Sunday, February 22, 2015

Is there value in becoming an independant contractor?

I ran across an article from the Huffington Post outlining Why We're All Becoming Independent Contractors.  The author Robert Reich says
The rise of "independent contractors" is the most significant legal trend in the American workforce -- contributing directly to low pay, irregular hours, and job insecurity.
It's become a race to the bottom. Once one business cuts costs by making its workers "independent contractors," every other business in that industry has to do the same -- or face shrinking profits and a dwindling share of the market
I suggest this one: Any corporation that accounts for at least 80 percent or more of the pay someone gets, or receives from that worker at least 20 percent of his or her earnings, should be presumed to be that person's "employer."
My personal belief is that having the majority of labor through contractors has been happening for quite some time. I believe things are changing form quite a bit. What I  mean is this for some time companies would hire employees to work for them, pay benefits, and then  there came a period where companies would use staffing agencies to keep some of their seasonal workers, then you have companies as mentioned in the article that strictly independent. This is what I have seen first hand from my experience working.

From an employer perspective, If I didn't have to pay benefits then I wouldn't these are extra costs that can be a bit burdensome especially if I am the small to midsize company. I'm sure a long philosophical debate could be derived from this situation on what is fair and what is not fair.  Where does one draw the line in the sand on who should be allowed benefits. What I do know is that where there is an artificial price floor put in then there will be an oversupply. In this case that means an oversupply of labor and lower marginal price paid in wages. Again this is highly debatable to some. But I wonder the cost of implementing such agency law and enforcement might be to the tax payers as well as what are the implications of such a law on the labor market?  Does this mean that we will have a middle class to rival the time period of the 1950's and 1960's? Does this mean that these agency laws provide minimal change as in after all the money is spent the average person sees their wages in all reality go up on par with inflation?

What does this mean to me on the bottom of the ladder. I think that regardless of what happens with the agency law either one has to develop a set of  specific set of specialty skills or facilitate the evolution of these contracts. One of the things I believe are that the 9-5 is going the way of the dinosaur.