It's comparatively much easier to just pay a contractor a higher hourly rate and let them pick their own health care, retirement, time off policy, etc.
When I was an employer as a small business, my heart would skip a beat every time I received a letter from the many local, state or federal agencies that would chime in on some requirement as an employer. For someone that wants to do it right, it's very hard to know exactly what "right" is without paying an arm and leg for professional services.
Each letter was a reminder about how easy it would be to outsource each position to another company or country.
Hmm. Wondering what country you are in. I'm in the USA and for "reasons.." I ended up performing all the admin tasks relating to employees (payroll, witholding, IRA, unemployment, insurance) over the past 6 months. I had to learn everything from scratch. Yes it was quite a bit of work, but I don't have the same experience you report at all. I haven't received any letters other than helpful reminders of things I need to file. Yes we have an accounting firm who have over the years educated us on what we need to do, forms to file, and so on. But nothing much changes year-to-year so once you're running the cognitive load is not too bad. None of it scares me at all. Certainly nothing in comparison to running the actual business, where you have customers who don't pay you; risk of being sued; requirement to use Node.JS -- you know -- real scary stuff ;)
I've had countless accusations of unfiled paperwork and numerous refilings. If 1 thing is off it seems like it takes atleast 6 months to correct it.
I also seem to get a fake workers comp claim or two per year that needs to be sorted out. By the time your correction is filed, another notice had already been sent out. So, you need to refile again to be sure then they call asking why you refiled twice. It's a pain.
Also, if you have an employee that owes alimony or child support it's another hassle that the employer gets sucked into.
Aren't they an asset too? A contractor doesn't really care about the long term health of your company, if your company folds, he'll go down the street and work for a competitor. He knows that you'll dump him in an instant if you want to so he has no incentive to go the extra-mile for your company.
I can see outsourcing peripheral tasks, office cleaning, etc, but for any important part of the business, outsourcing seems like a gamble. (somewhat related, I helped in-source a project that had spent 2 years outsourced off-shore which had met few of its deliverables. In 6 months the new local team got it back on track with literally 1/5th the headcount the outsourced agency used which made it cheaper to bring it back in house)
Granted if you're hiring minimum wage workers, maybe it's hard to find quality employees, but for any non-trivial position, outsourcing to contract workers seems like a short-sighted move.
Is this any different with an employee?
Exactly how I feel as an "at will" employee. At least the contractor has... whaddyacallit... a contract.
I really have no incentive link to the company I work for beyond ensuring that they'll continue to have enough paid tasks to offer me for as long as I want to take them. Even if the company announced some sort of profit-sharing or bonuses, there's no reason for me to believe that I'd be able to collect.
As far as I can tell, the only reason companies around here have employees at all is so they can credibly attach their resumes to bids and proposals.
I've only even had the chance to get out of Dodge before any axes fell once. A lot of these companies have been for [contractor] government work. I think the contractor companies would only enact such a policy if the largest customers demanded it. They won't do it just because they value employee retention highly, because clearly [to me] they do not.
I'm of the opinion that any amount of personal investment in a business entity is toxic, regardless of your employment status. The only reason anyone should personally invest in a company is if they have some kind of founder role.
From the article:
> Accenture is one of the world’s largest providers of outsourced labor. Along with many rivals, it is pitching chief executives on the idea that their company’s core business is smaller than they think.
This is a key point I'd like to see more companies think about. There's non-trivial work, and there's critical core work, and I think companies do a poor job at recognizing and separating the two.
As for your anecdote of full-time onsite work being more efficient than outsourced off-shore work, sure, that's usually the case. However, could it be that poor management was the issue, and not the location or employment status of the workers?
But the trend to just relieve employers of the "burden" without giving more power to the employee is wrong too. For example each state or the whole country should be one risk pool where everyone can buy in. Same for 401k, disability and others. A lot of tax deductions should be moved from employer to employee.
We have to be really careful not to end up with a market where employers have all the power and the rest are just day laborers without any rights.
The answer as others have pointed out is obvious. Medicare for All is something every business owner should support to simplify their own lives. (Ignoring that it’s just good business decision for “USA, Inc.” since it’ll save the country money.)
I'm not sure. Maybe health insurance tends to be fully paid for by many Bay Area companies, but the overall trend seems to be for it to be much more of a split between employer and employee. It's still often a significant benefit but the employee-paid share is still significant enough that most people make deliberate decisions among available plans.
Or so the mythology goes.
EDIT: I thought about it some more and realized how big California is. As far as California goes, I think you’re actually right. California is just simply too big. I haven’t worked out an algorithm for it yet. That will require probably a whole city of computer scientists to work that one out.
Not only do they not "have to be an expert", the individual does not even get a choice in the matter.
Are you a Christian Scientist, and do not use health services? Do you want to prioritize school tuition over retirement? Retirement over health insurance?
Not to worry citizen. Your older brother has made the optimal choices for you so you don't have to
That doesn't have to be the employer, but if I had to choose between putting that burden on the employer and putting it on the employee, I would put it on the employer in a heartbeat.
I think this is a better argument for why it makes sense to nationalize healthcare and relieve employers of that burden too.
I don't know if you've looked at health insurance plans in the US, but picking one (whether private or company-administered) is a pain, and understanding the nuances that differentiate your options is a pain.
Actually they don't. Some contractors are able to negotiate higher hourly rates, just like some employees are able to negotiate higher salaries. Yet, just because some employees managed to get paid above average salaries that doesn't mean all employees earn above average salaries.
I've worked as a contractor for a firm. We billed out pretty high.
I also know some people who work for a certain company as "contractors" but just seems like a way for the company to avoid giving benefits. A shitty hourly wage and they "furlough" everybody for a few months out of the year so they don't really have to worry about actually firing anybody, just don't pick up their contract next year.
If you are a contractor, then you are running a business and you will have to do things that an employee wouldn't. One of those things is negotiating enough to cover the time between contracts. If you aren't good at negotiating then your business will not do as well.
I can imagine that schemes exist, or will crop up, for this benefit to be passed to the contractor, as a part of compensation package which is also less expense to the "employer". E.g. doing contracting work via a shell company that only exists to hire contractors who already got a bit of contract work, and provide them the benefits of scale for a cut of them.
What it does, is it creates more busywork work for society, as a whole. Instead of a few HR persons/systems/payroll experts, in a no-employee world, everyone now needs to become at least somewhat competent at dealing with all this rubbish.
There's a reason we don't churn butter by hand anymore - dedicated creameries are much better, faster, and cheaper at it then I'll ever be.
[1] I'm not saying that you're a bad person, or that having your employees do their own paperwork is like throwing trash on the street - I am only making this analogy because of the amount of busywork that doing your own taxes/payroll/compliance entails. Busywork that most of them are not experts in.
No, it isn't. It's way harder to deal with each employee than it is for the person to deal with their stuff as a contractor.
Because this is a process I'd do once a year (Or four times a year as a contractor?), I wouldn't remember what the hell I did last year, what software I was using, where I found the forms in question (Maybe they moved, maybe the government changed the rules, maybe the website that I learned all I know from is dead/out-of-date), etc.
A company's HR department/accountant does this all the time. This is their core competency. This is not my core competency.
This is the same thing as with self-checkout lines at the grocery. I've yet to see a single customer be half as efficient at scanning and bagging groceries as the clerks. Yet, it's cheaper for the store, because their customers' shopping time is 'free'.
[1] What changes when I'm on paternity leave? Unpaid time off due to sickness? This is something that most people do once, maybe twice in their lives. This is something that most HR people, working for businesses deal with all the time.
My small business doesn't have money for anything like that. It's me, the owner, doing it instead of doing my business.
Unless their personal time is worthless, it's functionally the same thing as lowering their wages, and contracting out to an accountant. Except that an accountant would probably do it faster and cheaper.
In another sub-thread, you said that this should be automated, and that nobody should have to do this busywork. I strongly agree. That's not the world we live in, though. As of today, somebody has to do this busywork - and when that somebody is an expert, they can probably do it a lot better then I can.
I literally said that I'm doing it myself. Also, if you're a contractor and don't charge for doing work, that's your problem, not mine - you should adjust your prices.
Do you also pay your employees to wash the windows, and vaccum the office, instead of contracting this out to a cleaning service, that can do that busywork cheaper, and better?
If my boss wants me to waste my on-the-clock time to wash windows, that's fine with me, but it's poor business sense. I'm not very good at it, and my hourly rates are higher.
Because a contractor has way less paperwork than I have to deal with for each employee - at least in my country. We're also free to set our own terms instead of the lawfully required ones, and generally, contractors in IT want that. I'm even doing the contractor paperwork for some of my contractors as it's very easy - I can basically generate it automatically; definitely not the case with employees. An employee also costs way more money (that goes to the government).
> Do you also pay your employees to wash the windows, and vaccum the office
Irrelevant argumentative foul. No paperwork is eliminated doing that and no other advantage is gained doing that, so of course I'm not doing it.
> Because a contractor has way less paperwork than I have to deal with for each employee
Are you saying that:
Amount of paperwork that you have to do for an employee + amount of paperwork that one of your employees has to do for himself > Amount of paperwork that you have to do for a contractor + amount of paperwork that one of your contractors has to do for himself?
I strongly doubt that is the case. But I'm not a contractor, and I haven't enumerated the work involved.
That's exactly the case, and additionally I'm paying around 30% more per employee to the government. Being a contractor in my country means filling a maximum of 2 forms per year, out of which one is a registration form and the second one has to be filled anyways even if you're an employee, you just fill a different box. Having an employee is at least 7 different forms after hiring and then at least 4 more forms per year, a lot of government requirements, compulsory bullshit schooling (bullshit from the employee's viewpoint) that I have to provide, etc.
Economies of scale don't exist. Check.
I'm going back to a full-time job in two weeks and the difficulty of managing stuff that individuals just shouldn't have to deal with is a large factor as to why.
In the real world? If you run a corporation, you are afforded, by society, extremely powerful and beneficial rights, and as part of the social contract you should be handling these sorts of affairs on behalf of the people who make you your money. It is mere decency, and "well employees should do it" without that automation that we both agree needs to exist--but, rather critically, tends to always be step two for certain folks, after "set them off on their ice floe", not step one--is morally super not great.
It's not like the heavy burden has to be carried by the company or the worker, we can eliminate the heavy burden itself.
What I am saying is that it is all-too-convenient to say "oh, we'll eliminate that heavy burden we are now placing on you" and then, once it is so placed, proceed to do exactly nothing about it because, hey--the owners are happy, and who cares what anyone else thinks once they're happy? (This is one of many reasons why the Ubers of the world are so nasty; they shirk their responsibilities and leave their de-facto employees holding the bag.)
To do justice, one must eliminate that heavy burden, and only the ownership class has sufficient political pull to ever really do anything about it--so they need to continue feeling the pain of it until they do.
The estimated taxes are silly though.
Is this an actual option though? I've heard this notion a few times on HN that you can simply "1099" people and all is well. Admittedly not my core competency but I have been told numerous times by experts that you can't do that because the IRS and state labor dept will make their own determination as to whether your staff are employees. They may disagree with your thinking.
Now if you run a service based business (say app development) but outsource/1099 something like design but you are building an app - does graphic design fall under the B test ("that the worker performs work that is outside the usual course of the hiring entity’s business")? Is design outside of your usual course of business? Or does it count because your app needs design?
It's really a grey area but you can see how that B rule is really open to interpretation.
We've had labor law litigators tell us to basically stop doing 1099 at all. I started doing part time hourly instead for new hires. And hiring people that live outside California including other countries.
I don't think this will work out well for most people - they'll get part time work or hourly with limited benefits and many will be pushed to work for a staffing firm.
[1] https://www.wagehourblog.com/2018/04/articles/california-wag...
If regular employees start becoming contractors on a large scale then I'd like (and expect) to see some kind of unions or employment agencies springing up to handle the paperwork for the (former) employees and use collective bargaining to get better wages, group insurance, etc.
one thing that can help are PEOs like TriNet, who handle the multi-state and international paperwork, among other things. I've used Trinet for 20 years and numerous companies - frustrating at times, but way better than DIY.
No morale issues, no HR violations, no hiring, no diversity quotas, no standup or sync meetings, no one-on-ones, no wanting a promotion, works 24/7 with no sick days or vacation time, no rivalry within the team, no need for office space, catered lunch, benefits, work visas etc.
The upside is hard to overstate. As an employer, I will do everything in my power to switch human roles to software and will never look back.
This is called a "PEO".
It seems to work, but I'm curious if there are non-obvious downsides.