Silicon Valley's Dirty Secret: Using a Shadow Workforce of Contract Employees To Drive Profits (cnbc.com)

An anonymous reader shares a report: As the gig economy grows, the ratio of contract workers to regular employees in corporate America is shifting. Google, Facebook, Amazon, Uber and other Silicon Valley tech titans now employ thousands of contract workers to do a host of functions -- anything from sales and writing code to managing teams and testing products. This year at Google, contract workers outnumbered direct employees for the first time in the company's 20-year history. It's not only in Silicon Valley. The trend is on the rise as public companies look for ways to trim HR costs or hire in-demand skills in a tight labor market. The U.S. jobless rate dropped to 3.7 percent in September, the lowest since 1969, down from 3.9 percent in August, according to the Bureau of Labor Statistics. Some 57.3 million Americans, or 36 percent of the workforce, are now freelancing, according to a 2017 report by Upwork. In San Mateo and Santa Clara counties alone, there are an estimated 39,000 workers who are contracted to tech companies, according to one estimate by University of California Santa Cruz researchers. Spokespersons at Facebook and Alphabet declined to disclose the number of contract workers they employ. A spokesperson at Alphabet cited two main reasons for hiring contract or temporary workers. One reason is when the company doesn't have or want to build out expertise in a particular area such as doctors, food service, customer support or shuttle bus drivers. Another reason is a need for temporary workers when there is a sudden spike in workload or to cover for an employee who is on leave.

Comments

Does not dodge taxes

[SuperKendall]

It lowers tech wages too since you don't have long term employment. Plus it dodges taxes.

Hi, consultant here. I don't see it lowering wages, or dodging taxes.

That's because if you want short term help, a company will mostly be paying HIGHER wages than they would real employees. And those employees (or a consulting firm) will be paying all those taxes you think are somehow being "dodged". Which is why the wages are higher...

In my experience, it's a management problem

[jeff4747]

The vast majority of the times I've seen a company use contract workers, it's a management problem.

Manger has work that needs to be done, and all existing employees are busy. This work is not some sort of short-term bump in the road, there will be work for years.

Manager asks for another employee.

Executives and/or HR say "No", because it would violate some arbitrary rule on number of employees or number of direct reports or something similar.

However, the manager is allowed to hire a contractor at 150% the cost of an employee, because that doesn't violate the arbitrary rule. Contractor ends up as de-facto employee, and everyone desperately hopes that doesn't bite them in the ass.

Re:Before you commies get you panties in a bunch

[HornWumpus]

The more they pay for an opinion, the more weight they place on it.

Which is why I have the clients best interests at heart when I extort...er...negotiate my rate. It's so they get full value, if I let them get away with paying me less, they'd be liable to ignore my advice.