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Government The Almighty Buck IT

NY To Replace IT Vendors With State Workers 178

Posted by Soulskill
from the this-can-only-end-well dept.
dcblogs writes "New York state plans to replace as many as 500 IT contract workers with a new type of temporary state worker. The state estimates it can save $25,000 annually for each contracting position that is in-sourced. This is the result of a new law creating 'term appointments,' which strip away some hiring and firing rules that apply to permanent state workers. These term appointment workers are employed 'at will.' Term appointments can be up to five years and workers get state benefits. Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs."
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NY To Replace IT Vendors With State Workers

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  • by geekoid (135745) <(dadinportland) (at) (yahoo.com)> on Friday March 12, 2010 @03:38PM (#31456104) Homepage Journal

    What? the money they pay contractors goes towards state employee benefits?

    That would be weird.

  • by Fujisawa Sensei (207127) on Friday March 12, 2010 @03:40PM (#31456122) Journal

    Term appointments can be up to five years and workers get state benefits. Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs.

    Of course, some of that $128/hour the contractor gets goes toward employee benefits... and the cost to the state will be more than $55/hour including benefits...

    More like $50/hour goes to the peon doing the actual job, and $78/hour goes to the contract holder.

  • by blueg3 (192743) on Friday March 12, 2010 @03:40PM (#31456124)

    It may not be true, but the wording they've chosen is saying that the $55/hr includes the cost of benefits -- not that the cost is $55/hr plus benefits. So you're comparing hourly cost including benefits to hourly cost including benefits.

  • Re:Anti-Union (Score:4, Informative)

    by nicolas.kassis (875270) on Friday March 12, 2010 @03:54PM (#31456348)
    Actually, I've worked for a state government and never seen an IT postion paid better than in the private sector, including benefits. In fact they usually were getting 10-20% (low estimate) less than the private sector would offer. A dba in state government will rarely ever (don't know any) get the average salary of the market.
  • Re:Wow (Score:3, Informative)

    by Lumpy (12016) on Friday March 12, 2010 @03:56PM (#31456364) Homepage

    That $128/hr contractor MIGHT be getting paid $45 an hour with benefits. Their firm takes the rest.

    There is no Generic IT grunt getting $45.00 an hour in New York. They are getting $21.00 MAX.

  • by rainmayun (842754) on Friday March 12, 2010 @03:59PM (#31456420)
    "Contractor" in this sense does not necessarily mean "independent contractor". Most "government contractors" are employees of firms and get paid on W-2s like anybody else. The "contract" is government with firm, not government with individual.
  • Re:Anti-Union (Score:5, Informative)

    by PopeRatzo (965947) * on Friday March 12, 2010 @04:01PM (#31456452) Homepage Journal

    Many of the states who are bankrupt are so due to escalated costs of state employees.

    That's only one of the three assertions in your post that are factually incorrect. Except for those three false items, you're right about everything else.

    It's actually the pensions that are causing so much trouble for the states. And the reason that the pensions are so high is because starting about 30 years ago, management thought they could safely screw workers by offering them high pension benefits instead of higher pay. Then, when people starting living longer than the actuarials were predicting at the time, management realized its error and started demonizing the very contracts that they pushed.

    In every single case that I've looked at, the unions were actually looking for higher pay and went with the pension benefits when management stonewalled. If management hadn't tried to screw workers to begin with, this wouldn't have been such a problem.

    This goes for public employee unions as well as automobile companies and other large employers.

  • by Joucifer (1718678) on Friday March 12, 2010 @04:09PM (#31456546)

    ..."right-to-work" laws really mean that you have the right to be fired for no reason and have no recourse...

    "right-to-work" normally means that you don't have to join a union. You still have plenty of options if fired for no reason.

  • Re:Anti-Union (Score:1, Informative)

    by Anonymous Coward on Friday March 12, 2010 @04:16PM (#31456652)

    The fact remains that unionized government employees are paid 10-20% higher then private sector counterparts and have 4x the benefits package (about $9500 annual in the private sector vs 38k in a fed gov job). Many of the states who are bankrupt are so due to escalated costs of state employees.

    Your facts are wrong. At least where I live (California).

    Speaking from personal experience on both sides of the fence, state technology workers make 10-20% less than private sector employees at similar positions. The state employee however has better job security (once you pass your probationary period it can literally take an act of congress (state legislature anyway) to terminate you). Your job must be eliminated, unless some extreme misconduct is proven. State employees have more paid holidays than most private sector employees. State employees also have a pension plan instead of a 401K. Other benefits, such as medical/dental/vision, were exactly the same.

  • Re:Wow (Score:3, Informative)

    by skids (119237) on Friday March 12, 2010 @04:16PM (#31456654) Homepage

    Pretty much. I used to work for state IT. I'd cringe every time a pointy-hair brought in a contractor, knowing just how much tax money was going up in smoke for someone with no better skills than their permanent employees had -- and there was almost always a contractor doing something, so they could have FTEd that work if they could have got the paperwork through. there were a few of these contractors that actually made good money, but only through generous travel reimbursements. The rest were getting shafted compared to what their employers were charging.

  • by Knara (9377) on Friday March 12, 2010 @04:16PM (#31456656)

    "Contractor" in this sense does not necessarily mean "independent contractor". Most "government contractors" are employees of firms and get paid on W-2s like anybody else. The "contract" is government with firm, not government with individual.

    QFT. For some reason on IT sites posters seem to equate "contractor" with "someone who works freelance by running their own business."

    Most contractors are managed by a contracting firm, and get nowhere near what the firm bills out for their time.

  • by Anonymous Coward on Friday March 12, 2010 @04:50PM (#31457220)

    I do plenty of work with NY's state and local government offices. Usually dealing with the IT staff. (I'm not a contractor but consult on specific software products.)

    The usual job of an "IT" person in government employ is to follow very specific, very carefully prepared documents with step-by-step instructions complete with screenshots. Should a task need to be performed that is not in a document or the steps are different in some way, they call up vendor/consultant support to lead them through the process. All IT tasks are performed this way. No troubleshooting, no independent research, and no process improvements are attempted. Any updates to software or procedures are done with vendors or consultants. These updates can drag into years. There is no way, either, to predict which updates will be delayed before starting the process.

    The long-term contractors I have dealt with have been marginally better than internal support. If only because the state-employed IT workers I have dealt with can as often be victims of a lateral move from another department within the organization when their old job ceased to exist or some other action forced them from something like "scheduling coordinator" or "assistant photocopier maintenance" (both real, and funny, examples). Contractors will have actual IT training in some capacity besides that provided by the organization.

    Basically, it takes more people to provide less support in the government offices I have dealt with. It costs more, too, because the actual support is provided by hidden outside vendors and service contracts. Since promotions are not based on technological metrics like successful projects or cost savings initiatives, I do not see this situation improving. With the organizations I deal with and have seen the finances (part of my job), the staff/contractor costs are dwarfed by outside support and consulting costs. In most private companies, the amounts are closer to parity.

    With the above considered, I doubt state organization budgets will improve.

  • More Info (Score:2, Informative)

    by slugo (243955) on Friday March 12, 2010 @08:52PM (#31460234)

    I know of this issue first hand being a IT contractor and working for the state. Where Im at they have approximately 125 IT contractors. So far they have laid off 15 IT contractors, are trying to convert 15 or so more to government service. Next in Oct all IT companies will have to bid through a Managed Service Provider. Basically an appointed IT contractor that all the agencies will go through to source contractors. I don't believe they plan on eliminating all contractors since I don't think they can do to the fact the most people would rather be a contractor than work for the state. Also a lot of the IT contractors are from overseas and cannot become state employees without a green card. Most of us are just taking a wait and see approach to what our future actually is with the state come Oct. Who knows how many contract slots will be available at that time.

    For some people taking the state job is actually good deal. Some prefer the stability that the state has offered in the past. What I can add is the converted contractors will receive a tier 5 pensions not tier 4. The state legislature enacted the tier 5 pension in Jan 2010 in coincidence with the plan to convert the 500 contractors. Here are some of the reduced benefits that they will receive.

    Require most public employees to work 10 full years before vesting in the system, rather than the current five, and limit the amount of overtime that can be used in the calculation of a final average salary to 15 percent of regular annual wages.

    Raises the minimum full-benefit retirement age for members of the State and Local Retirement System to 62 years from the current 55.

    Certain exemptions were granted to firefighters, teachers, and police officers.

    They figure they will save $48 billion over 30 years.

    Here is the full article. http://www.nypost.com/p/news/local/statehouse_oks_deal_to_fix_hyper_p72NcP2a2IegZcBJFKuf0J [nypost.com]

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