Federal Contractors Are $600 Screwdrivers 593
ideonexus writes "Last month an article appeared on Slashdot about how the government pays IT contractors twice what it pays its own workers. Missing from the article was how much the IT contractor pays its own workers. After working for a federal contractor for 10 years, a document accidentally leaked to employees by the contractor illustrated the incredible disparity between what the contractor was paying us and what they were charging the government. Like most contracts according to the GAO, the government provided our offices, utilities, computers, and training, leaving our salaries as the only overhead to the IT contractor, giving them an incredible incentive to keep them as low as possible to maximize profits. When the top 100 defense contractors cost taxpayers $306 billion, eliminating the federal contractor middle-man seems like an obvious place to start the austerity measures."
Um.... (Score:2)
...haven't we pretty much known this for some time now?
Re:Um.... (Score:5, Informative)
"You don't actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?" - Independence Day, 1996
Re:Um.... (Score:5, Insightful)
"You don't actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?" - Independence Day, 1996
See, this is the thing. Golden Fleeces were being handed out, fingers pointed, voices of indignation were hollering at every microphone and camera they could find - it was like a scene out of Bloom County - so preposterous and yet happening.
Forward a few years and instead of buying a special model of hammer or seat meeting a particular specification, we now have contracted out an enormous amount of work - and from what I've seen, a lot of the result is garbage - it's far worse now than $600 toilet seats. The contractors who flooded Iraq were taking home tons of money, while much of the work was done by sub-standard hires - and we saw some of the results in the news, but Cheney's old company made a sickening haul and nobody seemed to do more than bat an eye at this seeming corruption - Just how was it that Halliburton was awarded a giant no-bid contract, because they were the only company seen to be prepared to handle it? Talk of inside information .. there must have been a conversation including something like this from Cheney, "Get oil, security, contruction, everything ready now, because we're going to invade Iraq in a year and if you are ready, we give you a fat no-bid contract, OK?"
Old advice, too, from someone in my past - if you want to make money, get contracts for government - education, too. You can sell rubbish which you could never get away with in the private sector markets.
There is usually a reason for it (Score:5, Insightful)
At the time, I was rather shocked at the rate of pay. He was making something like 2 to 3 times what you would realistically pay someone for the same thing stateside. Then I heard a few stories from him as time passed. They were sequestered in a military base 24/7 for the duration of their time in country, so they wouldn't get murdered. I asked him once about why he slept in a tent in their base, and his reply was that 'The buildings tend to draw mortar fire', so there were some dynamics that made life more interesting than most help desk gigs.
As an outsider who just sees the 100k a year job without understanding what it entails, it seems like a $600 hammer. The government isn't stupid (well, mostly not stupid), so there is usually a reason for things.
I could have taken the job, but getting possibly shelled, shot at, and trapped in a desert base surrounded by 18 year old marines with SAWs for 10 months, no benefits and no promise of a job past the current contract wasn't worth the money.
Re:Um.... (Score:4)
The problem with some of these "outrageous" expenses is that they never are given with any context. Why do they need such an expensive hammer, when a hammer is like $5 from Home Depot? As it turns out, the need for the expensive hammer is found in where it's used. The hammers were used in situations where gas might be around, like in gas tanks. Therefore, they needed hammers that could hammer without giving off any sparks.
Re: (Score:3, Informative)
1) Ampco Non-Sparking Safety Hammer from Amazon: $56.99
2) Bill $500 to the Feds
3) Profit
Re:Um.... (Score:5, Insightful)
Re:Um.... (Score:5, Informative)
(1) Amazon did not exist in 1980 when this story emerged.
(2) There never actually was a $600 hammer. The actual (averaged) price to the program was $435.
(3) That $435 included $420 the design and testing of the toolkit, amortized over each thing in it. For example, if you paid the vendor a nickel for an allen key, you'd call that $420.05, even though you only paid a nickel. The actual marginal cost (i.e. what the government actually paid the vendor) for the hammer in question was $15.
(4) Using the same accounting methods that arrived at $435 for the hammer would yield $476.99 for your Ampco hammer, regardless of what you actually paid the vendor for it.
What does this show? That you should beware when somebody peddles this kind of story. They're more interested in how effectively the story sways your opinion than whether the story is true.
Many of the biggest money wasters in government are stupid attempts to save money, as in the case we are discussion here.
Re:Um.... (Score:4, Insightful)
Exactly.
A lot of those contracts were to deliver X thing that costs $15 at any hardware store. But the delivery was to the middle of Afghanistan on a specific time table while people are shooting. It turns out it costs more to deliver a thing to Kandahar than it does to Baltimore.
Pay scale is to blame (Score:5, Informative)
Been working Federal IT at various agencies for 20 years and the story is the same today as it was twenty years ago. You can't reach high quality/niche programmers on the Federal pay scale in the DC area. Scoff if you want, but we just had a top notch contractor successfully apply and get an offer for Federal work, only to turn down $137K plus bens. Great candidate, couldn't reach his rate. I've seen this time and time again.
That same contractor bills out near $300K per annum.
The system is skewed towards the contracting companies. Keeping Federal IT pay rates down below the industry average for our area guarantees big pay days for the contracting companies. These companies were supposed to be a panacea for the inefficient Federal worker. All that they have become is YAFE (yet another Federal entitlement).
And yes, some of the contractors have been in the same position for DECADES. Same lifetime entitlement.
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Re:Pay scale is to blame (Score:5, Insightful)
That depends on a lot of factors. Still if it weren't cheaper for them to pay contractors they would just hire employees. It's obviously cheaper.
How do you figure that? Your argument is that the US government always makes the most cost-effective decision? From what I have seen, political influence has a lot more to do with the decision making process than cost-effectiveness.
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..haven't we pretty much known this for some time now?
Yes. It's also obvious. You'd have to be an insane contractor with no business sense to work for less, as well.
That factor of 2 has to cover pension, retirement, health insurance, gaps in employment due to being a contractor rather than a regular employee and other costs.
Not only that, but contractors are much lower risk (much easier to not renew the contract than to fire an employee) to the employer.
Re:Um.... (Score:4, Informative)
As a small businessperson, I can tell you that the overwhelming amount of bullshit required to bid on government contracts (especially Federal government contracts), combined with a low probability of successful bids, means that it's imperative that you inflate the bids to cover costs, or avoid bidding on them.
Want to cut the price? Cut out the red tape.
Re:Um.... (Score:5, Interesting)
Actually, not really. While there is plenty of bullshit, the government requires a certain portion of the work to go to small businesses. So there is a good chance that a small business will get the work.
However, the small businesses that do get the work, tend to be partnered with larger firms, who end up doing all the paperwork to help the small business win the contract. I know, I work for one of those monstrous companies and we partner with, and supply the paper framework all the time.
Re:Um.... (Score:5, Insightful)
Re:Um.... (Score:4, Insightful)
Re:Um.... (Score:4, Insightful)
*Knowing* it and getting a Congress that's absolutely owned by said contractors to do jackshit about it are two very different things.
hate answers in 3...2... (Score:2)
Nice article, how long until some CNN/Fox News/ random-astroturf-blog starts explaining why it's GOOD for economy that so much money is "spent" in middlemen? Sure, they get rich, but if we cut them off, the financial system will fall apart, and communism will win!
blah blah blah OBAMA blah blah.
What about the Government Unions / Payroll Taxes? (Score:3, Insightful)
The salary is just one factor of the cost of employment.
If the government hired all of these sub-contractors as employees, then they would all be members of various federal unions, and the government would then be on the hook for all those unions' juice benefit plans and pensions. Also they would be paying payroll tax for them all (yes the government has to pay tax too).
If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.
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The expense ratio for federal workers is 22% on top of salary. This will not get you there.
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Re:What about the Government Unions / Payroll Taxe (Score:4, Informative)
I run a small business where we have contractors. I have been a government contractor in the past, but my company hasn't done any government work since we got started a year ago. Our employees know their billing rates vs what they're actually paid and haven't complained.
Our top rate is $120/hr, which would work out to be 240k/year if the person worked 40 hrs a week for 50 weeks (2 weeks pto) .. 2000 hrs.
But, we don't always have our contractors out full time. Sometimes they're on the bench (working on internal projects).. We have to cover that cost, or we have to lay them off. Essentially we're building up a bank account so that we can afford to keep employees that aren't working for the client at the moment. That plus the other overheads we have really eat into the company profit.
So.. even if we're paying $110k/year to the guy we're billing at $120/hr, it can be a close thing.
Re:What about the Government Unions / Payroll Taxe (Score:5, Informative)
Re:What about the Government Unions / Payroll Taxe (Score:5, Informative)
And you're basing this on what evidence? I see no figures on this.
The fact is, people are pocketing a significant portion of government contract payments, and it's not the people doing the actual work. It's the guy in the suit who "manages" the teams, and says "You let ME worry about that" to everything while driving a fucking $200,000 Mercedes.
The unions and payroll have absolutely nothing to do with the inflated cost of government contracting, they're just an easy target recently vilified by the far right and other class-warfare commencing scumbag motherfuckers. So go join your party on the right, tea bagger.
For what it's worth, most union dues/benefits are paid for by the employee themselves through dues and fees. It is a rare occurrence that an employer takes care of all the costs.
Pensions are a stupid employment incentive all around, but it's not the unions' faults. Keep paying people's salary even after they retire? Yeah, that's a marvelous idea for the bottom line.
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If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.
Except that they are accounted for already.
http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html#Summary%20of%20Methodology [pogo.org]
Because the contractor billing rates published by GSA include not only salaries but also other costs including benefits contractors provide their employees, POGO added OPM’s 36.25 percent benefit rate to federal employee salaries and BLS’s 33.5 percent loading to private sector employee salaries to reflect the full fringe benefit package paid to full-time employees in service-providing organizations that employ 500 or more workers.
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Oh noes! Unions actually fight to keep decent benefits for their members! The horror! They should be willing to gut everything for the enrichment of their employers, just like everyone else has!
Next time you want to rant against union benefits, remember, the correct position is not "Why do they still have this when I don't!", it's "Why do I not have this while they do?" Don't be pissed off because someone was able to negotiate a better deal than you.
How else is the government supposed to make money? (Score:3)
When the top 100 Defense Contractors cost taxpayers $306 billion, eliminating the Federal Contractor middle-man seems like an obvious place to start the austerity measures.
Instead of borrowing $306 billion from Wall Street and giving it to defense contractors (owned by Wall Street), the government could create the same $306 billion and give all 300 million of us $1002 apiece.
This would be something like Cook's A Bailout for the People [wordpress.com].
Working towards small government ;) (Score:5, Informative)
Every time a worker leaves the Federal Payroll to become a private-sector Federal Contractor, the President and Congress can claim to be reducing the size of government. They publicize the fact that âoe1990 total government employment⦠was 5.23 million,â which fell to âoe2.84 million in 2009.â
There you go, here's what happens when you voters keep asking for small government. That's why I've said time and time again, the problem is not quantity. It's quality. It's not the quantity of Government that matters so much as the quality.
You can have these jokers reducing the size of Government to near zero, but if everything is done by such contractors, it makes no difference or it's even worse.
Private Corporations don't even have to pretend to listen to the voters. The Government does, hence this "small government initiative".
Re:Working towards small government ;) (Score:5, Insightful)
When I say smaller government, I mean less revenue, less spending, and lower page count if the US Code is printed.
That's still obsessing over quantity, and that's still stupid.
Assume enough of you ask for it and they actually give it to you. Given their track record what will happen is they'll chop bits off the government/State and give the profitable bits to corporations owned by their cronies (I believe this happens in Russia and elsewhere). Corporations that can completely ignore the voters rather than pretend to listen and throw you a few bread and circuses from time to time. Look at the recent Slashdot article on the 147 companies in the world that control most stuff, or this article: http://www.forbes.com/sites/brendancoffey/2011/10/26/the-four-companies-that-control-the-147-companies-that-own-everything/ [forbes.com]
Do those look like they listen to US voters? Some of those companies may listen to their customers, but how many US voters are customers/shareholders they will pay attention to?
If that happens you'd have a small government with less revenue, less spending, lower page count in the US Code, heck lower page count in your Constitution too if enough of you ask for it. And you'd be as screwed or worse.
All the roads and highways could be private property owned by corporations - you'd have to pay for access. All the utilities too, but without any pesky Government regulation (just the way most libertarians like it). Your currency is already controlled by organization that's not quite government, so hey why not have a fully private corporation be in charge of it too with no regulation or one with "low page count".
When your dreams are granted you can vote for whoever you want and it would make even less of a difference.
Even if the crazy Libertarians took over there would be little they can do, since the government by then would be a weakling with no practical power over anything.
They can threaten the corporations but the corporations could then say: "You and whose army?". No revenue = no army.
If the voters haven't been using their brains and ballots well, I doubt they'd do a good job voting with bullets either.
lollll...they're going to WikiLeaks you... (Score:5, Insightful)
Re:lollll...they're going to WikiLeaks you... (Score:4, Insightful)
I never understood this either. You have the same capitol, running, maintenance and probably higher payroll costs. Plus, the need to make a profit. Yet somehow, the silver bullet of privatization and deregulation are supposed to be somehow, magically, saving the end-user/taxpayer money.
Confused Mishmash (Score:4, Interesting)
This summary is a confused mishmash of thoughts. First they talk about how the government pays for offices, utilities, computers, and training then they bring up defense contractors, who aren't the kind of contractors that the earlier statement is talking about (I assure you that defense contractors pay for their own overhead costs). Secondly, in what world does a company having many significant expenses mean that they don't try to optimize the largest one? Companies minimize costs and maximize revenues wherever possible, it is the one thing that they are good at (and why capitalism comes as close to working as it does). Removing some expenses doesn't especially encourage companies to reduce costs in other areas, just like increasing costs doesn't encourage them to gouge their customers, if they could get away with gouging their customers (or employees for that matter) they'd already be doing it.
Re: (Score:3)
So, same sto
War is a racket... (Score:3)
Smedley Butler tried to warn us... [wikipedia.org]
President Eisenhower tried to warn us... [youtube.com]
Question is, what are we going to do about it? Either through political means or revolutionary ones, we can't wait around for other's to solve this problem for us. It's time to make the change ourselves.
Duh? (Score:4, Interesting)
What you get with contractors is freedom from salaries, benefits, leave, and liability. Depends on what you are wanting. As someone who has worked for the state, I can say the contractors we hired were worth 3-4 internal employees. The contractors have incentive, the in-house never did, they got paid the same no matter how hard they worked, just as long as they kept that seat warm between 8-5.
Wrong contractors (Score:3)
I think you guys are thinking more so of private contractors where such incentives and the like pay off.
But what's being talked about here is mass contractor employment. Low-pay, zero incentives, in fact often they couldn't care if you sat at your desk all day and did nothing. So long as they can legally bill the government for your time.
It's an entirely differently system than corporate contract work.
If you pay them twice as much (Score:2)
Visibility is a government agency. (Score:3)
The government has the ability to force contractors into full disclosure agreements. A federal law should be passed that forces any business that accepts a government contract to fully disclose how the money they received is spent. A federal web site ( ie. contractors.gov) should be implemented so contractors can easily journal receipts, wages, and other payments, without specifying the names of employees specifically of course. The journal should be kept during the entire process and maintained on the site for no less than 10 years. The web site and all information should be freely accessible to all U.S. citizens.
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Overhead and profit margins (Score:2)
After working for a Federal Contractor for 10 years, a document accidentally leaked to employees by the contractor illustrated the incredible disparity between what the Contractor was paying us and what they were charging the government.
It's a for profit company. Does he seriously think they were not charging any sort of a markup on his services? Furthermore there is a LOT more cost that just the salaries. Even for companies whose main cost is labor, overhead is huge and can easily double costs without even considering profit margins. This is especially true for business with high insurance costs. Furthermore if you've ever dealt with the government, the amount of bureaucratic cost can be off the charts. Doing business with the feder
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contractors are guvmint types (Score:5, Informative)
This whole concept of contracting is like outsourcing, looks good on paper as it saves costs. Then politicos can brag how they are reducing costs because there are less govt workers (though there are a zillion more contractors), i.e. NASA or number of troops overseas (much of those positions replaced by contractors). Only advantage of contractor is it is easier to fire someone than a civil servant. Don't think unions are all powerful and all members have juicy benefit plans and pensions (they don't). Now people like to say how much better contractors are at saving money (uhmm, J35 fighter has doubled cost in past five years and its contractors have a lot of political power like lobbyists and work less regulation than before so don't blame govt people. Oh, did you know the J-35 began as CALF, Common Affordable Lightweight Fighter?).
Others say contractors are good because it is private enterprise, you gotta work hard to make it successful unlike govt which don't have to make profits or deal with customers. However, pretty much all federal contractors have only one customer, the federal government so they are government. I see almost all these companies could never compete in the "real world." And those that do work in the real world are highly dependent on government contracts. Which I think is why federal spending has skyrocketed because it is the only big thing in town, as all other industries have collapsed.
There was a time when becoming a police officer or working some other govt position was considered low pay (especially NASA civil service in the 80s). Right now it looks really good because all other middle class jobs have collapsed. But even for them salaries and bennies are dubious.
Comment removed (Score:4, Interesting)
Re:Summary is moronic (Score:4, Informative)
I just want to point out, most liberals are not against firing dead weight, but they just want the person doing the firing to actually have a reason (prove that the firee is actually dead weight). At-will termination means you can fire someone just because you don't like the shoes they wear, for example.
Re:Summary is moronic (Score:5, Interesting)
You just reminded me of a guy I met on a plane a long time ago. He was a welder for a company that did nuke maintenance in Washington state on the nuclear subs as part of their periodic refit (the subs, as most military ships, have to be torn down quite a ways every so many years and have everything fixed and updated, including the nuclear power plants). He had to have some kind of high security clearance, and was a very high end welder so his pay rate was pretty high; then working on nuclear equipment involved a substantial pay differential. Safety rules and work rules meant that his work day was as follows: 1.5 hours going through several levels of decontamination and clothing changes; 1 hour of actual welding; 1.5 hours coming back out of the decon cycle, 1 hour lunch, 1.5 hours of decon to go back in, 1 hour of work, 1.5 hours of decon. The contractor was required to have the lunch break by state and federal law, and there is no way to eat lunch inside a nuclear hazmat suit. And federal work rules did not allow working more than eight hours. So he spent six hours per day changing clothes and two hours per day working, getting paid for eight, at (IIRC) triple time for nuke+hazard duty. I don't know that there's any other way to do this, but it's expensive. If they went to a 12 hour day then they could get four more hours of actual work, tripling actual work hours per day, but that was impossible. It was kind of frustrating all round for the contractor, the employee (the guy I talked to) and the military folks but nothing could be done. It's been a long time so I might have some details wrong but that's the gist.
As for your numbered points, some good, some interesting, ideas but never gonna happen.
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Humm... he's complaining that the contractors are charging 170k for a given job, yet paying the actual person doing said job about 80k (less than the national average and less than a government employed equivalent). In the poster's experience, the contractor isn't actually providing anything, the government pays the utilities, the office space and provides the equipment. So that extra 90k is for... uh... to make sure that the contracted employees fill out their timesheets, and... uh... that's it.
He's not sa
Not new (Score:3)
Follow the money, follow the greed, find the power, find the corruption. It's a pretty common theme and has been going on for decades. Most of you may be too young to remember (http://www.wnd.com/index.php?pageId=4314)
Overhead on govt contracts (Score:5, Informative)
If you remember the stories about the $600 hammers, and you actually read the details, what you find out is that the hammer cost $10, and the contracting overhead cost about $500. That includes all the rules for government procurement, Federal Acquisition Regulation compliance, EEOE, small and woman/minority owned business requirements, limits on subcontracting, requirements for exhaustive financial/time accounting, etc, etc, etc.
Most of those overhead requirements are placed for good reasons, either for social policies (e.g. small business/minority business) or for fiscal or technical accountability (e.g. time accounting, facility security, etc.) But when you add them all up, you have a lot of overhead for doing government contracting that you don't have in business. It's part of the reason why government is inherently inefficient.
Been there, seen it (Score:5, Informative)
I was a government IT worker in the U.S. Treasury for decades. Before I retired, contractors were being brought in to replace workers in my position. One guy comes to us fresh from a front-line support position at, believe it or not, Best Buy. After a long while, he turned out to be not so bad, trainable, and useful. It took about a year to get him up to speed.
At some point, he decided he trusted me enough to talk about pay. I was shocked. Why should he treat salaries as some sort of secret? As a public employee, my pay is known to anyone who wants to look it up. I showed him how to look up what anyone in the organization made, showed him my salary, and couldn't imagine why anyone would think of this stuff as proprietary information.
In his case, though, I can see why his employer had gone to great pains to create the impression that salaries were some kind of secret. He was doing the same work as a first-tier support employee but was being paid roughly one-fourth as much money. The contract to his employer was sufficient to support employees like me (the agency was paying roughly twice the annual salary of a senior computer specialist for each contractor who reported to a job site) yet the contractor simply took the contract, took a cut, and subcontracted the rest out. The subcontractor took a cut and subcontracted the rest out. The next level subcontractor took a cut and hired an out-of-work Best Buy leftover to report to the job for a pitifully small percentage of the original contract payment.
It was a multi-level sham. I was annoyed at the waste. The contract guy was annoyed that he wasn't making any more money. Overall, contracting for these positions was a completely stupid thing to do that only accomplished just one thing - slicing off shares of pure profit to a few middlemen. Ultimately, the workers on the ground and their customers got screwed and the U.S. government got a *very* poor return for the money spent.
Naturally, once the guy was fully trained and providing real value to the organization, budget cuts forced cancellation of the support contract and he was gone in a flash. All that training time, all that productivity diverted from helping customers to bringing him up to speed was, in an instant, flushed down the toilet.
I'm sure it's not always the case, but contracting for services like this by the government is, in every case where I've gotten a close look, a completely stupid thing to do.
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There is a tradition in private industry of keeping wages secret. I think that everybody likes to think that they're a good negotiator and that they're the best paid person in the department. However, the guys who work out your salary are actually professionals at such things and they've almost certainly given you a deal that you might not be happy with.
Just another case where we shoot ourselves in the feet over privacy...
Feature, not bug. (Score:3)
I was around in the Government when the Reagan administration came in, RIFed a bunch of people, and put in hiring freezes all over the place, nominally to reduce the size and cost of government. However, they didn't really reduce either departmental budgets, or the tasks that those departments had to fulfill. The result was a vast hiring of contractors, replacing people making X with people making 2X, which (with burden) was billed to the US government as 4X+. I thought at the time that this was not about cost savings at all, or better efficiency, but about funneling cash to politically well connected contractors, and I have seen nothing to make me change my mind since.
What actually happens with government contracting (Score:5, Informative)
Essentially, there seems to be a debate regarding government employees vs contractors (at 2x the rate).
But the truth of the matter is those contractors never see that double income. All the talk of how 2x let's you pay for your own benefits is hogwash.
Here is how the system works for the most part. Rather than having government employees hired for a task which is likely to be short-term (1-5 years). The government contracts it out. Instead of hiring a $50K-$75K employee they pay a major contractor (Northrup, Lockheed, L3, Accenture, etc, etc, etc) $100-$150K to fill that position.
These companies then hire from vendors adding an additional tier to the puzzle. (If the contractor is a foriegnor there may be a third party involved in sponsoring their visa.) So of that $100K-$150K paid by .gov for that contractor. The contractor might see $40K-$75K. All the rest is eaten up by middle-men.
But it doesn't stop there. The way the contract system works, it is not uncommon for one of these contracting firms to mass hire dozens of people toward the end of a fiscal year. They do this so they can use up (bill the government) for every dollar the contract allows for. Upon the end of the fiscal year many of those contractors will be let go. No severance. Nothing.
Essentially, the contract system allows for an at-will hire and fire. Which in an economy that has 9%-16% unemployment becomes a gross abuse. You literally watch people hired for two weeks only to be let go. Positions are advertised as part of a long-term contract. New hires are often misled into thinking there is an element of job security. Some even leave jobs for these positions only to reach a very rude awakening.
Seriously, Unions need to quit wasting their $$$ being campaign fundraisers and get on the ball with what unions were all about. Defense of the worker.
In the current market, a potential new hire has little to no ability to negotiate on contract. And if misled, lied to, etc - has even less recourse.
There needs to be a fraud law that mandates whether a position is long-term (min. 1 year) or merely short term. If fraudulently mis-portrayed, than the hiring firm would be obligated to pay the employee for one year of time.
This would help end the abuse of contractors that is rampant in government work.
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YANATL (you are not a tax lawyer).
You also have to pay the corporate income tax on the cap. gains. But, IANATL
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You do know you cannot pay yourself a $1 salary, right? It doesn't work that way.
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Re:Tax evasion (Score:4, Informative)
If the company is making a profit and you pay out distributions equivalent or greater to what you should be earning as an employee in order to avoid payroll taxes, you can get in trouble. And yes, there have been court cases about this very issue. See here [sprouselaw.com], for example.
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Actually, there is a law. In particular, for S corps, that don't pay corporate taxes of their own, the IRS requires all compensation in total (salary, pensions, stock options, etc, all taken together) to fall in a range that is "reasonable and customary for the position" . If that's not exactly pegged to a market value for executive compensation, that's because there is no standard amount for executive pay. This means the auditing agent has a fairly broad range to decide whether the total package is reasona
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The second time I went with Kaiser. It was, and still is, less expensive than my share of my employer provided insurance. HMO's have thei
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So the answer is outlawing unions and having all workers negotiate their own contract terms?
Sure, that worked really good for the industrial revolution. Welcome to your 112 hour work week, don't like it? Fuck off, there's a line of people behind you waiting for a job.
Re:They're impossible to fire (Score:5, Insightful)
And yet, there has to be a middle ground. If you give the employer too much power, they take complete advantage of it. If you give the Unions too much power, you can't keep people accountable even for basic tasks and efficiency.
We have to stop saying that any limits on union power mean a return to sweatshops, because that's just as wrong as saying that returning to no unions will fix all of our economic problems.
Re:They're impossible to fire (Score:5, Interesting)
Well, if unions in the USA are as powerful as The Incredible Hulk, they must be doing a really sloppy job. After all, you're among the countries with the highest income inequality [wikipedia.org] among developed nations. And it keeps rising.
I suspect this anti-union rhetoric that floods Slashdot all the time is more a product of decades of brainwashing from the part of the corporate media propaganda machine.
In my country (Portugal), unions are pretty weak. That's one of the reasons (but not the only, mind you) we have incredibly shitty pay compared to countries where unions are powerful like Germany and France. And it hasn't helped us at all to have weak unions. Our productivity is still very low, although we work more hours than the other Europeans. Our country is bankrupt. And our managing class is one of the most illiterate, lazy, loutish and well-paid in Europe.
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Why would unions give a shit about income inequality?
Re:They're impossible to fire (Score:5, Insightful)
This biggest issue caused by the unions is an unwillingness to reduce benefits to match the current economic state.
Which economic state are you talking about? If the few rich are richer than ever before, why should the be workers who accept to reduce their benefits? Clearly there's enough money to satisfy their benefits, it's just poorly distributed.
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Do people really have that much of an issue with their own negotiation? I've worked in some very big companies, I've never been part of a collective bargaining group - and I've also never had problems negotiating my own compensation (and I hate talking money with anyone). Its not that hard to do, and its not hard for the company to accommodate individual bargaining either.
Is US employment culture that different to British employment culture?
Re:They're impossible to fire (Score:5, Insightful)
Unless you're a rockstar, compensation is usually a "take it or leave it" proposition. Especially so in an economy where people are desperate for jobs and will take anything to put food on the table.
Re:They're impossible to fire (Score:5, Informative)
Not every kind of worker is the same. You're an educated person, but a miner, truck driver, or some other low-end worker usually can't negotiate any kind of benefits or anything. Either because no one will hear them, for fear of being fired (or flagged...), or simply because they're too... "uneducated" to know what their rights are.
A company is always bigger than a single person. And a company can afford a lawyer (or an army of them) to screw you, while you usually don't have resources to do that. That's why unions exist.
But unions need regulations, just like companies need regulations. What folks here don't seem to understand is that any "unregulated" area WILL get exploited, and the bigger guy always wins. That's the danger, not "government intrusion".
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The really bad situation for otherwise good workers is where upper management decides to implement threshold benefits that encourage dismissal for bullshit reasons, e.g.
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Until the government stops passin
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Not sure what's it like in the US, but the rationale behind mandatory car insurance is simple, the slipknot equation explains it: PEOPLE = SHIT. If you hit somebody with your car and don't have insurance, they will sue you to get paid. Except you could hide your money and claim you don't have any. So you get your money, walk away free, and the person you hit doesn't get medical attention (because he's broke AND doesn't have medical insurance, cause he thought he'd never need it).
You know what happens if the
Re:They're impossible to fire (Score:4, Interesting)
If a lower end worker wants to "negotiate", but there are 12 people behind him in line for the job, then why should that employee have any leverage? That's capitalism. Supply and demand works for labor, too. If somebody thinks they're worth $15/hour, but there's a line of people willing to work for $12/hour, shouldn't the employer just hire the $12/hour employee?
That's all fine and good until every company decides to hire the cheapest workers. Then the wages of the whole working population crash to sweatshop levels and we're back to working conditions in the 1800s. The "market" doesn't work here because working is not a choice. When all employers drop their wages to $0.50/hr your choice is between $0.50/hr and not working at all. Workers can't "vote with their feet" in this case.
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Sure, that worked really good for the industrial revolution. Welcome to your 112 hour work week, don't like it? Fuck off, there's a line of people behind you waiting for a job.
The 19th Century thinking here is remarkable. It makes me wonder who are the conservatives.
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The 19th Century thinking here is remarkable. It makes me wonder who are the conservatives.
The 'progressives' are the modern conservatives, because they're trying to maintain an industrial-era ideology in an increasingly post-industrial society. The 'conservatives' are trying to build a society that works when most people aren't 'working for the man' in a factory twelve hours a day.
Re:They're impossible to fire (Score:4, Insightful)
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Actually...that works for me....
That's the thing with govt/DoD contracting. Yes, at first you likely will not make a ton of money on that first gig. But you get your foot in the door...meet people, network. From there on, you can negotiate your bill rate much better. Especially if the govt people know you on a project, they will pressure the contractor to hire you, and you can therefore negotiate your rate better.
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Re:They're impossible to fire (Score:5, Insightful)
All I read in your post was this:
I come from a middle-class family, there was always food in my table and growing up was easy, then I started working and was always happy with my paycheck, and I even found ways to avoid overpaying taxes. I don't see why people say they can't find jobs... you just go somewhere and say "hi, here's my qualifications, i want a job" and you get it. It's not so difficult.
Which is fine, except that in real life there are other factors, like genetically stupid people, or people who didn't have proper nutrition as children, or whose mothers drank, smoked, or did drugs during pregnancy. Or teenage mothers, or many other factors that automatically get you out of the American Dream elegibility.
If you stop for a minute and think that, gee, not everyone is like you. Not everyone can negotiate, can afford to "meet people", or HEY! they don't even have the kind of job you are doing (I doubt a walmart cashier can benefit of "getting in touch with people", since she's probably there because she can't do anything else.)
(BTW, i'm from a middle-class family, I have a decent living, I got my "gigs" by meeting people, etc. But I also have empathy for other people and I can see why things are the way they are. It's either that, or we kill all idiots, "they're useless anyway")
Re:They're impossible to fire (Score:4, Insightful)
And this is my problem how?
Because you assume your privileged ass is the norm, so you decide that anything that benefits those that don't have it so great is unneeded. Pull your head out of your ass sometime, and you'll see that your situation is not the norm.
I mean, no one said the world was fair, nor that everyone starts out on the same level, some have it harder than others.
So we should continue trying to keep it unfair?
Re:They're impossible to fire (Score:5, Insightful)
So the answer is outlawing unions and having all workers negotiate their own contract terms?
No, but there should be a middle ground.
Unions are good, but this whole "protect every employee at any cost" thing has to go. Outlawing the union is going way too far in the other direction, but there has to be a better solution.
Personally, I think that these claims that people are impossible to fire are largely made up. Maybe people are difficult to fire, but impossible? As for punching his boss in the face, I certainly don't have all the details (or any of them, really), but I'll bet there's more to that story. Certainly, if the guy punched his boss for no reason, he'd be arrested for assault and battery and I'm guessing he'd be easy to fire, union or not.
Re:They're impossible to fire (Score:4, Informative)
I'd love to see proof of the guy punching someone in the face and not getting fired. I find that extremely hard to believe. There may be other circumstances or the poster may be lying. Like you said...I'm pretty sure he'd be arrested pretty much immediately.
Re:They're impossible to fire (Score:5, Insightful)
In what world are outsourced IT workers in unions? Talk about putting the blinders on and diverting the issue. This was supposed to be that privatized haven the fiscal right is asking for, turns out the reality is just as crappy as what they complain about.
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You could just tell these people to stay at home and keep drawing a paycheck, and still only wind up costing the taxpayer maybe 5% of what federal contractor profits now cost us.
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That works great until word gets out that you can get a paid vacation by punching your boss in the face.
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Re:They're impossible to fire (Score:5, Insightful)
Not true. I worked for the USG for a few years and in that time my boss fired 2 of the 15 people reporting to him (fired, not laid off).
The real issue is that people think that and then never check how the process works.
Re:They're impossible to fire (Score:5, Insightful)
Something tells me there's more to this story...
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Dude here punched his boss in the face and they were unable to fire him Something tells me there's more to this story...
Yeah, but you aren't going to get it. No, not even the real story, if there even is one.
Misleading, contractors buy health insurance (Score:2)
And when they talk about how much Federal employees make vs Contractors they never factor in that a Contractor doesn't get any benefits, any life insurance, any health insurance, or anything. The Contractor has to buy his or her own and receives none of the fancy government benefits. In reality the government employee might get less in take home pay, but they get way more in benefits.
Re:Misleading, contractors buy health insurance (Score:5, Informative)
And when they talk about how much Federal employees make vs Contractors they never factor in that a Contractor doesn't get any benefits, any life insurance, any health insurance, or anything.
Except that they did factor that in.
Because the contractor billing rates published by GSA include not only salaries but also other costs including benefits contractors provide their employees, POGO added OPM’s 36.25 percent benefit rate to federal employee salaries
http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html#Summary%20of%20Methodology [pogo.org]
If that guy had been a contractor (Score:2)
He wouldn't have set foot on that government installation again. It is insanely easy for government to get an under-performing contractor kicked off the job.
Now if the guy was actually good and he got kicked off only because an irrational government employee was having a bad day, then a good contracting company will find him work elsewhere or roll him onto a different contract and keep him on the payroll until that can be done. Bad employees are just dropped, not worth the trouble.
This ability to provide a
Re:They're impossible to fire (Score:5, Insightful)
I'm sorry, but I just have to call BS on that claim. A guy gets punched in the face by a contractor, you call the police, not HR. You call management to get them banned from the building. If the contract says "you have to keep him paid until it is resolved" then fine. But just moving the offender to another department doesn't hold water even in fantasy land.
You'll have to cite references before I begin to believe that.
Re:They're impossible to fire (Score:4, Insightful)
No, the point of the story is that nobody knows shit, especially about how to do their jobs. If someone punches another employee in the face, and you can't get them fired, then you are the one that doesn't know how to do your job.
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Re:They're impossible to fire (Score:5, Informative)
Labor unions have had policies put in place by which government employees are impossible to fire if you don't fire them within one year.
Uh, the civil service protections of federal workers have nothing to do with unions. They started with the Pendleton Civil Service Reform Act of 1883, which was motivated by various scandals around "the spoils system" and the shooting of President James Garfield by an office seeker.
When I worked for the DOD the only people I knew in unions were government contractors (many military bases and NASA installations had union staff and I don't believe that that has changed). I came to have a great respect for the Teamsters, who negotiated very hard and worked very hard.
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Not just labor unions support this -- as a taxpayer, I support it, too. Otherwise, every time a bad president came into office, they'd get rid of all of the "non supporters" and replace them with useless hacks. The way we have it, people can get a job with the government as a first choice ("I can make a career here" and "I won't be fired summarily") instead of a last choice ("it's only for a few years, but I need money now").
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They accounted for benefits given to federal employees when making the comparison. And pointed out that the government provided the infrastructure (office space, computers etc.) to the IT contractors as well as the employees.
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That and also...frankly, I have NO problem with having everyone, start paying at least some Federal tax.
When I hear about people paying 0% federal tax and it seems to be almost half the populace of the US adults...I get furious.
I don't care if it is a reduc