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The linked article mentions outsourcing, but it was this other _fantastic_ article [1] on the structural issues of the current wage economy that really helped m

The linked article mentions outsourcing, but it was this other _fantastic_ article [1] on the structural issues of the current wage economy that really helped me understand just how different things are: "Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies. The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day. “This is what’s really driving wage inequality,” says David Weil, the former head of the Wage and Hour Division of the Department of Labor and the author of The Fissured Workplace. “By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.”" 1 - http://highline.huffingtonpost.com/articles/en/poor-millennials/ http://highline.huffingtonpost.com/articles/en/poor-millenni...

OscarCunningham 9y ago
What is it, in particular, about contracting that allows businesses to pay the same people less? What can they do with the contracting that they couldn't do without it? I think this: >“By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.” was an attempt at explanation. But I don't see how it leads to lower wages.
- greedo 9y ago
  There's also a psychological factor at work too. Contractors aren't part of the business "family" but a cost center. So the dynamic changes; instead of a longterm commitment to a person, it's more of a direct business relationship with the outsourcing company.
- lotsofpulp 9y ago
  It doesn't. The real reason is due to reduced demand for labor, partly due to increased efficiency from technology, partly due to reduced spending, etc. At the end of the day, it's always supply and demand. The contracting just helps with creating a third party to deal with employment laws and all that hassle. I recently stayed at a hotel and didn't even need to talk to anyone. Bought the room on via the hotel's app, the digital key in the app opened the door using the phone's NFC, the receipt was received via email.
  - deleted 9y ago
    [deleted]
- wallawe 9y ago
  Benefits. Benefits can cost up to 50% more on top of salary per employee, sometimes even more. The government requires full-time employees to be covered by health insurance for example. So if you switch to contractors you can save a great deal on this cost.
- emodendroket 9y ago
  I don't know if this is what the article is meant to suggest, but in the past I think promotion from within from menial positions to lofty ones was far more common than it is now and contracting could help, in part, explain that.
- michaelbuckbee 9y ago
  One aspect of this is that it's much more difficult to "work your way up". To start at a relatively low paying position and then put in your time (accruing annual raises) and taking on roles of increasing responsibility and pay. Previously you could start in the hotel kitchen and then become a line chef or a waiter or bartender and then a manager. And you'd be able to do so by showing you were competent and hardworking and moving up within the organization. Now, in the extreme case, each of those roles is handled by a different outsourcing firm. The manager is quite possibly not directly taking resumes from people who walk in off the street, they're getting workers from a temp service who only supply low level kitchen help. Put another way: who is typically going to make more? The person who has worked for Hilton Hotels for 20 years or the person who bounced around between a half dozen temp agencies doing work inside the same Hilton Hotel for 20 years?
edraferi 9y ago
I hate this. I REALLY hate this. Creating a full-time workforce by cobbling together contractors is disgraceful. Sure, sometimes contracting makes sense, but replacing your core workforce with contractors just sucks. Here are some reasons why: 1) loss of corporate identity / camaraderie 2) reduced working training & quality... and loss of control over how work it performed. If you retain control over work methods, they’re supposed to be employees 3) double downward pressure on wages as companies compete and then the contracting firm takes a cut. Pressure increases as subcontractors show up 4) subcontracting! You hire firms with no capabilities, which then hire subcontractors who hire people who know what they’re doing (maybe, see above). Why are these companies making profits? It should all go to the workers. 5) false flexibility. Your HR system might be painful, but good luck getting rid of a toxic contractor if they’re the cheapest person who can do the work. You can take your contract to a new company but they’ll hire the same people you already had. Contracting obviously has its place - no firm can do everything- but staff replacement just sucks. -
- humanrebar 9y ago
  > Creating a full-time workforce by cobbling together contractors is disgraceful. Not paying people but still requiring them to do things (like show up to work or keep their schedule free) is disgraceful. Hiring part-time workers is not disgraceful. If we want more full-time workers for stable employment, we need to a better job disentangling our social justice policy goals (retirement savings, health care, maternity leave, etc.) from full-time employment agreements (at least exclusively those agreements). If we want a dynamic labor market and employees with the ability to tell their bosses to stuff it, we need to stop leaning so hard on the employer/employee relationship. It clearly isn't working.
  - notheguyouthink 9y ago
    That's actually a really good point. I argue for full time employment frequently, especially in retail. It's, imo, a terrible place to work with a lot of scummy tactics against employees. I'd still say employers need to be held accountable for how they treat part time workers though. For example, they can drop your hours to next to nothing, forcing you to leave the job rather than firing you. They can juggle your part-time days around at random making it insanely difficult to hold two part-time jobs. You make valid points about the employer/employee relationship, but even if things like benefits were fixed, holding two or three part time jobs can be extremely difficult. My wife works in pharmacy, retail - and the things she sees from retails stores regarding employees is disgusting. The store seems straight up hostile towards it's employees. It really puts it into perspective how much better I have it, as I've worked salary for ~15 years now.
Cthulhu_ 9y ago
The other crooked part about temps / contractors is that they're more expensive for the party hiring their services, but the employees earn less and have worse secondary terms; that extra money? Goes to the higher-ups. Companies need to be incentivised to hire their own people again.
- pixl97 9y ago
  > is that they're more expensive for the party hiring their services Eh, your explanation doesn't make much sense. You are saying they're more expensive but you are probably just looking at the employee vs contractor take per hour. Employees need unemployment insurance paid to the state, contractor does not. Employees need health care, contractor does not. Employees expect raises, contractors? Hard to lower employee wages, with contractors it's just a negotiation at end of contract terms.

OscarCunningham 9y ago

What is it, in particular, about contracting that allows businesses to pay the same people less? What can they do with the contracting that they couldn't do without it? I think this: >“By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.” was an attempt at explanation. But I don't see how it leads to lower wages.

greedo 9y ago
There's also a psychological factor at work too. Contractors aren't part of the business "family" but a cost center. So the dynamic changes; instead of a longterm commitment to a person, it's more of a direct business relationship with the outsourcing company.
lotsofpulp 9y ago
It doesn't. The real reason is due to reduced demand for labor, partly due to increased efficiency from technology, partly due to reduced spending, etc. At the end of the day, it's always supply and demand. The contracting just helps with creating a third party to deal with employment laws and all that hassle. I recently stayed at a hotel and didn't even need to talk to anyone. Bought the room on via the hotel's app, the digital key in the app opened the door using the phone's NFC, the receipt was received via email.
- deleted 9y ago
  [deleted]
wallawe 9y ago
Benefits. Benefits can cost up to 50% more on top of salary per employee, sometimes even more. The government requires full-time employees to be covered by health insurance for example. So if you switch to contractors you can save a great deal on this cost.
emodendroket 9y ago
I don't know if this is what the article is meant to suggest, but in the past I think promotion from within from menial positions to lofty ones was far more common than it is now and contracting could help, in part, explain that.
michaelbuckbee 9y ago
One aspect of this is that it's much more difficult to "work your way up". To start at a relatively low paying position and then put in your time (accruing annual raises) and taking on roles of increasing responsibility and pay. Previously you could start in the hotel kitchen and then become a line chef or a waiter or bartender and then a manager. And you'd be able to do so by showing you were competent and hardworking and moving up within the organization. Now, in the extreme case, each of those roles is handled by a different outsourcing firm. The manager is quite possibly not directly taking resumes from people who walk in off the street, they're getting workers from a temp service who only supply low level kitchen help. Put another way: who is typically going to make more? The person who has worked for Hilton Hotels for 20 years or the person who bounced around between a half dozen temp agencies doing work inside the same Hilton Hotel for 20 years?

edraferi 9y ago

I hate this. I REALLY hate this. Creating a full-time workforce by cobbling together contractors is disgraceful. Sure, sometimes contracting makes sense, but replacing your core workforce with contractors just sucks. Here are some reasons why: 1) loss of corporate identity / camaraderie 2) reduced working training & quality... and loss of control over how work it performed. If you retain control over work methods, they’re supposed to be employees 3) double downward pressure on wages as companies compete and then the contracting firm takes a cut. Pressure increases as subcontractors show up 4) subcontracting! You hire firms with no capabilities, which then hire subcontractors who hire people who know what they’re doing (maybe, see above). Why are these companies making profits? It should all go to the workers. 5) false flexibility. Your HR system might be painful, but good luck getting rid of a toxic contractor if they’re the cheapest person who can do the work. You can take your contract to a new company but they’ll hire the same people you already had. Contracting obviously has its place - no firm can do everything- but staff replacement just sucks. -

humanrebar 9y ago
> Creating a full-time workforce by cobbling together contractors is disgraceful. Not paying people but still requiring them to do things (like show up to work or keep their schedule free) is disgraceful. Hiring part-time workers is not disgraceful. If we want more full-time workers for stable employment, we need to a better job disentangling our social justice policy goals (retirement savings, health care, maternity leave, etc.) from full-time employment agreements (at least exclusively those agreements). If we want a dynamic labor market and employees with the ability to tell their bosses to stuff it, we need to stop leaning so hard on the employer/employee relationship. It clearly isn't working.
- notheguyouthink 9y ago
  That's actually a really good point. I argue for full time employment frequently, especially in retail. It's, imo, a terrible place to work with a lot of scummy tactics against employees. I'd still say employers need to be held accountable for how they treat part time workers though. For example, they can drop your hours to next to nothing, forcing you to leave the job rather than firing you. They can juggle your part-time days around at random making it insanely difficult to hold two part-time jobs. You make valid points about the employer/employee relationship, but even if things like benefits were fixed, holding two or three part time jobs can be extremely difficult. My wife works in pharmacy, retail - and the things she sees from retails stores regarding employees is disgusting. The store seems straight up hostile towards it's employees. It really puts it into perspective how much better I have it, as I've worked salary for ~15 years now.

Cthulhu_ 9y ago

The other crooked part about temps / contractors is that they're more expensive for the party hiring their services, but the employees earn less and have worse secondary terms; that extra money? Goes to the higher-ups. Companies need to be incentivised to hire their own people again.

pixl97 9y ago
> is that they're more expensive for the party hiring their services Eh, your explanation doesn't make much sense. You are saying they're more expensive but you are probably just looking at the employee vs contractor take per hour. Employees need unemployment insurance paid to the state, contractor does not. Employees need health care, contractor does not. Employees expect raises, contractors? Hard to lower employee wages, with contractors it's just a negotiation at end of contract terms.