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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.
From TFA:
>> Contract workers tend to fill more "grind it out type roles" that need manpower or less senior roles
>> workers with jobs in higher wages are more likely to have their services contracted out than jobs associated with lower wages. Such "alternative" work arrangements are becoming more common among older and more educated workers.
Explain, clearly, why this is a bad thing.
If you use the words H1B, foreign, or union you are disqualified.
If you're a contract worker, you're not going to get stock options.
Goodbye, Slashdot!
_everybody_ does this. It's a quick and easy way to get H1-B workers for one thing. It lowers tech wages too since you don't have long term employment. Plus it dodges taxes.
Thing is, what are we (/. techies) gonna do about it? Nobody wants to vote for strong worker protections. It pisses us off when somebody abuses them. So we'd rather give them up for ourselves than risk somebody else getting them.
If you want this to change you're going to need help from the government. By ourselves we're too weak. We don't have any solidarity for one thing. And there's so much cheap, overseas labor we can't hope to compete. It's Ok to want nice things, and to take steps to get those things. And it's OK if you can't do it on your own.
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Ever want to know what it feels like to be a $20 whore? Get involved in one of these 'contracting' deals. They have no investment in you, you're paid what you're paid, and if you're stupid enough to let them alter the deal so you hang around longer than 6 or 12 months, you'll NEVER get paid another penny more, no matter how much the economy changes in the meantime, and if you complain too much, all it takes is a phone call and you're FIRED, with no consequences for them, they'll get another $20 whore in your place, to be used like a toilet. You wonder what 'capitalism gone bad' looks like? This is part of it. Hire people outright? Give them a reason to hang around? LOL that's so Last Thursday! The NEW HOTNESS is just treating people like the robots everyone keeps talking about taking everyones' jobs. We've truly become a degenerate society when shit like this is going on.
just sayin’.
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...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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.
guilty if not proven innocent much ?
I am one of these contract workers. I like it fine. I'm getting a better rate per hour than I ever did in any other job, I work from home, and I have complete control over when and how much I work. I suspect my client is willing to put up with this precisely because I don't cost them anything when I'm not working.
However, I like it fine because I'm disabled. I get government money to help me along when my paycheck isn't enough, and I get (currently) zero copay healthcare from the state I live in.
People worry quite alot that small businesses are dying, because many kinds of them are. The "mom and pop" store can't do shit against Amazon. The thing is, Silicon Valley startups are also small businesses, and the fact they sometimes manage to sucker in venture capitalists sometimes doesn't make them not small businesses. They're 3-5 dudes who know how to code who have an idea about how use code to make something easier or more marketable. Because they're paying Silicon Valley rent, they can't afford real employees until such time as they do happen to land that VC money. Even then, that money isn't theirs to fuck around with, and I'm sure the field is littered with startups that were too good to too many people.
The upshot of this is that the kind and amount of work that is best available today isn't enough to sustain a person by itself, and it's not solely because of exploitative employers. This is why universal healthcare and universal basic income will be important ideas going forward. The commodification of labor isn't going to be around forever, and while it persists, it's going to change alot. More automation means more people who do work at all do it the way I do. I can tolerate this arrangement because I basically already have the benefits of universal healthcare and basic income. I'd like them to be universal. People need to be free of the fear of homelessness and starvation for work to legitimately be anything but slavery. I want other people to be free the way I am, and I'd like them to not need to be some kind of cripple to get it.
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In my team, it's much easier to hire overseas contractors. It's not about internal office politics; it's that we work with a contracting firm that makes a big effort to screen candidates well. I find that American recruiters are so focused on being salesmen that it's very hard to pre-screen candidates. They work hard to convince us that a candidate is awesome, when in fact the candidate is a poor match. In contrast, when our contracting firms present a candidate, there's a good chance it's a good candidate.
No, I will not work for your startup
BOTH parties do in practice. GOP only gives curbing undocumented workers lip-service. Biz bribes GOP to not do anything because they want cheap labor. (Bribery is via campaign donations.) And Democrats tried to hire more border guards roughly 4 years ago and were blocked by GOP, citing debt concerns. (Now GOP doesn't seem to care about debt.)
As far as the "violence", you are cherry-picking incidents and individuals. I can do the same with conservatives.
Table-ized A.I.
THERE WILL BE CONSEQUENCES FOR YOUR LIES KEN DOLL YOU DISHONEST FAGGOT
Filter error: Don't use so many caps. It's like YELLING.
Filter error: Don't use so many caps. It's like YELLING.
Filter error: Don't use so many caps. It's like YELLING.
'The U.S. jobless rate dropped to 3.7 percent in September, the lowest since 1969'
Guess Trump gets a second term?
... shares a similar dark secret.
There are more contractors hired by the military than there are actual military headcount.
It little behooves the best of us to comment on the rest of us.
Oh this is truly fascinating, so contractors cost more than employees... is everyone writing this pedantically explained basic shit down? No, everyone knows this already and Ken Doll is a moron for explaining basic shit again? Yeah.
What a dumb faggot nazi. His family will suffer the consequences for his dishonest advocacy. Cowardly faggot can't keep his stories straight - he's been unemployed for over a decade. Take out the trash Ken Doll.
You support unlimited illegal immigration.
I support greatly expanded legal immigration. Yes there will be a "hit" to wages and living standards for those of us already here but our children and grandchildren will inherit a much richer economy as a result.
Currently we accept a few million legal immigrants each year. When the economy is good like it is now we can easily accept several times this number, even if many don't yet speak English and may be a drain on the economy their first few years here and/or will drag down wages in the short term.
Let's bring back the 19th century rules that said if you weren't sick or a criminal we'll let you in. Adapt them for the 21st century by requiring an economic sponsor - typically a family member or immigration-supporting church or non-profit - to guarantee payment of a return trip home if you become de-portable and to demonstrate that you will have living expenses paid for you for up to a year if you are not employed or are under-employed. Also allow communities to temporarily say "no more for now" if their local unemployment rate is very high or they have taken in a very high number of immigrants in the last year or two.
Only say "no more for now" if the entire country is in a recession or we've taken in a huge number as a nation in the last year or two and we need a "time out" to get everyone settled.
The best thing you can think to do is brag on slashdot, lol? You're the definition of a loser. Your mom raised nutless little faggots, lol. I hope she died ashamed - you sure will.
Huh? This makes little sense; overseas firms want their consultants staffed on a project just as much as US ones - how honest they are at this has nothing to do with the companies location, you'll find variance all over the place.
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It is the H1Bs and these companies are able to get not just contractors, but contractors are some of the lowest rates going.
This is why we need to kill H1B progran and instead increase the greencards. In addition, we need to require that anybody that comes to America on a tech visa, not be allowed to contract out for say 5 years. IOW, they can work for contract shop for 5 years.
I prefer the "u" in honour as it seems to be missing these days.
At most of the places I've contracted for, I know what the employees make and know what I make.
I assure you, I make more than the employees - sometimes am offered a permanent position, but it's always at a lower rate because I would get "benefits".
I don't doubt what you are saying but it really means you should have set contracting rates a lot higher, or increased them through the years.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It is true there are two different kinds of contracting for sure, and in some cases like the ones you mentioned maybe the wages can be lower for what is kind of unskilled programming work...
However like I said, in those cases taxes are still not being evaded, the consulting firm providing the workers is paying the taxes for them (since that was the original point of discussion).
I have seen some people use that lower platform as a way to actually become more a real worker... but you have to have drive to do so. I don't think it's a good way for someone to try entering programming as a carrier.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
TFS title should've read "Silicon Valley's Dirty Secret: Using a Shadow Workforce of Contract Employees To Drive Profits with Plausible Deniability"
In recent years, I'm more familiar with the UK labor (um...labour) market than the US, and there the situation has really developed into a class-based society. You have the "nobility", who have jobs with benefits. And you have the "serfs" who are technically "temps" - short-term contract positions with no benefits. I know of cases where only upper management are actually employees - everyone else, from middle management on down, is a temp.
The advantages of this are obvious, at least to pointy-haired types: reduced costs and flexible labor - you can hire-and-fire on a whim.
The disadvantages are numerous. For the temps, life is insecure: jobs are short, typically somewhere around a year. They have no benefits, and if they don't manage to hang jobs seamlessly together (and how are you supposed to do that?), they wind up spending their savings surviving the frequent times of unemployment. Or else, this racket get subsidized by the taxpayer, when they wind up on benefits.
There are also downsides for the businesses that the spreadsheet-driven managers don't seem to understand. If you have any business with face-to-face customer service, customer loyalty is seriously impacted, because there's always someone new - you never see the same person for an extended period of time. There is also a lack of loyalty within the business - if you're just temporary, why should you actually give a sh*t? Difficult issue? Just shove it aside - by the time it become critical, you'll be gone anyway.
Lastly, consider training, and errors. The UK is a seriously chaotic place to do business. At least part of this is due to the fact that everyone is always new, always just learning the job. By the time they know what they are doing, they're gone, and next temp is hired.
Sad to hear that the US is going the same way.
Enjoy life! This is not a dress rehearsal.
Housing prices skyrocketing
Stock market at record highs
Time for salaries to double.
Contractor vs Employee is about the level of control and independence. Control is: Who sets the hours, who owns the work place and the tools, who decides how a task will be solved, can you work for more than one person.
Uber driver, picking his own hours, driving his own car and even to some extent choosing the route to drive - contractor.
Cube dweller payed $150/hr, working 9 to 5, using a company computer - employee.
Most western governments use degree of control/independence as the measure for employee vs contractor and they can't enforce it because they are often the worst offenders for breaking it.
This nazi cunt Ken Doll spends all her time giving life advice on slashdot to anyone dumb enough to listen, obviously it hasn't had a real job in over a decade and now pretends to be a contractor, lol.
a gig is not a job. This percentage is incredibly wrong.
It's so obvious what a lying faggot you are Ken Doll, nobody should take any single bit of bullshit that falls out of your bitch mouth seriously, jobless nazi coward.
I will never work for you. I cant be bothered to waste time with an organization who isnt serious about retaining talent. If you do this, then fuck you.
At least at a couple of those firms mentioned (Alphabet, Facebook), they've boxed themselves into a crazy level of "only the best" multi-day intense interviews hiring. Can't remember every IPv6 header on a whiteboard? Can't rattle your Linux syscalls for a SRE job? Don't fully know the internals of a dictionary in Python? Don't have any TEDx talks? Out the door. Meanwhile, they backfill a lot of those very same roles with contractors who, while they don't last as long, don't go through *near* the rigor in getting in.
Not really surprising. Google and Co. are large computers with large pieces of software on them - not much more. What are humans supposed to do in that context? Come up with Google Chat App #11? The novelty effect of silicon valley is wearing off and two decades from now the party will be in the far east or somewhere else. This is just how things like this go.
We suffer more in our imagination than in reality. - Seneca
Long term employees can become stuck in a rut and lose their motivation, especially if there are peaks and troughs of interesting work. On the upside they develop unrivalled domain knowledge on that business. Sometimes though you just need an experienced person who will do a solid 3 month stint, enthusiastically. They usually don't get involved in internal politics and will hopefully know their stuff - for a price.
There is nothing new here. This has been going on since the late 70's. So welcome to the party. The only difference is that since the early 2k's using and abusing Temps has spread out to all sectors in the US economy including the public sector.
I post Anonymous because I could care less!
I was a direct employee for a company that rhymes with Hell. During my 5 years there, about half of my team consisted of contract workers on a continuing rotation. These were not telecommuters. By keeping only half staff direct, continuity was maintained, and by rotation of contract workers, benefit costs stayed low. Once a contract was up, the contractor would be shifted to a "sister" company until that contract ended. Rinse and repeat. There are people who have worked years this way without benefits.
The use of contract workers in tech at the moment is predominantly driven by a need to be prepared for the coming bust.
The great recession was so huge that it still feels like yesterday. It left a much longer lasting fear imprint.
It is widely believed in economic and business circles at this moment that we will hit another recession within the next 18 months. Many actually see it as a "the sooner the better" deal because the higher we climb before it happens, the worse the fall.
The tech industry is revving much higher and faster than most. When the recession hits (nobody says "if"), they will have a much better chance of scaling back quick enough to survive through letting contract workers go than letting employees go.
In the case of the FANG companies and some of the other big ones, they have additional reasons. Success brings attention. They are all in the sights of regulators. At any moment, they can suffer huge losses via fines or regulation. Maintaining a nimble employment profile helps to survive those losses in the same way it helps to survive recessions.
This is an industry that has been hit by bust more than once practicing prudence in the wake of still recent trauma.
This has been common practice at every high tech company I've worked at over the last 30 years. They all had a mix of permanent and contract employees.
There are any number of reasons to do this, some good, some misguided. It's like buying versus leasing a car, or buying versus renting a home. Depending on the circumstances, you might want a temporary relationship.
This makes little sense; overseas firms want their consultants staffed on a project just as much as US ones
I'm guessing the headhunters in parent poster's US contractor firm function as something like temporary contractors themselves as well -- the headhunter's goals are much shorter-term than the corporation they work for.
Maybe they even get a commission (which is a terrible incentive structure that ensures their goals don't align with the customers').
Wow, I hope I can get my own personal troll someday too.
it's a tax/benefits dodge. The 150% cost is still less than paying the various benefits and taxes to the employee. For one thing contractors don't have unemployment benefits. Plus upper management likes being able to fire on a moments notice if they need a quick stock bump. Most jurisdictions require a few months notice.
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not a contractor. Most contractors are really full time employees. They're doing work critical to the business on a routine schedule. Companies hire them explicitly to get out of paying unemployment insurance, health benefits and payroll taxes.
The problem isn't actual contract gigs or consultancies. The problem is when the company hires contractors to do stuff like tech support of key, long running products or monitoring of base systems. That's the bulk of your "contractors". It's the IT equivalent of Uber.
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if he/she's not a contractor. Facts not in evidence. It does not follow from "company A hired a 60 year old" that they wouldn't have hired them without the advantages from contracting.
There is one big advantage to a contract when hiring 60 year olds: You can fire them and hire somebody younger and it's not age discrimination, it's just that their contract was up, and they just happened to give a guy in his 20s the permanent position.
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not when companies can just say "Oh well, we tried, time to get an H1-B" any time they can't find somebody willing to take a job for $20/hr, weekend graveyards, $220/week health insurance and you need a 4 year degree and 8 years experience in tech for this senior position that is somehow critical enough that we get an H1-B but not so critical that we can't have a contract worker do it.
Workers have lost virtually all bargaining power in the global economy. It's why Donald Trump is our president. He ran on fixing that and it resonated for a reason.
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All the big tech companies in the Triangle do this: IBM, Lenovo, Cisco, on and on. I couldn't tell you the difference between myself and the full time employees when I worked for these places.
I suppose the only difference is they weren't getting shafted in compensation.
I'm guessing the headhunters in parent poster's US contractor firm function as something like temporary contractors themselves as well -- the headhunter's goals are much shorter-term than the corporation they work for.
:-) So contract worker (headhunter) has shorter term goals & so doesn't provide a good service to their employer. I'm not disagreeing, but I find it ironic given the context.
Maybe they even get a commission (which is a terrible incentive structure that ensures their goals don't align with the customers').
Right. Perhaps being told we won't use your company anymore if you send us junk candidates would rectify this (/put poor performing firms out of business).
Are you a Russian troll?
An Indian living in America?
Either way, English has articles, learn how to use them to blend in better. It will help with your trolling.
How about you do US a favor and stop being a hypocrite. I know for a fact I have gotten into several arguments on this site with you, and you are a hard right conservatard. And yet, NO SURPRISE, you're sucking off the governments teat, collecting your free money while voting to fuck the rest of us over. You can FOAD.
https://www.youtube.com/watch?v=BTdOHBIppx8
Is that "only" or "partly?"
I'm a contractor.
I get a paid a *ton* of money - far, far more than I ever did working full-time.
As such, I work a three months every two years.
I don't have to worry about the company or management being idiots, because I leave in a few months.
A full time job is hell.
It's death come early - you work *all* the time, and then on the weekend, you do the things you must do, so you can work *all* the time the rest of the week.
I think most people do it because they don't know about the alternative.
I work in IT for a large manufacturing company that has nearly 100 manufacturing and retail locations across the US. Most of the locations are remote (surrounded by cornfields). The company has been in aggressive growth/acquisition mode since I hired in a few years ago. I have been in charge of IT infrastructure for the new sites we turn-up. We utilize an outsourced contracted company for network cabling. That company employs contract workers. The reason for this is twofold: my company does not want to deal with 1099 forms for every contract worker, and my company wants a single vendor for all sites. In addition to this, my company has an outsourced (in-shore) helpdesk, which I also manage. The reason for this is that my company does not want the helpdesk people to be regular employees with benefits, that burden is shifted to to the outsourced company. As a direct employee for the company, I get the company benefits and perks, so it works for me.
why aren't wages rising?
I'm not buying the productivity numbers either. Tesla became a top 5 car dealer in less than 10 years. That's crazy. Manufacturing output continues to rise with less workers.
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so you rather your kids go hungry just to spite those ev111L capitalist exploiters.....If i can't have it nobody can !
Look everybody - it's a cowardly anonymous Progressive Nazi asshole, stalking someone who dared challenge the big money Establishment narrative. Look at the Nazi! Hahahahaha, what a loser!