Recruiters seem shocked that we are all contractors now, but that is the way it goes for tech workers, especially those in the medical device/embedded systems world. Honestly, that’s the way it is going for many job sectors. I’ve been meaning to write something about this Paul Solman story on PBS News Hour so I guess I will merge it in with this. They both stem from much the same place.
I’ve written about unemployment before. On this particular blog I have been writing about The Mythical IT Shortage since at least 2011. In my latest book I have an essay on The Changing Game of Recruiting and Consulting.
Can we all agree that I’ve been thinking about this for a while?
Management Wants Slaves
Worker exploitation has been a management principal since the dawn of time. MBA schools, especially the shit schools like Keller, have been grooming “graduates” to believe people volunteer to be slaves when you hire them. They get this from the Ancient Egyptians where people used to pay to become Temple Slaves. In fact, I pilfered the featured image for this post from that post, it’s a good read.
I have another essay in my latest book titled Karoshi – Do More with Less. I’m not going to steal the thunder of that essay but if you’ve worked in “the office area” of a company of any real size you’ve all heard management tell people “Do more with less.” I think even Gartner was paid to promote that bullshit, but don’t quote me on that. You’ve also heard it spoken in other ways.
Gotta give 110%
It takes extra effort to get ahead
Be a real team playerManagement-speak for “you should work for free”
These mantras exist from the bottom of the labor force all the way to the top. Wal-Mart has been fined many tens of millions of dollars for forcing employees to work off-clock, and each time the company officials say “We’re not that company anymore” when they grant an interview. How many times does it take before the leopard admits it never changed its spots? They fought one case from 2006 all the way to 2016 where it finally cost them $151 million.
The Bottom Sucks
If you read my multi-part series on The Unemployment Benefits Myth you understand that the bottom moved. I’ve got to give a huge shout-out to Catherine Rampell for this PBS News Hour piece on just this topic. Whether she’s ever read any of my blog posts on this topic or the concept is just so obvious any thinking person can come up with it doesn’t matter. You sure as Hell don’t hear politicians admit it. Usually you hear them and the people who can’t fill the shit jobs say
People don’t want to work
The younger generation doesn’t have the worth ethic previous generations had
It was really refreshing to hear the city employees tasked with both the jobs and hiring workers for those jobs utter phrases like
You can work hear for $15/hr and play with poopy water or you can drive a forklift at Amazon for $18/hr, what would you do?
It Was the Restaurant
I generally like Paul Solman’s reports on PBS News Hour. What stuck in my craw was the high end restaurant owner complaining they couldn’t get hostess/host workers even though many were making $38/hr after tips. I have two stories to share here.
Story #1: Sullivan’s Steakhouse
Roughly a decade or so ago a co-worker had come in from out of state to a Fortune 500 company we both worked at. She an employee, me a contractor. Don’t worry, this ain’t that kind of story. I hadn’t had a good steak in a while, we had put in a ton of hours on the project, I took her to Sullivan’s. There was this short wall that you could kind of see through the top of. I don’t remember exactly, but you could look over and if they were looking at you, make eye contact. It was the “privacy without actually giving privacy” trend popular in restaurant decor of the day.
We were chatting away, mostly bitching about some co-workers and her telling me how her kids called her a drug addict because she smoked. Generally unwinding. The late middle-aged overweight couple across the non-privacy barrier was bitching about everything the waitress brought them, sending most of it back. Both of us had grown up blue collar. The shit was starting to really offend us. The excruciating detail of exactly how they wanted the meat cooked, this mixed, that prepared, etc. was the level of detail you would only hear for safety protocols at a hermetically sealed lab.
Our waitress showed up and we had a pleasant chat about what we wanted. When it came to the question of how I wanted my steak done I said
Don’t lead it in on a rope, don’t still have blood running all over the plate, don’t bring me a briquette. Hit that really big target in the middle of that and we will both be fine.How I want my steak
When she brought us our food she asked us to cut and check the meat. My coworker said “oh this looks fine.” I didn’t even cut mine, just replied “You didn’t lead it in on a rope, there’s no blood running on the plate and it doesn’t look like a briquette. We’re good!”
The older overweight couple was still complaining about mixed drinks, temperature of wine, honestly I lost count of the complaints and started to ignore the detail. After the waitress was gone my coworker said there was something not quite perfect and in a little louder voice “but I’m not going to complain or send it back because I’m not a princess.” Might not have been princess, but it was a dig of that category. They both snapped their heads and glared through the non-privacy wall as we ignored them.
When it came time to leave I remember giving the waitress money to give to the other couple’s waitress. Nobody should have to put up with that shit. They didn’t cook your food or mix your drink and they most certainly aren’t HVAC certified to maintain the refrigerators. God invented ice and stone bottle chillers! The least you could do is learn how to use both.
Story #2: China Chef
Pre-pandemic when I was working remotely or just helping out on the farm I would stop into China Chef for a meal. Hopefully that link works for a long time. The pictures on the page should make it clear this is a small family run Chinese restaurant serving good affordable food to blue-collar people. The egg rolls are the size of real burritos (not McDonald’s) and two of them is definitely a meal. I say that as a guy. You don’t eat two of them for lunch without taking a nap.
There were two young girls working there as servers whose names I never actually knew, yet we were “friends.” I used to run into one of them at a local pizza place and we would chat there as well. Once I had to send a glass of iced tea back because one of the bags had obviously broken during the brewing process. There was no scene. Same thing was happening to me back home which lead to this blog post. The date on that post should give you an idea as to how long I’ve been eating there.
One day this really heavy set dude and his not dainty buddy came in and were seated at the booth in front of me. He was talking a mile a minute and ordered some mixed drink I’ve never hear of. The waitress bought the drink, he took a tiny sip and made a scene.
“Oh no! This is horrible. It tastes like he added this, then stirred in that. Take it back, bring me” at which point he named another drink I had never heard of and completed the rant with “I’m not a complainer, but I don’t want to be charged for that.” Same shit happened with the second drink. Then for the rest of my meal he complained to his companion that he was not a complainer.” Here’s a hint: Yes you are!
I’m not a violent guy, but I have never wanted to bust my plate over the back of someone’s skull without warning so bad in all my life. Not only are you an obese complainer, you walked into a tiny family restaurant and ordered a drink you just read about in Bartender magazine. Hey, I drink, I’m Irish. My hard liquor days were in my mid-twenties when I drank Kamikaze (s) on the rocks, but I never drank them at lunch! I also didn’t refuse to pay for one no matter how bad it was. You ordered a mixed drink, you take your chances.
I’m a member of Landry’s Select Club. I don’t say that to be hoity-toidy, I joined to get the discounts and as a traveling consultant I know I can always get a good safe meal at one of their places. You see prissy people like the above all of the time. Well, I used to back when I worked on site. I knew Landry’s employees who claimed to pull down $80K/yr with only a high school education, but they ate nine miles of shit per day. Eventually you can’t take that diet anymore. A job for half the money driving a forklift where you have less than a third of the physical labor and none of the shit to eat starts to sound good. It sounds even better if you get stock options.
You need to search the ABC 7 and PBS News Hour archives for earlier in the pandemic when restaurants were just getting to open with servers. They interviewed the same wait staff something like two weeks apart. Right after opening customers were great, tipping like crazy and calling them heroes. Two weeks later they were right back to being entitled assholes. Putting it bluntly
Just how many assholes are you willing to deal with for $80K (or less) per year when you have other options?
It’s not a lack of work ethic. A person’s digestive system simply cannot tolerate the constant diet of other people’s shit.
Where Did They Go?
A bunch of them went from frying pan to fire when they quit being wait staff to work for Amazon. A seemingly endless stream got jobs at Target because Target has the advantage of being “College Cool.” Many of them went to places you wouldn’t think of out of the box, The Gig Economy.
Yes, this is where all of the above ties into IT people all being contractors now. There is more to come on the “why” for senior developers, but we will cover the bottom of the market first.
What Made the IT Gig Economy Take Off?
I was a consultant before it was easy. Every consulting firm was trying to get workers on a W-2 salary then have them work 80-90 billable hours per week. They pulled people into that way of life with two things that were a long way from easy to get on your own: Health Insurance and a 401K
If you were a Sole Proprietorship back then you could open a Keogh. You had to open two of them and there were some not uncomplicated rules for contributions. If you were willing to put in the effort you could contribute up to 25% of net income. This dramatically reduced your taxable income. Your only other option was a traditional IRA, limited to $2000/yr and pathetic bank interest rates.
Health insurance was the killer. Even being early twenties and healthy back in the 1980s I was still paying well over $1000/month and was damned glad to find a policy. By the early 1990s the insurance companies wanted over $3,000/month. There was a fledgling e-insurance web site or something like that. I managed to get better coverage for half the month but it was short lived.
Obamacare and Wall Street
Obamacare removed the insurance hurdle for many a young gig worker. Hey, it isn’t perfect and too many parts of the country still have exactly one insurance provider. At least there are some rules and an attempt at a marketplace. You don’t have to eat nine miles of shit each day to get health insurance and most wait staff jobs don’t come with health insurance anyway.
Wall Street wanted more money to play with. The really big retirement funds had their Good ole Boy network and the Young Turks wanted to shoot the dice with other people’s money. Gambling feels good when you don’t lose your own money! This lead to a lot of PAC money and lobbying. Rules for 401K got changed so tiny companies could easily set them up. Solo 401K plans became legal and almost automated for those who wanted to self-direct rather than dump it in a mutual fund and hope for the best. You even have Roth IRA plans now.
Once both of these obstacles were removed Gig Workers had bargaining power. Consulting companies couldn’t pay a pathetic billing rate and sell you a bill of goods about how much your insurance was costing them. Trust me, I’ve heard every attempt at justification.
W-2 Dirty Little Secret
Companies below a certain size used to only have to forward your withholding dollars to the IRS on a quarterly basis. This may still be true today, I do not know. Large consulting firms used to put your withholding dollars in their stock market slush fund, potentially using insider information, get a 4+% return on that money before sending it to the IRS. This worked great with the DOT-BOMB rush and with the DOS software gold rush before it. Then the DOT-BOMBs actually bombed and taxes couldn’t be paid.
After that catastrophe any company with more than 50 employees had to pay that money immediately to the IRS. Guess what? Large consulting companies created paper shell companies with numerical names Doing Business As the real company. Every one of these companies had 49 or fewer employees. They weren’t going to give up playing the stock market with your tax dollars, no siree!
If you are willing to run the risk of going to prison for insider trading, you can see how this worked for them. They have 30-50 contractors working on a product for Corp X. They know when Corp X is going to announce and use your tax dollars through an arms length broker to purchase a big slew of shares. Ka-ching! Double or triple the money in 72 hours then pay the IRS the original amount.
Every Stool Needs at Least Three Legs
There used to be an actual SlaveLabour Web site, now it appears to just be a reddit thing. Even if yo don’t click on all of these links, you will notice with the inclusion of FreelanceWriting.com and ServiceScape.com that these aren’t just “tech jobs.”
Some Personal Experience
I’ve personally used ServiceScape to hire second and third pass editors for my book series. It’s one of the few places on-line where English Lit and Journalism majors can get decent paying work. Most start out doing the editing/proof reading on the side before going to their bar tending/wait staff job. Eventually they make as much, then more doing the boring editing work so they give up the job where they have to eat nine miles of shit every day.
While I’ve only taken one or two writing gigs through it, I actually pay to be a member of Writers-Editors Network. Dana puts in a lot of work scanning through the mundane and scam posts to update a list on the bulletin board each weekday of writing/editing jobs that look like they could be good. She scans places I didn’t list here like MediaBistro, ProBlogger, and God knows how many more. The wheat gets separated from the chaff and only the best looking ones get added. You won’t find SEO content mill jobs there.
At the corporations that will survive the next ten years, the world isn’t AGILE. It’s writing SDLC documentation, SOX compliance, possibly FDA or other regulatory compliance, and actually putting documentation in the code. There is no such thing as self documenting code! You would be surprised just how many geeks are also doing writing jobs on the side.
New Markets for Contractors Now
Every corporation of any size now has software. They need technical writers to create help text, user guides, standard operating procedures, etc. Every one of them has weeks to months of writing work for technical writers. Ten years ago they didn’t have these channels to hire people for short jobs. People post tasks requiring in-depth medical/finance/mechanics/etc. knowledge and sometimes they find retired doctors/nurses/CPAs/etc. looking for something to do a few hours/days per week.
Generating printed documentation was and still is massively expensive. It gets out of date fast. Generating all of your documentation as PDF or Wiki pages on-line is pretty damned cheap. You can update it with each version and not have thousands of printed copies now needing disposal. Corporations went from loathing documentation as a black hole of an expense to using documentation as a sales tool.
The Bottom of Corporate Ethics
For many years Enron and Arthur Andersen defined the bottom of corporate ethics. Today it is Disney and all the corporations that flocked to H-1B labor. All of them claiming there was an IT labor shortage and demanding Congress eliminate all visa caps. Most of them turned around and wholesale replaced IT departments with off-shore labor. How could their be an IT labor shortage and corporations able to do that? There wasn’t, it was all criminal fraud.
The minimum you could pay an H-1B worker was $60K per Department of Labor regulations. The minimum you could pay a qualified U.S. citizen IT worker with a college degree was around $140K plus bennies. California quickly became America’s newest slave state. Kids watched their parents get laid off and not get another good paying job. If they went to college, they didn’t go for IT.
Even today, we have people paying media companies to trumpet stories about a labor shortage when it really is a shortage of good paying jobs and competent management. We also need the Ethics in Income Act. Too many corporations are paying CEO and other upper management 500+ times what the lowest wage workers at the company are paid and decrying a labor shortage because nobody will take the shit wages they offer.
The Bottom Fell Out
The pandemic really shined a light on shit management. One former client instantly furloughed all non-union non-contract workers one day per week. Could not be Friday or Monday, you had to work it out with your manager. Then they came back and cut wages another 10%-20%. Some people reportedly took a 40% wage cut during the early days of the pandemic. People with mortgages. Shit management viewed the pandemic as the ultimate tool to cut labor costs. Many of these same shit companies are trying to now have employees work five days per week without giving them back their wages.
If you want to create an entire generation of workers that will never be anything other than a union member or a contractor, that’s how you do it. You have all seen the news about unionization votes spreading like wild fire in a dry forest. Only a person with zero skills and a viciously low opinion of themselves would go through a period where the union workers and contractors couldn’t have wages cut while watching their own wages get shredded would still want to be a direct employee.
Department of Labor
For much of its existence the Department of Labor has been a mute spineless eunuch. It has allowed corporations like Disney, Facebook, Google, and even hospitals to throw National Security under the bust. Then the DOL got behind the wheel of the bus and backed over National Security twice just to be sure. Stories like the Jihadist doctor here on H-1B are everywhere. News media doesn’t even report on them anymore because they simply aren’t news. No, I’m not going to quote anything from CATO because that is just a fiction network.
Previously this article told you about the $60K minimum wage for visa workers. This was a quiet little change to the bill replacing “prevailing wage” with a hard number. Other groups could be paid as little as $50K. It was the lower middle income end at the time but the time was the mid-to-late 1980s. Somebody finally kicked the DOL in the ass after Biden took office. Now the $50K person has to be paid $90K. When you get to the Level IV employee (previously described as 2 years and a day of experience) they now have to be paid $222K.
A funny thing has happened. Overnight the plantation owners (Google, Facebook, etc.) have stopped demanding the government raise the cap on the number of slaves that can be imported each year. Now you are seeing slave factories like Revature turning people into low skilled low-code “developers” earning low wages but generally more than they made waiting tables in a low end chain eatery. I know that sounds like I’m dissing the entire thing. I’m only dissing the quality of the product they are putting out, not the business model or concept. To understand the “why” of that you need to read my AGILE book and I need to find the business plan I wrote a long time ago called “The Tech Farm” which was going to do a similar thing for OpenVMS systems back in the mid-1990s.
In the 1970s we didn’t have good college courses for information technology. The fundamentals were really still being discovered. Every big corporation like Sears had training programs. They would direct hire at low wage employees that went through an N-week in-house training program teaching them how to program in COBOL, write JCL, and maintain the systems at the company. At the end of the program those who passed got hired into various departments for slightly more money. The rest were let go.
We Should Be Able to Buy It
During the 1980s management went to absolute shit. “We should be able to buy it” was the mantra of MBAs. Training programs were gotten rid of as “cost cutting measures.” They started running ads wanting a minimum of five years experience. Every one of them thought some other company should train the developers they hired. For those of us who had skills this was great because wages skyrocketed. There was a finite pool of labor meeting that criteria and to get us you had to pay for it.
This was followed by the off-shore feeding frenzy and throwing National Security under the bus. Quickly followed by huge dollars into Super PAC and PAC lobbying efforts to get unlimited H-1B visas approved.
For those not paying attention, the global pandemic, war in Ukraine, and massive baby formula shortage will bring new laws after the midterms severely limiting the amount and type of production that can be off-shored. The great chip shortage was really caused by Intel and others off-shoring chip production to some of the cheapest and more questionable locations.
Taiwan uses a lot of water in the chip making process and the country is in the middle of a California level drought. It wasn’t just auto makers cancelling chip orders that hosed things up, there was no place functional enough to handle the production.
You Can’t Buy It Anymore
Now that they have to pay $90K for entry level and over $200K for two years and a day, the H-1B flood is over. Companies like Revature are the industry coming full circle. You are also seeing a lot of IT and BA jobs in the job boards asking for “(1 year preferred)” of experience paying between $35-$60K. Yes, you can get developers for roughly $12K in Brazil, but . . . Similar issues for the former Soviet members nations given the Ukraine war.
There is no place to safely buy it anymore. They have to build it. Kids don’t go to college for IT thanks to what they saw happened to their parents or other relatives. Your short-term gains are now causing you long term pain.
We are all contractors now. Nobody wants to be an employee, especially a tech employee after what companies did to office workers during the pandemic. Even the kids going through slave factories like Revature are “gig working” moving project to project. Once they have enough time in to get out of their employment contract, they will be contractors too, it’s the life they are used to.
The high school and college kids that used to have to work in food services because the influx of visa workers kept openings and wages down in all other fields now have dozens, if not hundreds of “gig boards” where they can pick up extra cash using the laptop they already have for school.
Yes, they could make up to $38/hr being a server in a higher end restaurant, but they have to eat nine miles of shit ever shift and they know it. If you had the choice, wouldn’t you sit in the same chair you use for school work, use the same laptop, and make $7-??/hr as needed?
They call it The Great Resignation. It’s really The Great Contractor Awakening. Companies were supposed to reward employees for loyalty. Instead they shit on them at every opportunity and some pay the CEO over $90 million.