Does Silicon Valley Have A Contract-Worker Problem?

[HardOCP News]

How does a company that raised $40 million in venture-capital funding pay homeless people $19 per house to clean them? Maybe we should ask Uber, Washio, Shyp and others.

To explain why it's possible for a cash-flush tech start-up to have homeless workers, it helps to know that the man I hired through Homejoy wasn't a Homejoy employee at all. That's because Homejoy doesn't employ any cleaners — like many of its peer start-ups, it uses an army of contract workers to do its customers' bidding. To hear Homejoy tell it, it's simply the digital middleman that allows people seeking home-cleaning services to find people willing to do it.

 

[dgingeri]

IBM has a contractor problem.

Their support center in Boulder, Colorado is populated by contractors who have been double contracted to avoid any responsibility by the various companies. One of about thirty companies finds the support people to contract, then they contact one of four companies who schedules the contract for IBM. Even worse, because of the size and locality of the companies who actually hire the contractors, they don't have to abide by certain aspects of federal law, like providing health care, work hour restrictions, breaks and lunches, or paying for all work hours. Even minimum wage is invalid because they are usually 1099 workers.

They technically get paid by the hour, but only for the time on the phone. If they are only on the phone 5 hours of an 8 hour shift, they only get paid for the 5 hours. IBM requires these people be at their desks at least 30 minutes before their shift, and they can't log out of their phones and work on their day end paperwork until the end of their scheduled shift, but they don't get paid for that extra time. So, people are working 9 hours or more and only getting paid for 5 or 6 hours.

On top of all this, they get paid at minimum wage by their contract companies, but those contract companies get $5 per hour profit for those people while the intermediary contract company gets another $7 per hour, just for managing the time cards. So, IBM pays $20.25/hour for their contractors, but the contractors only get $8.25. Oh, and the people who run the contract companies also happen to be mostly former IBM management.

IBM also happens to charge $125/hour per person on average for their contracted support services, too. Their biggest employer is the US federal government.

It's pretty pitiful, but it is all technically legal. Talk about predatory.

 

[rudy]

This is why minimum wages is a facade. There can never be a law that can be enforced to force an independent business to make money. Welcome to the world of self employed you can lose your shirt or work well below minimum wage as long as you can sustain it. Now with the internet being so cheap and easy to communicate and organize you are seeing tons of companies just like AirBnB that spring up in all sorts of sectors that make it easier for an "independent" contractor to circumvent all the usual laws governing any particular market and sell cheaper. Hotels, gutter cleaning, lawn mowing, everything is coming under assault of millions of people who can run with lower overhead.

The problem here is that everyone thinks its a problem. Is it really? If someone has a choice of not working at all or taking a little money why does this country make it illegal for them to work for a little money?

With air travel getting so cheap and effective wont surprise me if sooner or later people figure out they can fly people in from Asia to work and ship them out cheaper than hiring Americans. Because after all it is essentially illegal for Americans to compete with the people we outsource too. Actually I think some Asian companies especially those out of India are already essentially doing this.

Too few people actually understand where wealth comes from, it doesn't come from arbitrarily making up higher minimum wages. Why do so many people think it does?

 

[Terminus]

This is why minimum wages is a facade. There can never be a law that can be enforced to force an independent business to make money. Welcome to the world of self employed you can lose your shirt or work well below minimum wage as long as you can sustain it. Now with the internet being so cheap and easy to communicate and organize you are seeing tons of companies just like AirBnB that spring up in all sorts of sectors that make it easier for an "independent" contractor to circumvent all the usual laws governing any particular market and sell cheaper. Hotels, gutter cleaning, lawn mowing, everything is coming under assault of millions of people who can run with lower overhead.

The problem here is that everyone thinks its a problem. Is it really? If someone has a choice of not working at all or taking a little money why does this country make it illegal for them to work for a little money?

With air travel getting so cheap and effective wont surprise me if sooner or later people figure out they can fly people in from Asia to work and ship them out cheaper than hiring Americans. Because after all it is essentially illegal for Americans to compete with the people we outsource too. Actually I think some Asian companies especially those out of India are already essentially doing this.

Too few people actually understand where wealth comes from, it doesn't come from arbitrarily making up higher minimum wages. Why do so many people think it does?

Because these corporate tricks violate the spirit of the law. We all know damn well that an Independent Contractor is supposed to be a highly paid professional, not some "clever" mechanism as to circumvent long established labor laws in this country.

I don't care if it's (currently) legal or not, it violates the spirit and true intentions of the laws on the book: to protect low income laborers from the overreaching power of the trusts.

To think otherwise is un-American.

 

[mlcarson]

It's the headhunter guys that need to be regulated. How about a law that sets a maximum of 25% of a person's salary. You got contractors that are making less than 50% of the employer rate and that's before taxes are taken out. Should it ever be fair that the headhunter is getting more than the contractor doing the work?

 

[pavementeater]

IBM has a contractor problem.

Their support center in Boulder, Colorado is populated by contractors who have been double contracted to avoid any responsibility by the various companies. One of about thirty companies finds the support people to contract, then they contact one of four companies who schedules the contract for IBM. Even worse, because of the size and locality of the companies who actually hire the contractors, they don't have to abide by certain aspects of federal law, like providing health care, work hour restrictions, breaks and lunches, or paying for all work hours. Even minimum wage is invalid because they are usually 1099 workers.

They technically get paid by the hour, but only for the time on the phone. If they are only on the phone 5 hours of an 8 hour shift, they only get paid for the 5 hours. IBM requires these people be at their desks at least 30 minutes before their shift, and they can't log out of their phones and work on their day end paperwork until the end of their scheduled shift, but they don't get paid for that extra time. So, people are working 9 hours or more and only getting paid for 5 or 6 hours.

On top of all this, they get paid at minimum wage by their contract companies, but those contract companies get $5 per hour profit for those people while the intermediary contract company gets another $7 per hour, just for managing the time cards. So, IBM pays $20.25/hour for their contractors, but the contractors only get $8.25. Oh, and the people who run the contract companies also happen to be mostly former IBM management.

IBM also happens to charge $125/hour per person on average for their contracted support services, too. Their biggest employer is the US federal government.

It's pretty pitiful, but it is all technically legal. Talk about predatory.

Sad but try and IBM does this in all of their internal and external contracts... their global services sector / End User Services groups has a ton of this going on for their contracted accounts... Cough at&t account cough ... errr is one where they have sub contractors being paid 10 an hour by their contract company and making them basically go through the same hoops as there call centers. Now that's 10$ and hour for the San Francisco Bay area... IBM will hire a contract company in low Min wage area and have that contractor report to some place with hire wage area to circumvent a lot of the local minim wage laws.
Pretty sad because IBM does not pay it's IT staff in house that much :| .

 

[pavementeater]

Sad but try and IBM does this in all of their internal and external contracts... their global services sector / End User Services groups has a ton of this going on for their contracted accounts... Cough at&t account cough ... errr is one where they have sub contractors being paid 10 an hour by their contract company and making them basically go through the same hoops as there call centers. Now that's 10$ and hour for the San Francisco Bay area... IBM will hire a contract company in low Min wage area and have that contractor report to some place with hire wage area to circumvent a lot of the local minim wage laws.
Pretty sad because IBM does not pay it's IT staff in house that much :| .

Ugg typing in VM while using AGNC... sucks sorry for the really bad typos ...

 

[NickJames]

Because these corporate tricks violate the spirit of the law. We all know damn well that an Independent Contractor is supposed to be a highly paid professional, not some "clever" mechanism as to circumvent long established labor laws in this country.

I don't care if it's (currently) legal or not, it violates the spirit and true intentions of the laws on the book: to protect low income laborers from the overreaching power of the trusts.

To think otherwise is un-American.

I wish it were the case but not anymore. Being a contractor for the federal government has no benifits, lower wages and no security. It fucking sucks and there's nothing we can do about it. Essentially we are on borrowed time until the department says "Sorry, we no longer are in need of your services." and an instant kick in the ass without so much as a goodbye.

 

[/usr/sbin]

IBM has a contractor problem.

Their support center in Boulder, Colorado is populated by contractors who have been double contracted to avoid any responsibility by the various companies. One of about thirty companies finds the support people to contract, then they contact one of four companies who schedules the contract for IBM. Even worse, because of the size and locality of the companies who actually hire the contractors, they don't have to abide by certain aspects of federal law, like providing health care, work hour restrictions, breaks and lunches, or paying for all work hours. Even minimum wage is invalid because they are usually 1099 workers.

They technically get paid by the hour, but only for the time on the phone. If they are only on the phone 5 hours of an 8 hour shift, they only get paid for the 5 hours. IBM requires these people be at their desks at least 30 minutes before their shift, and they can't log out of their phones and work on their day end paperwork until the end of their scheduled shift, but they don't get paid for that extra time. So, people are working 9 hours or more and only getting paid for 5 or 6 hours.

On top of all this, they get paid at minimum wage by their contract companies, but those contract companies get $5 per hour profit for those people while the intermediary contract company gets another $7 per hour, just for managing the time cards. So, IBM pays $20.25/hour for their contractors, but the contractors only get $8.25. Oh, and the people who run the contract companies also happen to be mostly former IBM management.

IBM also happens to charge $125/hour per person on average for their contracted support services, too. Their biggest employer is the US federal government.

It's pretty pitiful, but it is all technically legal. Talk about predatory.

Sorry, but I call bullshit on this.

Why would anyone do this when they could take a job at McDonalds or some other fast food place making minimum wage for all 8 hours of their day? Who in their right mind would work for 9 hours, and get paid for 5-6 hours when you could work less, get paid for all the time, and collect a bigger paycheck?

 

[NickJames]

Sorry, but I call bullshit on this.

Why would anyone do this when they could take a job at McDonalds or some other fast food place making minimum wage for all 8 hours of their day? Who in their right mind would work for 9 hours, and get paid for 5-6 hours when you could work less, get paid for all the time, and collect a bigger paycheck?

People are desperate, you could literally pay someone to shovel shit for less than minimum wage, why not have them answer phones? It's very easy to outsource these jobs and it puts no risk on the company to hire them. Essentially all these people they hire are put there by government work assistance and the contracts for those are paid out by the government and then again paid out by the company. It's a huge circle of bullshit.

 

[pavementeater]

People are desperate, you could literally pay someone to shovel shit for less than minimum wage, why not have them answer phones? It's very easy to outsource these jobs and it puts no risk on the company to hire them. Essentially all these people they hire are put there by government work assistance and the contracts for those are paid out by the government and then again paid out by the company. It's a huge circle of bullshit.

Sorry, but I call bullshit on this.

Why would anyone do this when they could take a job at McDonalds or some other fast food place making minimum wage for all 8 hours of their day? Who in their right mind would work for 9 hours, and get paid for 5-6 hours when you could work less, get paid for all the time, and collect a bigger paycheck?

I work for IBM and have to say it's not BS on what NickJames posted.
It's pretty much dead on from what I have seen with IBM ... If is saves them $0.01 they will take it but if they can find any kind of loop hole to rape the contractor ,sub contractor or employee out of deserved pay and give them almost nothing for their work then they would gladly do it.
BTW in a lot of areas the fast food places are not hiring they have full maxed out staff counts and have tons of people lining up to take the next job opening with them.
The job market any more is just fucked up...

 

[NickJames]

I work for IBM and have to say it's not BS on what NickJames posted.
It's pretty much dead on from what I have seen with IBM ... If is saves them $0.01 they will take it but if they can find any kind of loop hole to rape the contractor ,sub contractor or employee out of deserved pay and give them almost nothing for their work then they would gladly do it.
BTW in a lot of areas the fast food places are not hiring they have full maxed out staff counts and have tons of people lining up to take the next job opening with them.
The job market any more is just fucked up...

Yeap, and with no termination clause or contracts, they can let you go for any reason with no cost or delay to the company. A contract employee is much easier to terminate than a company employee.

 

[wabbitseason]

Business is completely fucking with workers despite record profits. News at 11.

Workers have no power, no bargaining power, and no chance to negotiate. Even the small portion of the population with indispensible, rare skills is getting f'd. For example, some years back I worked for an ass with a biotech start-up who classified me as an "Independent Contractor" to avoid paying benefits. I took it because the pay was solid, but eventually concluded it made much more sense to get a more typical full-time position so I moved on. I was lucky to find one that paid well, even though a decade ago I'd have had companies fighting each other to hire me.

All this data about the supposed "economic recovery" is based on corporate profits and the explosion of part-time, benefit-less, zero-job-security type work. Now we have markets literally at record highs, along with profits, yet none of that is being reflected in the job market.

Regulators are greatly helping by making business nervous and hesitant to invest or hire. Instead, they just amass cash and have to use absurd methods like share buybacks to keep investors from killing them.

 

[Parja]

Workers have no power, no bargaining power...

Bullshit. There's always options. They can walk. If people won't work those jobs, the employers will be forced to make changes.

 

[wabbitseason]

Bullshit. There's always options. They can walk. If people won't work those jobs, the employers will be forced to make changes.

But people will work them, because they're desperate for money.

Your statement is useless and obvious. Of course if every worker decided, collectively, that they wouldn't accept contract work, business wouldn't be able to get away with it. That is impossible, so why are we talking about it?

 

[pavementeater]

Yeap, and with no termination clause or contracts, they can let you go for any reason with no cost or delay to the company. A contract employee is much easier to terminate than a company employee.

yep but sadly it's starting to get easier and easier to terminate normal employees through looks holes in local and state laws. Can perform at new levels of SLA or metric no problem your fired or we no longer need your group but we can place in another group but you have to take a step down in pay to switch to another group ... don't like it well we have to let you go, btw you can't collect unemployment from the state or feds because we offered you a job but you didn't take it .
Contracting is pretty much like indentured servitude .

 

[FLECOM]

Bullshit. There's always options. They can walk. If people won't work those jobs, the employers will be forced to make changes.

and I am sure their bank, land-lord and power company will be totally ok waiting for things to get better right?

 

[Wrecked Em]

Who the fuck would pay money to let a homeless person stay unattended in their house?