no longer do all of the work, but you cannot afford to pay someone else for a full-time position. In this way, it's important to work with other solo IT guys in a symbiotic way.
Also known as the European system of labor(contracts and employers that hate FTE with a passion) with all the negative implications. It's the system that should have by all rights stayed out of the US. Now that it is starting to come to the US, it can be seen as Trouble Ahead.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.