When I graduated from colllege I started working at a top tech company on a contract to hire.
The company was paid 50/hr fore and I was paid 20 an hour. When I asked for more, the indian-born Indian CEO of the company went apeshit on me.
No real story only that almost everyone is scum. It's not just the companies. When I told the director of my org what I was getting paid she hired me full time right away at a competitive salary. And I was just lucky that she happened to like me. Other people who complained simply got let go.
I sense there is something else at play here
IT work isn't that hard, yet for some reason instead of increasing awareness that there is huge demand for these jobs, we fly people in from india. We pay 150 bucks an hour for them, when an eager college kid can do and would do the same job with a bit of training for a fraction of the cost. Something else is going on here.
There are two reasons (both sort of hard to fix) for why contracting is screwed up.
1. Co-employment- Large companies like Google or Apple would love to hire contractors directly but are very scared of being sued by contractors that can claim they were actually employees-not contractors because of the unclear rules around who is/is not an employee. So they introduce a staffing agency in between to become the 'employer of record' and offset the risk.
Things like hiring and paying contractors directly, giving them laptops, keeping them for long terms, training them, etc. actually makes a stronger case for contractors that might want to sue them, which is why you see the weird ways these companies treat contractors (not allowing them into morale events, restricting how long they can work, etc.)
How to Fix- Labor laws would need to change, making it clear to companies how they can hire contractors without becoming liable to be held as employers. New labor marketplaces like Taskrabbit, Homejoy, Workmarket, etc. will push lawmakers into doing something soon, but this is going to be tough given how strongly labor unions are against this.
2. Non-transparency. Large companies don't like to advertise that they hire contractors. They instead give their open jobs to staffing agencies, who are not allowed to disclose the client name when they advertise the job on job boards. The staffing agencies are incentivized to provide the lowest cost engineer that meets the minimum bar and these are usually the engineers on visas that need to find a project soon or leave the country.
How to Fix- If large companies publicly share all their current contract job openings (reqs) just like they do their full-time jobs. If that happens, anyone can apply to those jobs and even nominate the staffing agencies they'd be willing to work through. They already have Vendor Management Systems (VMS) that they use to share their reqs with staffing agencies, so its just a matter of will.
In the meantime, we (http://www.oncontracting.com) are trying to solve this non-transparency by crowd-sourcing the list of preferred staffing agencies for the Fortune 1000 companies. Contractors can avoid bad labor brokers and instead discover who the preferred staffing agencies for any Fortune 1000 company are and approach them directly.
>How to Fix- Labor laws would need to change, making it clear to companies how they can hire contractors without becoming liable to be held as employers.
Except that the entire reason these laws exist is because tech companies have been caught using people as contractors permanently, "laying them off" on a consistent seasonable basis, and then "rehiring" them again as "contractors". A permanently-employed worker needs to legally be considered a full-time employee and be taxed/benefited as such.
I believe these laws were first put in place to prevent factory owners from exploiting poorly paid workers- and weren't really meant for highly paid tech workers. The problem with requiring companies to hire everyone as employees is exactly the reason companies try to find ways to dodge it in my opinion. If the Govt has a problem collecting taxes from contractors that is a different problem and should be addressed separately.
What's wrong with that? Lots of people love working seasonally. Teachers, fishermen, hospitality workers, and forest rangers can work seasonally. Why should programmers be denied the privilege by law?
I'm not aware of how it works in those fields, but as I see it, trying to burden companies with unclear laws and force artificial behavior is what is causing the problem in this case.
For example- A large company needs a contractor and is willing to pay $75/hr for 12 months.
Option 1- Hires you as a contractor directly for $75/hr on 1099. You get paid well, but if they are not very savvy about independent contractor compliance, you can still go after them in the future stating you should have been an employee for various reasons. The IRS could also go after them for not classifying you correctly and claim taxes missed.
Good for you- Risky for Client.
Option 2- Give the req to their staffing agencies and offer to pay them the $75/hr. A Staffing agency finds and hires you as a permanent employee- pays you $40/hr with benefits. Terminates you after 12 months. Large Company ended up paying the same but has much lower risk of being considered employer because the staffing agency was paying you and taking care of your healthcare, etc.
Same deal for Client but low risk- Bad deal for you - Good deal for Staffing Agency.
In the quest to try and force the law upon a company, we successfully complicated and introduced a middle-man into this process.
There's already plenty of laws to regulate them and they work pretty well for the most part.
The problem is if a large company wants to hire contractors directly- and not use a staffing agency. Thats where the laws are unclear and contractors are the ones paying for it.
Is common in games, what has happened to people I know is they get a job and then build the mechanics of a game, they then get fired while the art is discussed and worked on, then rehired to finish the work as nobody else knows how it fits together anyway.
What's wrong about it? You should just charge more in expectations that the job won't last long and you can work at different company on different game mechanics after getting fired. Employing people you do not need is not efficient for both the company and economy.
Companies are also scared the IRS will come after them with a rusty knife for hiring "contractors" that per the 1986 law that removed the safe harbor are really employees. That's probably more of a threat than losing a "permatemp" lawsuit (https://en.wikipedia.org/wiki/Permatemp).
They don't want job-seekers cherry picking or getting confused between full-time jobs and contract jobs (You can sometimes get a higher pay-rate contracting than as a full-time at the same company). I think, they also fear it reduces their recruiting brand. They want to make it appear that getting a job at X is really hard, which is why they boast about their low acceptance rate, etc. If people discovered there are hundred or thousands of contract jobs at the company, it reduces the allure. Use of contractors is also often not deemed as a 'good' workforce practice - similar to outsourcing, mainly because of stories of exploitation, etc. It also leads to complications- think customers buying some sophisticated or sensitive equipment or service from you discovering that you had a bunch of contractors building it.
The college kid presumably could also keep looking for jobs and if bullied to work 60, 70 hours per week would go look for another one. Someone wrapped up in the H1B visa paperwork will be put up with a lot more abuse. So perhaps it is "pay same amount but get more guaranteed work out of it" deal?
Isn't the "something else" just money? The employer gets an employee who is afraid to ask for a raise, since that might mean losing immigration status and returning to a (not as comfortable) life in their home country. With the green card process taking a few good years, the employer has an indentured servant. Indian born CEO or American born, money is money to them.
Immigration reform is essential. If someone on a temporary visa asks "for more" like you did, they might just get fired and replaced with another temporary visa worker. So, they don't end up asking for raises, which means that the labor rate is artificially depressed. If H1Bs were not tied to employers, then this would not happen. BUT this is not in the employer's interest, so I don't think this has a chance of changing.
No. Frequently it is more expensive to outsource and this is well known beforehand by management.
There are plenty of companies out there who choose the outsourcing/H1B route in spite of the higher cost, not out of sheer stupidity, but because they feel better able to control their workers and are willing to sacrifice margin for that.
Anybody who has seen incredulously watched an outsourcing project come to fruition despite knowing that it would never end up being worth it should recognize this. It happens all the time.
So there's a high initial cost involved, but then the company can wage suppress the employee over the next 5-6 years, and in the end turn a profit? Wow.
Individual wages are always lower, but the following can and often do end up ballooning the overall cost of the venture:
* Lower quality net result (& higher support costs).
* Additional headcount
* Higher coordination costs (e.g. paying these bloodsuckers)
The point is that it goes ahead even when it makes no financial sense even 5-6 years out because management prefers a pliant, docile, easily controlled workforce.
> management prefers a pliant, docile, easily controlled workforce
I am trying to understand why, and what the incentive is. If the overall cost balloons up, what is it about a docile workforce that is so lucrative to these companies? Ability to pay lower wages? Not having to search for replacement employees every now and then?
Who said a docile workforce is lucrative for the companies? There are many reasons they may not be. However, in most cases, "the company" doesn't make these decisions - managers do. And plenty of managers prefer a docile workforce whether or not it's good for the bottom line.
>what is it about a docile workforce that is so lucrative to these companies
It is not just about the money. It is about the power, too.
It is peculiar naivete unique to our dominant school of economics to think that the bottom line is at the heart of every decision made by C level executives.
It's not necessarily lucrative at all. Many managers confuse personal power with collective profit, and are crafting their departments to be lord over a fiefdom rather than to contribute maximally to the business.
People are not rational market actors, especially not deep within organizations.
I'm sick and tired of hearing this bullshit repeated over and over again. Let me say this once: H1B workers are not tied down to a particular employer.
It used to be the case that the were, but in 2000, Congress passed a law (known as "AC21") which brought job portability for H1B workers. I don't know why I keep hearing people on HN and elsewhere talk as though AC21 never happened over and over again.
>I'm sick and tired of hearing this bullshit repeated over and over again. Let me say this once: H1B workers are not tied down to a particular employer.
>
>It used to be the case that the were, but in 2000, Congress passed a law (known as "AC21") which brought job portability for H1B workers. I don't know why I keep hearing people on HN and elsewhere talk as though AC21 never happened over and over again.
If you are fired or laid off there is no grace period to find a new job. So, if you are lucky and you time it right you can transfer to a new employer. If you don't, hard luck and get out.
So it is false to say that you are not tied to your employer. The tie is there, it is has just weakened since 2000.
EDIT: AC21 is for those who are applying for a green card (I-485 pending). How the heck is AC21 even connected to H1B? Source/link please?
EDIT2: H1B transfer does not seem to involve AC21. All that happens is that the new employer will need to apply for a H1B petition all over again. So you are simply tied to the new employer, instead of your old employer.
AC21 is not free, there are legal fees and processing times involved. There is a non-zero cost involved. If this cost did not exist, if an employee could just switch jobs WITHOUT needing the receiving company to do anything, then obviously there would be no wage suppression. Employee can ask for a raise, and simply leave if refused.
>The American Competitiveness in the Twenty-First Century Act of 2000 (AC21) and the U.S. Department of Labor's PERM system for labor certification erased most of the earlier claimed arguments for H-1Bs as indentured servants during the green card process. With PERM, labor certification processing time is now approximately 9 months (as of Mar 2010).[33]
>Because of AC21, the H-1B employee is free to change jobs if they have an I-485 application pending for six months and an approved I-140, and if the position they move to is substantially comparable to their current position. In some cases, if those labor certifications are withdrawn and replaced with PERM applications, processing times improve, but the person also loses their favorable priority date. In those cases, employers' incentive to attempt to lock in H-1B employees to a job by offering a green card is reduced, because the employer bears the high legal costs and fees associated with labor certification and I-140 processing, but the H-1B employee is still free to change jobs.
>However, many people are ineligible to file I-485 at the current time due to the widespread retrogression in priority dates. Thus, they may well still be stuck with their sponsoring employer for many years. There are also many old labor certification cases pending under pre-PERM rules.
> if they have an I-485 application pending for six months and an approved I-140
That is related to a green card. And yes, employers typically try to file your I-140 under EB-3. This means that you need to wait 10+ years before your priority date becomes current. Once the PD is current, you can file your I-485. After another 6 months elapse, ONLY THEN can you invoke AC21. In effect, the employee is tied to the employer for 10+ years since companies only file for your green card after you spend ~6 years on H1B. The decision of EB-3 vs EB-2 (about 5 years shorter) lies with the employer. These two categories of green card cannot be self petitioned, only an employer can do it.
EDIT: So to summarize, the employee usually is first locked in during the 6 years on H1B, with the hope that the employer will apply for a green card (i.e. file the I-140).
Then, the employee is locked in for another 10 years, waiting for the PD to become current. And then, after 6 more months, the employee is finally free to change employers.
I don't understand how this isn't indentured servitude.
My understanding was that while you wait your priority date to become current, you are not locked to your current employer. I think this was one of things that AC21 fixed. There is a 180-day period following your I-140 approval during which you are locked to the employer that filed your I-140, but after that you are free to switch to another employer, as long as your new position will be substantially similar to the one for which the I-140 was filed. Changing employers after 180 days have elapsed should not affect the underlying approved I-140.
I've tried sift through the legalese of AC21 and discern as much as I can, and this is my understanding. I might be wrong. Here's the full text of the Act: https://www.govtrack.us/congress/bills/106/s2045/text It's fairly short. I just wish they hyperlinked the references to other laws and acts.
> Changing employers after 180 days have elapsed should not affect the underlying approved I-140.
Employers can actually withdraw the I-140 if you switch jobs BEFORE filing I-485 and letting 6 months elapse - and then you have to start all over again.
The I-485 AC21 provision is not related to the H1B other than most people affected by it also have H1Bs. However the H1B is pretty portable in practice: even though there is no formal grace period, practically, you have about 3 months to find a job and just do an easy transfer (you get a new I-90) and if it takes more then you might need to leave the country to get a new H1B stamped and receive a new I-90 at the border.
Also, the AC21, I believe, allows to start working on H1B as soon as you've filed a reasonable H1B app (provided you are already in the country legally, of course, so it applies mostly to the COS/AOS process).
Source: I had been laid of on H1B twice, one time I started working on the new company immediately after filing the new H1B, the other time I had to wait ~3 months for the application to pass through.
> AC21 is not free, there are legal fees and processing times involved. There is a non-zero cost involved. If this cost did not exist, if an employee could just switch jobs WITHOUT needing the receiving company to do anything, then obviously there would be no wage suppression. Employee can ask for a raise, and simply leave if refused.
In the tech industry, most companies are willing to do an H1B transfer. The cost of doing it is small compared to what they'll be paying you. You can start working right away, as AC21 states that you don't have to wait for USCIS to process and approve the petition before starting work. (A caveat to this is that if USCIS denies your company's petition for you, then you'll effectively be deported. This is unlikely though, if you work for a reputable company.)
The company was paid 50/hr fore and I was paid 20 an hour. When I asked for more, the indian-born Indian CEO of the company went apeshit on me.
No real story only that almost everyone is scum. It's not just the companies. When I told the director of my org what I was getting paid she hired me full time right away at a competitive salary. And I was just lucky that she happened to like me. Other people who complained simply got let go.
I sense there is something else at play here IT work isn't that hard, yet for some reason instead of increasing awareness that there is huge demand for these jobs, we fly people in from india. We pay 150 bucks an hour for them, when an eager college kid can do and would do the same job with a bit of training for a fraction of the cost. Something else is going on here.