4 ms·

Because companies complain that it adds 20% - 30% to their labor costs.

by gregd 7y ago

toomuchtodo 7y ago
More accurately, the loophole they've been using to obtain a labor discount (employee misclassification) has been removed.
- ars 7y ago
  There is no loophole, and there is no labor discount. This is inaccurate. You are speaking of the Employer portion of social security tax (aka Self Employment Tax). All the happens when switching from contractor to employee is the salary goes down, so the final cost to the employer is identical. (And the income of the employee is also identical.) A contractor vs employee is about flexibility on hours. An employee expects a certain number of hours per year - all the benefits are based on that. A contractor has no such expectation, so they have no benefits (because otherwise you would have to scale the benefits up and down constantly based on actual hours worked).
  - gregd 7y ago
    Going from Contractor to Employee status adds 20% - 30% in labor costs. Things like Workers Comp, PTO, unemployment insurance, etc. that companies are forced to pay. There is indeed a "loophole" or labor discount with ICs.
    - ars 7y ago
      > adds 20% - 30% in labor costs. As I said multiple time: In the real world companies simply reduce the salary 20% to 30% in order to keep the final number the same.
      - lovich 7y ago
        I would like to see evidence of these mythical companies that pay based on what's fair and not based on the cheapest amount they think they can get away with, while meeting their own goals
        ars 7y ago
        Did you read it in reverse? Reducing the salary is cheaper for the company. Or more accurately employees and contractors cost them the same, it's just do they pay it as salary or as benefits?
        lovich 7y ago
        You're implying that there's a set "value" per employee that the companies are going to pay and they merely subtract their costs from employees while contractors are paid more because they lack these fees. That might be the case for skilled labor that freelances but we've seen a plethora of gig economy jobs be created that trend towards minimum wage or lower. That does not mesh with your claims
    - JordanFarmer 7y ago
      That is why contract positions have a far higher payout. I know many contractors who come out on top this way. Many have a spouse with a job that provides Insurance for the family. They pocket that extra. Others just enjoy the autonomy of the hours they work ETC. If restaurants are exploiting workers by calling them contractors, why do the workers stand for it? Go work somewhere else. Why does that restaurant have cooks on staff if they are indeed mistreating them? Are people so weak in this generation that they can't make things happen themselves and need the government to save them? "Strong men create easy times, easy times produce weak men, weak men cause hard times, hard times produce strong men." Get ready for hard times...
      - taurath 7y ago
        That sounds like a talk radio tagline. Real wages have barely improved since the 70s. The safety net has been dismantled. We're in the 3rd world in terms of worker protections. But toughen up! Don't fight for better pay, go work for someone else and the market will provide!
      - scarejunba 7y ago
        The government is of the people, so yeah that's how they're making things happen this time. If you have two tools and never use one, then you only have one tool. In America, we have both the ballot box and the market.
        JordanFarmer 7y ago
        The track record of the government saving people and fixing things is absolutely abysmal. It is literally insane (doing the same thing over and over and expecting a different result). Why has the black poverty level been the same for 60 years? Do you know how many laws and programs the government has created to save them? The government doesn't do anything very well. There are always so many unintended consequences that need more laws and programs till there is so much red tape and taxes needed to pay for all the bureaucracy and programs. Government officials campaign on promises of half baked ideas. Then when they get elected, they do their job, making more and more laws and programs. Progressives are even realizing now that the government has created a welfare generation and are pushing to end it in favor of guaranteed basic income. Look at the insane amounts of money sunk into inner-city schools and do things ever improve? No. The government is a failure for social programs and fixing problems citizens face. This is easily proven though statistics. How do we keep on going down this path? I'll never understand big government people...
godzillabrennus 7y ago
Not to mention employee labor and liability is basically a personal guarantee for a business owner. Hard to justify committing to wages if your business is new or volatile. Easier to just not start a business. California has great programs to help the poor with food, clothing, and energy. At some point it becomes easier to just stop working and live off the state. Then you vote for the party that will let you keep your free stuff. Then you have a land where costs are high and the people are mostly poor. You have California in 2019. https://www.politifact.com/california/statements/2017/jan/20/chad-mayes/true-california-has-nations-highest-poverty-rate-w/ https://www.politifact.com/california/statements/2017/jan/20...
- taurath 7y ago
  States without a good social safety net do not do better in terms of new businesses. Frequently the opposite - not having an educated workforce, infrastructure, or any amount of established industry keep the bottom states at the bottom. If they did do better at starting businesses, many of us would be moving there.

Because companies complain that it adds 20% - 30% to their labor costs.

by gregd 7y ago

Because companies complain that it adds 20% - 30% to their labor costs.

More accurately, the loophole they've been using to obtain a labor discount (employee misclassification) has been removed.

ars 7y ago
There is no loophole, and there is no labor discount. This is inaccurate. You are speaking of the Employer portion of social security tax (aka Self Employment Tax). All the happens when switching from contractor to employee is the salary goes down, so the final cost to the employer is identical. (And the income of the employee is also identical.) A contractor vs employee is about flexibility on hours. An employee expects a certain number of hours per year - all the benefits are based on that. A contractor has no such expectation, so they have no benefits (because otherwise you would have to scale the benefits up and down constantly based on actual hours worked).
- gregd 7y ago
  Going from Contractor to Employee status adds 20% - 30% in labor costs. Things like Workers Comp, PTO, unemployment insurance, etc. that companies are forced to pay. There is indeed a "loophole" or labor discount with ICs.
  - ars 7y ago
    > adds 20% - 30% in labor costs. As I said multiple time: In the real world companies simply reduce the salary 20% to 30% in order to keep the final number the same.
    - lovich 7y ago
      I would like to see evidence of these mythical companies that pay based on what's fair and not based on the cheapest amount they think they can get away with, while meeting their own goals
      - ars 7y ago
        Did you read it in reverse? Reducing the salary is cheaper for the company. Or more accurately employees and contractors cost them the same, it's just do they pay it as salary or as benefits?
        lovich 7y ago
        You're implying that there's a set "value" per employee that the companies are going to pay and they merely subtract their costs from employees while contractors are paid more because they lack these fees. That might be the case for skilled labor that freelances but we've seen a plethora of gig economy jobs be created that trend towards minimum wage or lower. That does not mesh with your claims
  - JordanFarmer 7y ago
    That is why contract positions have a far higher payout. I know many contractors who come out on top this way. Many have a spouse with a job that provides Insurance for the family. They pocket that extra. Others just enjoy the autonomy of the hours they work ETC. If restaurants are exploiting workers by calling them contractors, why do the workers stand for it? Go work somewhere else. Why does that restaurant have cooks on staff if they are indeed mistreating them? Are people so weak in this generation that they can't make things happen themselves and need the government to save them? "Strong men create easy times, easy times produce weak men, weak men cause hard times, hard times produce strong men." Get ready for hard times...
    - taurath 7y ago
      That sounds like a talk radio tagline. Real wages have barely improved since the 70s. The safety net has been dismantled. We're in the 3rd world in terms of worker protections. But toughen up! Don't fight for better pay, go work for someone else and the market will provide!
    - scarejunba 7y ago
      The government is of the people, so yeah that's how they're making things happen this time. If you have two tools and never use one, then you only have one tool. In America, we have both the ballot box and the market.
      - JordanFarmer 7y ago
        The track record of the government saving people and fixing things is absolutely abysmal. It is literally insane (doing the same thing over and over and expecting a different result). Why has the black poverty level been the same for 60 years? Do you know how many laws and programs the government has created to save them? The government doesn't do anything very well. There are always so many unintended consequences that need more laws and programs till there is so much red tape and taxes needed to pay for all the bureaucracy and programs. Government officials campaign on promises of half baked ideas. Then when they get elected, they do their job, making more and more laws and programs. Progressives are even realizing now that the government has created a welfare generation and are pushing to end it in favor of guaranteed basic income. Look at the insane amounts of money sunk into inner-city schools and do things ever improve? No. The government is a failure for social programs and fixing problems citizens face. This is easily proven though statistics. How do we keep on going down this path? I'll never understand big government people...

godzillabrennus 7y ago

Not to mention employee labor and liability is basically a personal guarantee for a business owner. Hard to justify committing to wages if your business is new or volatile. Easier to just not start a business. California has great programs to help the poor with food, clothing, and energy. At some point it becomes easier to just stop working and live off the state. Then you vote for the party that will let you keep your free stuff. Then you have a land where costs are high and the people are mostly poor. You have California in 2019. https://www.politifact.com/california/statements/2017/jan/20/chad-mayes/true-california-has-nations-highest-poverty-rate-w/ https://www.politifact.com/california/statements/2017/jan/20...

taurath 7y ago
States without a good social safety net do not do better in terms of new businesses. Frequently the opposite - not having an educated workforce, infrastructure, or any amount of established industry keep the bottom states at the bottom. If they did do better at starting businesses, many of us would be moving there.