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I’m writing this on my phone while on break so I can’t get as detailed as I’d like but I just wanted to express agreement with your point regarding the effects of low level jobs being outsourced to contractors.

I don’t want to get too specific in my role but I was able to go from a very entry level position at SpaceX, let’s say something along the lines of kitchen/cafeteria/janitorial/facilities staff, to a much more technical position working on actual launch vehicle hardware. I know I’m not the only one that’s moved up from those positions into our technician roles. It actually happens somewhat regularly. I can’t imagine this being the case if all of our lower level positions were outsourced to contractors.

A significant potion of this is an end run around immigration law. Cleaning companies need to compete with companies willing to employ illegal immigrants for very low wages which drives down the costs below what companies like IBM would pay people.

Change some of these loopholes and the outsourcing overhead becomes far more significant. Though employing large numbers of part time workers works better at scale so the practice has some advantages.

I have heard variants on this as well but haven't seen any actual data or research that supports this notion. If you come across any I'd be interested in reading that.

There is a tremendous exposure to legal risk both for the contracting company and the company that hires the contracting company if they employ workers who do not have the right to work in the US. Having worked with IBM's legal department I'm pretty sure they run audits on any company they employ to insure they comply will all laws (they are really fussy about that stuff). In the New York Times article the Apple contract janitors weren't illegals either just under paid.

Now the 'gig' economy? Sure. People who hire day laborers from the parking lot of the home improvement store? No question. But running a contracting business? I've not seen anything that backs up that assertion, and certainly nothing that is 'significant.'

> tremendous exposure to legal risk

In practice that's very rarely an issue. One recent case had Target using a cleaning service that way paying illegal immigrants below minimum wage. The government did not care and the only impact was being forced to pay actual wages. And remember that's the worst case, which means sticking with minimum wage is safe.

Now, IBM/Apple/whatever may take steps to avoid illegal immigrants. But, the market clearing price does not have a simple illegal vs. non separation for jobs. So, companies bidding on work are faced with some hard choices.

PS: Now, if you can find examples of penalties for the big company side of things outside of the most blatant violations I would be curious.

>There is a tremendous exposure to legal risk both for the contracting company and the company that hires the contracting company if they employ workers who do not have the right to work in the US.

That's why you layer it so the people taking the risk are little more than hourly employees themselves.

Big corp hire cleaning corp to clean. Cleaning corp hires local cleaner to clean. Local cleaner hires legal worker with plenty of contacts who aren't legal, gives them the cash to get the job done with what ever 'contractors' they want. While local cleaner could technically be found guilty, they'll always through the local legal employee under the bus and rarely ever get prosecuted. At worst they'll be shut down and then they'll just open up under another name. Cleaning corp is effectively immune and can always find a new local cleaner if the previous one is shut down. Big corp might not ever know what is going on, they are just paying someone who handles things for cheaper than directly employing the cleaners (at least cheaper on certain budget reports that they needed to make look better).

As I said, I understand this narrative is out there, what I have not been able to find is any evidence that this occurs at any sort of scale or more explicitly with any sort of company with more than a few million in annual gross receipts.

In California at least the SEIU union is all over employers and both well funded and well motivated to root out such abuses of the system. That they don't find them and there aren't big stories about companies they are taking to court, suggests to me that in all their looking they have yet to find this situation to actually exist.

I'm not saying they don't exist, I'm saying that I haven't seen any evidence that this is happening.

> with any sort of company with more than a few million in annual gross receipts.

https://www.texastribune.org/2016/12/19/big-name-businesses-... Target is a ~45 billion dollar company.

It's all tiny local cleaning companies. So, sure it's not corporate policy to do X or Y nationally. But, they are not going to object to saving some money.

That is perfect, thanks so much. Interesting bit here is what I would expect from Target:

The issue instead was that their employer, Jim’s Maintenance, was failing to fulfill its obligations to keep proper records, including records of I-9 compliance. This failure to fulfill its contractual obligations ultimately contributed to Target’s decision to terminate its contract with Jim’s Maintenance.

So company offers services to Target, uses workers that are undocumented. Target severs the relationship as soon as they "know"[1] that the company is a bad actor which puts this company out of business.

This is how it is supposed to work, which is that people do things that are bad, they get discovered and they end up losing more than they gained from their bad behavior.

But to my original point, Target understood the legal risk of hiring a firm that hired people who were not authorized to work in the US, and once they were made aware of it they stopped. In California this is something the SEIU does, if they suspect a company is using illegal workers they will go tell people who employ them that what they are doing in a paper trail sort of way (registered mail etc). That forces the company to break that relationship. As a result, it is quite difficult to run this sort of thing and harder to make any money at it. All this has the appropriate chilling effect.

[1] I realize that clearly someone inside the Target stores knew this was going on, but in this case it is once the corporate entity knew. I'm curious if the store manager was fired or not.

~5% of the US workforce is an illegal immigrant. That’s a lot of wink wink nod nod going on.

So, sure when a huge lawsuit shows up Target is going to fire that company. But, notice the issue was not the workers bing undocumented it’s them making below minimum wage and then suing Target.

One can satisfy I-9 compliance easily as long as e-verify is not used. I-9 paper verification is all good faith effort on the part of the employer. https://www.uscis.gov/system/files_force/files/form/i-9-pape...

And once it is officially known they'll have to act, so a lot of it is making it take a long time to be officially known. It isn't like they purposefully hunt for those who do things illegal, they just are aggressive enough in who they give their contracts to that there is a selective pressure for those who can cut costs by hiring undocumented workers. The big companies would be just as happy, maybe even slightly happier, hiring a company only employing legal workers if they could do so for the same price.

To add to retric, Kroger does the same kind of thing. Their workers clean the tables, shelves, and so on. The floor people that push the machine and sweep in the morning are Hispanic contractors that barely speak English. The only exception Ive ever seen shopping there was one store where they were all Eastern European who barely spoke English. Given areas' demographics and company's workers, I think it's safe to assume they're contracting in immigrants to exploit them for low pay and avoid giving them benefits. It was also a running joke for some workers I talked to.

Well, in some states it is illegal to ask a potential employee about their citizenship status.

There are definitely industries in which hiring (suspected, but very likely) illegal immigrants is standard practice.

Citizenship perhaps not, but it's not at all illegal to ask whether a prospective employee is legally able to work in the United States, and upon hire it's required to demand documentation to prove it. The form is called the I-9.

https://www.uscis.gov/i-9

In all US states you are required to fill out an I-9 form if you are hired. That form requires that you "prove" to your employer that you have a legal right to work in the United States and you are required to provide a valid Social Security number or Tax ID number.

If you fail to do that, you violate the Immigration Reform and Control Act (IRCA) which was passed in 1986 and subjects the business to fines, penalties, potentially the loss of business licenses and prosecution under the RICO act.

And it's not uncommon (in certain states, in certain industries) for forged identities to be used. As I understand it, so long as the SSN is "valid" and goes with the name provided, employers don't (and possibly can't, legally speaking) go beyond that.

A significant potion of this is an end run around immigration law.

Is it? A friend of mine works in documents at an old-school whiteshoe law firm and they converted all of their administrative staff to a 3rd party a couple years ago. He didn't get fired or laid off, he just works for the other company now.

Not just immigration law but many types of laws and also benefits. It looks very bad to have worse health insurance for some employees than others, but you need good insurance to recruit top professionals. Solution: make all of the other people non-employees.

> There are a lot of jobs... currently firewalled behind a general contracting company. That perversely misaligns the end employees motivations and the company motivations.

Would you mind elaborating on this point a bit? I have some notions of what you're suggesting, but I'd rather not assume.

The contracting company adds a cost layer between the worker and the employer. The money funding that cost layer comes out of the worker's salary not the price they charge the company they are providing services for.

So the worker knows the contracting company is squeezing them and they get into a sort of adversarial relationship.