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Consulting: Welcome to the cluster-f*ck economy

In the April 25, 2017 Ask The Headhunter Newsletter, a reader deals with modern employment: consulting.

Question

I’ve accepted an offer for a job at a company, but technically I’ll be an employee of the Consulting Firm that recruited me and is billing me out. There’s a third company involved, the Screening Company.

consultingToday I received an e-mail from the Screening Company, asking for W-2s from the employer I worked for between 2005-2011. I happen to know that companies verify prior employment electronically, so I asked the Consulting Firm why they needed W-2’s. He said the Screening Company couldn’t confirm my employment. This made no sense to me. I said I would call the Screening Company to work this out, since there was a number on the e-mail for customer service. The recruiter at the Consulting Firm said not to do that, and that I should download the W-2s from the IRS.

I called the Screening Firm anyway, and asked a customer service rep why they needed W-2s to confirm prior employment when I know they can do it electronically. She said the Screening Firm didn’t need W-2s for employment verification, and that it was the Consulting Firm that required W-2s.

But then she said they do call prior employers, in addition to doing electronic verification, and that my former employer did not respond to their request. “Would it be sufficient if my former employer called you?” I asked. She said, “Sure.” So I called the HR department at my former company and asked if they had any outstanding requests to confirm my employment. The answer: No. (Say what??) I asked if they would call the Screening Company on my behalf and they said they would only respond to a faxed request with a copy of my consent, and gave me their Employment Verification fax number.

Fair enough. So I forwarded the fax number to the rep at the Screening Firm and then e-mailed the recruiter at the Consulting Firm to keep him in the loop. I said if they had any other concerns to please contact me.

I already have the offer in hand. I never disclosed my salary history during the hiring process. Why would the Consulting Firm want my W-2s? What exactly is the Screening Company’s role? Why did the Consulting firm claim the Screening firm needed the W-2’s and then tell me not to communicate with the Screening Firm? I have more questions, but can you help me with these?

Nick’s Reply

I don’t see how your prior W-2 (salary) information is anyone’s business. If the Consulting Firm does its job right, it knows you’re qualified to do the job its client needs you to do. Otherwise, what’s it charging its clients for? What does it matter where you worked in 2011 or what you were paid? Just sayin’.

You’re asking good questions, but there’s a bigger question: Why are there so many middle-men involved in this?

A cluster of companies

You’ve got:

  • The Consulting Firm that recruited you. That is, your actual employer that will sell your work.
  • The company where you will actually be working. That is, the Consulting Firm’s client.
  • The Screening Company, which processes the hires that its client, the Consulting Firm, makes. The Screening Company seems to be handling the Human Resources tasks for the Consulting Firm.

I’ll hazard a guess that there’s a fourth entity — yet another firm that will process payroll, taxes, and benefits.

There’s a term for the amalgamation of arm’s-length client relationships and consequent finger-pointing that make up this employment game: Cluster-F*ck.

I have no idea how any of these entities can even stay in business with so many hands in the till. You’re not hired to work; you’re rented out to do work. The price being charged for your work far exceeds what you’ll see in your paycheck. Everyone’s getting paid for your work; everyone’s getting a taste of your pay. Good luck figuring it out, because I wouldn’t even start trying to. All I see is a hole in the economy, where money goes without the creation of any value. (See Consulting Firms: Strike back and stir the pot.)

This is not consulting

You’re not being hired by a consulting firm to help it consult to its clients. You’re hired by this Consulting Firm so it can rent you to another company. That’s not consulting. (And don’t confuse what your Consulting Firm is doing with headhunters. See They’re not headhunters.)

Real consulting is an honorable business that creates value. One company turns to another for specialized help: a consulting firm. The consulting firm employs experts in its field that are organized, usually as a team, to solve a client’s problems. Day-to-day work is not the product. A solution, delivered to the client, is the product.

The consultants report to a manager at the consulting firm, not to a manager at the client company. The consulting firm’s employees likely work on multiple client projects at a time. They’re never not working. They’re never “on the beach,” as modern rent-a-worker companies like to call unemployment. (See Will a consulting firm pay me what I’m worth?)

The deal you’ve signed up for is not consulting. None of the companies you describe seem to be responsible for you — or to you. One hires you. You work for another. A third handles the transactions. (I still think yet another will handle HR tasks, like processing payroll and taxes, and administering benefits, if there are any.) When you have a question, each points a finger at the other.

Work for your employer

You’re asking good questions. I don’t have any answers. You’re being forced to deal with middle-men whose roles are questionable. In a well-organized, well-managed business, the functions of all those middle-men are functions of the company itself. A competitive enterprise leverages its expertise with all those functions to produce profit. Beware employers that you don’t actually work for.

consultingMy advice is, work for your employer. Avoid any drain of economic value from your work. Don’t let middle-men interfere with the employer-employee relationship. The risk you take when you participate in this kind of cluster-f*ck economy is that you are not the worker. You are the product. You become an interchangeable part. Worse, you become a returnable interchangeable part.

If the Consulting Firm is paying a Screening Firm to confirm who you are and to handle other transactions with you, so it can charge its client for those services, then what value is the Consulting Firm delivering to its own client?

The employment industry has become one of the biggest rackets going. It really is a clusterf*ck. With workers like you in the middle. But as someone advised a long time ago when a dangerous political entanglement could not be unraveled, “Follow the money.” The real problem here is with the company that’s paying multiple entities so it can rent you. Are you comfortable with this arrangement?

Who do you work for? Who pays you? Are you being paid for the value you create in the economy, or are middle-men draining your value?

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67 Comments
  1. Doesn’t sound like “consultant” to me. It sounds like “temp.” Isn’t that what it used to be called, before marketing spin got involved?

    • @ Nils: I agree. Same old wine in a brand new bottle. Just another gimmick :(

    • Would be interesting to know how many real consulting companies there are compared to how many “staffing” firms.

      What’s the diff between yesterday’s temp agencies and today’s consulting/staffing firms?

      • Seems these agencies/companies add zero value by interjecting themselves for the purpose of collecting a fee. Not unlike the ticket sales “complex” which buys up tickets for entertainment and then increases the price while reselling to the public. No added value for a fee. What a deal!!
        The last time I engaged in “contract” work was in the 90’s. At that time I rec’d the lead via networking (you remember that concept) with no weak link involved in the transfer of info for too much money. Oh, the good old days :)

        • Good analogy. But both beg the question — are there kickbacks of any kind?

          • Consider a case where a company outsources it’s internal IT staff (like their help desk, DB/Sys admins, developers, etc.) to a consulting company (like TATA but smaller).

            Come to find out, said consulting company was owned (or at the very least was able to profit by getting additional business) by a family member of a VP in IT and this person was part of the decision making and still had a job after the internal people were gutted.

            So yes, there is likely some funny business going on.

  2. The employer created this racket to avoid paying the “consultant” any 20th century style benefits like health insurance, retirement, paid vacation, etc. And I know I’ve mentioned this before, in 2013 I had to hand over my full tax returns to be hired by Sallie Mae for a crummy 4 month data entry gig that paid $14/hr (a salary I had last earned in 1993). Such is the world in which we now live, either adapt or get off (I’m trying very hard to get off)…

  3. I work for a company that’s a household name – I am coming up to my 1 year anniversary, and have even gotten a raise. Yet even our company outsources the recruiting (as evidenced by some differences in e-mail addresses to indicate a contractor with my company) as well as the background checks. The last large company I worked for did their own background checks and recruiting internally (that was 2 decades ago). In fact, I got that job by attending a job fair when I was getting ready to graduate from college!

    In my job previous to my current one, a long-time friend recruited me. Even so, that was a 3 month contract-to-hire position. I don’t like that arrangement and almost didn’t apply, but she explained, “That’s how all companies in California do it now. It’s about liability – and we are a small company that isn’t equipped to do the thorough background check that we are required to do.” Let’s just say that things worked out well, and I got some raises. I left because opportunities are shrinking for that company, and my boss tried to aggressively counter-offer me. I said “No thanks” and kept walking – that was hard to do because it was a great counter offer!

    I am telling this story because there are perfectly good companies out there that are just following the trend of other companies. You probably don’t hear much about the good companies – it doesn’t make for good copy. That said, you have to know the people you are working for. In my current job, I knew a couple of employees already, and in my previous job, I was recruited by a close friend.

    So I now ask you this: Why does the word “liability” scare everyone? Shouldn’t people and corporations be accountable for their actions?

    • You said it right here, Kevin:

      “That’s how all companies in California do it now. It’s about liability – and we are a small company that isn’t equipped to do the thorough background check that we are required to do.”

      It’s what they all do. So, what does that say about our economy?

  4. This rats nest of relationships to get a single worker in a seat is becoming all too common.

    First of all, the term “consultant” is a misnomer since what is really happening is plain old contracting out for contingent labor.

    Second, the staffing firm outsources all of its HR, payroll, and benefits (yes, sometimes there are some) to third parties which have little or not commitment to the employee. They handle dozens of firms and hundreds if not thousands of employees so you really are just a number to them.

    Third, neither the consulting firm nor its client gives a damn about what the outsourced HR / Benefits Administration firm does, or says, to the contracted employee.

    As for verification, the US government verifies citizenship https://www.uscis.gov/e-verify and any of the major credit bureaus have your employment and compensation data available for sale to a business.

    Asking for W-2s sounds very suspicious and could lead to identity theft since your Social Security number is on them. I for one would not release them to any employer for any reason.

    • @Mayor: Kinda sounds like a pyramid scheme, doesn’t it?

      Consider the effects on the workforce. Just-in-time hiring eliminates any need for employers to train and develop their workers, so they can re-deploy them as the business and the market change. That’s the investment companies used to make to stay competitive.

      When those just-in-time workers are cancelled (nobody has to lay them off), the business can bring in new ones who are also just-in-time.

      The ones cancelled either invest in new education/training while taking time off (with no income), or try to find more of the same old kind of work, probably at lower pay because it’s less in demand.

      So, what happens to the labor force? This is what I contend the US Dept of Labor and the Federal Reserve’s economists fail to look at. This is the underpinning of our economic problems.

      Why buy and feed the cow when you can rent the milk?

  5. Boy, Nick, did you hit the nail on the head. From 2000 to 2015 I worked for several “consulting” firms, essentially in a rent a CPA/PM role. The markup on my work was typically in the 100 to 140% range. After several years in various roles, I began to refer to myself as a contractor, not a consultant. One of my clients referred to me as “bubble staff”.
    I have had similar experiences to those recounted by the letter writer. The hiring process at most of the contracting firms is convoluted and confusing. Unpaid “bench” time is all too common. A few of the “rent a brain” firms try to do it right but are often crowded out of the market by less scrupulous providers.

    • If there is no payment for “bench” you are not a consultant, you are a temporary employee and the company you work for is a temporary agency. They have zero interest in your career.

    • @Lewis: I’m waiting for someone to explain that the overhead is the same for an employer whether it hires its own employees, or pays a premium to a “consulting” firm to cover the administrative/recruiting/payroll/etc costs.

      I don’t think it is. Takers?

      • When I was in a contract to hire position, at every weekly meeting, the ops manager would complain about how his temporary labor rate was killing his margins. Yet senior management would not let him hire those people so they were actual employees.

        Theoretically, you should be able to charge a higher “out-the-door” rate for supplied temp labor in place of actual employees. That increase is the risk premium one pays to the temp labor company for taking on the duties/risk/responsibility of having actual employees.

        Kind of like outsourcing your non-core competencies. But if you do that with people, what’s your real competency? Hell, why not temp out your VPs and CEO, too?

      • Back 25 years ago we hired consultants because they came out of a different budget bucket. We managed on headcount, and they didn’t count as headcount. They were actually more expensive, and they stayed forever (this was pre-Microsoft decision.) When keeping them on as consultants became impossible, we hired most of them full time.
        But I bet in many cases the “consultants” get paid less than employees, enough less that it would be very obvious come salary administration time. Much easier to let their companies screw them than having to do something about the inequality.

        • @Scott: An interesting artifact of these deals is that the “client” (where the worker actually works) doesn’t know how much the worker is actually paid by the “consulting firm.” This has all kinds of ramifications. The client might not want to know, or pretends not to know, if the consulting firm is under-paying. It’s not just a potential for abuse — it’s real. I’ve heard from enough people who’ve been hurt by this to believe it’s real. When employers insist on hiring via third parties that depress pay, the market of job seekers feels helpless and starts accepting lower pay. And the cycle starts. Meanwhile, the Dept of Labor and the Fed wonder what’s going on.

          • I knew how much we were paying the company, but I had no idea of how much they were paying the contractors. But I certainly also believe this problem is real. Due to reorgs I wasn’t managing any of them when they got hired full time, so I don’t know if they wound up with raises or not. They did get raises from their companies from time to time.

      • As a “commodity engineer”, I don’t have the visibility into what passes for reasoning behind paying a contract house to supply what should be a design shop’s stock in trade.

        However, until she got tired of the rat race, my wife was a nurse manager at a local hospital. It really galled her that she had to lay off some of her trained staff due to budget cuts, then got stuck training “traveling nurses”. It seems that, at the highest levels, money was being siphoned from the direct-employee pot into the rent-a-nurse pot, and front-line managers, like the employees themselves, just had to suck it up.

        Bottom line: while it doesn’t make sense to any of us, it must seem like a good idea to someone. The real question is: do his interests align with those of the company he’s running?

        • @My Client: You’re reminding me of at least a couple of cases I know where managers at a company established staffing businesses on the side and sold the service to their own companies without disclosing they owned the biz. Then these managers hired from themselves. Where there’s a hole in an economic system, there’s someone holding a bag that money drops into. Now, take this to a higher level. What’s to stop top management or investors in a company from setting up staffing firms to do the same on a bigger scale? If we can think of it, someone’s done it.

  6. When I read the OPs story I shudder. The employment pipeline is truly broken.

  7. I have had two companies demand pay stubs or W-2 for immediate previous job, I suppose to verify my salary claim. Both jobs very clearly keyed my new salary off the old one.

    But demanding that many is ridiculous. Something very odd is going on, and I’ve been in odd situations.

    I also agree that labelling what the submitter is about to do “consulting” is very deceptive. It is temp work, plain and simple.

    Many larger employers of temps have a company that manages all the temps, takes care of notifying the smaller agencies, who usually outsource their payroll to someplace like ADP. The master company also rolls up the other agencies invoices so the client has a single invoice to pay for their contingent workforce. This part is not so bad.

    Margins are often smaller than you might think. Take pay to the employee. Another 15% or more is used up by Social Security/Medicare, unemployment taxes, workers compensation, maybe there are other taxes. There might be another 20 to 30% for all the rest of the overhead and the profit for the various middlemen. So $60/hour to the temp, and as an absolute top, $90/hour is billed out. Still profitable, of course.

    It’s rare for someone to be billed out at 100% markup. Client companies are fully aware of the economics, and sometimes actually specify pay to the temp as well as pay to the temp agencies.

    And then there is 1099 independent contractors. That’s actually better. All the taxes mentioned are not required, and, since it’s not a payroll, you can pay late without getting in trouble.

    Finally, many “wonderful” employers are actually 1/2 temporary employees, who don’t have anywhere as good a deal as the full timers.

    • @Bob: What you’re missing is the cost of training and developing real employees. Companies save that when they use temps. So, where does that value go? Where does that cost go?

      • Value goes to the companies that can get overqualified people at relatively low wages.

        Costs are pushed on to the employees who must deal with uncertainty and the need to train themselves.

    • The 100% markup is the norm for the places I’ve worked. The markup is treated like a state secret for obvious reasons. How do I know? I’ve seen the invoices.

      • So the companies are paying $120 to $200/hour for temporary programmers.

        Or is the markup lower for higher paid employees.

        One job last week the manager and I exchanged secrets and I found it was about 45% over my pay. That’s been my understanding, for programmers, as a common value.

      • I’ve seen routing mark-ups of 30%-60%. Never 100%. But I don’t doubt it.

  8. It’s said the consulting firm recruited the writer and that the “employee” has the job offer in hand. With all the maze involved and unclear reasoning over procedures, why not negotiate with the so-called consulting firm and determine how much leverage can be attained in this situation. Confront the “consulting” firm and declare yourself an independent who needs only to supply the 1099. Determine the salary you believe the hiring company will accept (not what you think you are worth) and state that as what you want.
    There are many non answered questions pertaining to the hiring company, the person posing the question, the industry involved that could impact the plan of attack. Simply stated, based on what information the writer has supplied, I would draw a line in the sand and find out what all the entities involved will do. How important is this job to the writer? It definitely is a learning experience and one the writer can use for future employment. He will not last long at the hiring company so it’s vital to develop a future strategy should this occur again.

    • @Tomas: Very good points. I think almost all of them are ignored nowadays because everyone accepts this “consulting model” as the norm. If you want a job, you have to play along. If you don’t play along, well, there are 50 more “candidates” waiting in line behind you.

      I call it a cluster-f*ck because this system is so dense and involves so many employers, workers and associated entities — including the government — that no one seems able to disengage.

  9. This is a dodge that many body shops and their customers have gotten in trouble for. Simple definition is from the IRS, https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

    “Common Law Rules
    Facts that provide evidence of the degree of control and independence fall into three categories:
    Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
    Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
    Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
    Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.
    The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.”

    • @JimDR: Ah, now we’re getting somewhere. You da man. Where’s the IRS???

      • Many of these companies also have a point of terminating, or interrupting the consultants’ engagements to throw off the scent. So, person A is hired by body shop B who passes A to Corporation C as a”Consultant”. Consultant A, living onsite at Corporation C, using their facilities and working as-directed, has their engagement ended (amicably) as they approach some elapsed time that starts to feel too much like Employee A status. At the termination of this, body shop B generally terminates the person (former Consultant) A. In some cases A becomes Employee A at Corporation C, with the tenure and benefit clock starting at zero.

        “A” needed the work, so cannot and will not complain. B performs a needed service. C sidesteps regulations. Discovery and correction are incidental and probably only through forensic accounting or jilted whistleblower.

        • Excellent point, and the reason that these faux consultancies thrive; “A” needed the work, so cannot and will not complain. When the mortgage payment is due, the bulldog must be fed. Few of us can afford to be choosy.

        • ” In some cases A becomes Employee A at Corporation C, with the tenure and benefit clock starting at zero.”

          Well, never thought of that, but it begs the question, how much does it really save the company in the long run? I mean, the company is going to have to pay for the salary/benefits/taxes to the employee/consultant or whatever you want to call them.

      • We don’t know if the writer will be a 1099 independent or a W-2 employee of the agency.

        If the latter the IRS is just fine with it, the appropriate taxes are collected.

        And in my opinion, an awful lot of 1099 work is a pushing the limits for being properly classifed. Agencies love it because there job is simpler, and will often over a premium over W-2, like $65/hour W-2, $75 for 1099.

        It’s all fun as long as they don’t get audited.

  10. One could make copies of the W2 and white-out the salary and social security info. Then re-copy so the white-out doesn’t show.

    • Or, you could say “I will SHOW them to you, but you may not make copies.”

      Or, have your attorney draft a liability agreement for them to sign granting you untold damages should any of your information EVER get out and harm you in the process.

      Or, you can just say no.

      • @Hank: I like option 2. Let’s spread the liability around. Nothing makes a bureaucrat stop to think like liability.

    • Or Photoshop them to show a salary 2-3x what you had.

  11. Why does this crap happen? Because the “consulting” companies have salesdroids who come to real employers and tell them that using their services is cheaper and avoids messy layoffs when a downturn comes. Long term commitment and some degree if aligning employee and employer interests don’t count in this.
    A long time back HBR had a famous article on core competencies – that is, having businesses focus on what is important. That is good justification for contracting out janitorial services, accounting services and reference checks. But some companies seem to think that recruiting is not a core competency – and I think a lot of us agree that this is stupid.

    • @Scott: Core competencies. A long forgotten concept. So’s recruiting.

      • Recruiting is a core competency. Don’t believe me, ask any good professional sports team who puts in a ton of resource on scouting.
        Managers and coaches don’t have their scouts cold call high school or college kids. The scouts are out there making connections and studying the talent pool. Just like a good headhunter does.

  12. My favorite protest singer, Phil Ochs, once sang about jumping on a getaway space ship to Mars, or anywhere where there are bars.
    Earlier this year, when I was still working, I had to come up with a politically correct term for CF, which is an incredibly important term but I worked with a group of people who only allowed polite language. Respecting their capabilities as well as their deep personal integrity, I worked hard to find a powerful substitute. I even asked some of my less reserved co-workers to help me find or create one. They shook their heads, but encouraged me to try.
    They approved of the one I created: Vast Array of Undesired Anomalies.
    Or was that one for bad picking errors (I worked in a distribution center)?
    Vast Array of Undesired Outcomes.
    I guess it needs some more work for the official version.

    • Sounds good to me. It’s the right amount of corporate-speak to it.

  13. I wish recruiters and “consulting agencies” would stop perpetuating the myth that they have the employee’s best interest at heart. That is 100% inaccurate. Not only do they take a GIANT chunk of every paycheck for the privilege of introducing you to the employer, but they also dangle the promise of a permanent job over your head throughout even if they know damn well from the beginning you will never be hired. I suppose if you’re incredibly brilliant and help design a new patent for the company or something they’ll find a place for you, but, for the average employee it seems to be a way for the employer to get out of paying benefits and be able to fire you with no notice on a Friday afternoon if they should decide your services are no longer needed.

    I’ve interviewed and landed contract roles at a few companies with the help of recruiters early in my career. One was so bad that I was pulled off an assignment for no legitimate reason, only to find out that the recruiter’s daughter was given the job on the Monday after I was let go. Granted, it was a low-level administrative job in the bowels of a hospital, but, still, shows how much respect the agency had for its employees.

    • @Jennifer: I very loosely suggested that the “overage” charged by the staffing firm comes out of the worker’s pay. This is worth thinking about. Where does it really come from? If the worker is underpaid, then part of the diff certainly does. Even if paid fairly, part of the diff covers admin and overhead that the “place of actual work” saves, and that the staffing firm pays for. And then there’s profit.

      While we can debate the first two, the profit is not debatable. And the question now is, profit for doing what? Transferring costs? I don’t think so. I think the profit at this point is what’s being skimmed out of the economy without adding value.

      What do you all think? Is there a good cost accountant out there who can build us a simple model?

      • I’ve always thought about this in relation to “temporary labor.”

        What is the REAL savings here because the agency wouldn’t do this if they weren’t making some sort of profit.

        The only thing I could really think of is the end client could save on unemployment/severance costs if they had a cyclical business or needed one off help. But even then, wouldn’t the agency have to absorb these costs and therefore up the costs to the employer?

  14. I work (as an employee) for Big Bank. Big Bank “hires” contract programmers to do most of the coding for 18 month gigs. (18 months is, I think, some lawyer’s idea of proving that they’re not “employees.”) The idea seems to be that we don’t ever risk having to lay anyone off. So we teach contractors about banking and our systems and maybe get 12 months productivity before they leave with all the knowledge, and we start over. From time to time we are allowed to hire people and they are often former contactors. And we do have people that do the “teacher schedule” – 18 months on – 6 months off (another Lawyer-determined span) – and then come back. (Sorta like public school teachers who teach for 9 months and take summers off.)

    The good: We always know who to hire, when we need to – They’ve already done the job.

    The bad: Training, retraining, retraining, ad infinitum;
    Difficult to get rid of the not-so-good-contractors, because, “S/He’s only
    here for another n months”;
    “Real” employees become watchers and not doers;
    The not-so-good-contractors still bill when the Employee has to step in to
    finish the project.

    • One company had a six month limit on contractors. This might be OK in the warehouse, but horrible for engineering. After about a year of this, they came to their senses and allowed long term contractors in engineering.

    • @JB: Oh, JB, you just dropped a big bomb. Thanks for the flow chart. Or is it a project chart? I’m gonna get in touch with an economist I know and share this.

  15. I love the term “cluster-F*ck”. I believe it come from the Vietnam war when the US with drop large numbers of bombs on a perceived enemy location, then go and try and count how many had been killed only to find few to none. The Generals claimed that the Viet Cong must have dragged the bodies away. The reality though was it was a really big mess and nothing got accomplished.

  16. I’m part of a huge “consulting” contract at a very well known telecom company and been punching the clock almost two months and hardly doing anything. It’s such an enormous project and bureacracy that they don’t seem to have noticed or don’t care that I’m not adding much value yet.

  17. A big reason I’ve heard for hiring contractors is so they can be fired quickly and cheaply if it doesn’t work out. An employer who buys into this seems to me to be just like a guy who refuses to marry his girlfriend because someday they might get divorced. I’ve seen guys say this even when they two of them buy a house together and are similarly entwined.
    I guess it is all lack of commitment.

    • As I said above, I don’t get how this would work.

      I would assume that the agency has to cover unemployment of the worker and therefore pass that cost onto the client, so that things don’t work out (especially on a consistent basis), their profits would go down or what they would charge clients would go up – ultimately at some point it may make no sense to use an agency?

  18. Scott 636pm 4-26
    Brilliant!
    Talent Scouts in the business world “ahead of the curve”
    Where are these people?

    • I hired PhDs in a very specialized area. The way I did it was to be involved in technical activities like conferences, know a lot of professors in the area with good students, follow the stuff that these people were publishing, and then get some as interns. This took time and I had to stretch my company’s rules a bit. I used to reject all the resumes from HR (unless they were really good) until right up to the deadline, and then when HR got nervous about filling the position told them “gee, I have a good candidate right here.” We hired most of them, which was the goal, so I got a slot next year.
      Heck, if I wanted to hire good waiters I’d go to lots of restaurants and notice who was hustling, or hang out in places waiters go to after work.
      It takes time, but scouts for sports teams don’t work for free. And no doubt your competitors with high turnover will just think you are lucky.

      • @Scott: Nice operational definition of recruiting. Real recruiting. Doesn’t matter if it’s a recruiter doing it or, heaven forbid, a manager!

  19. I have had been in various roles at two different companies which got into trouble with Dept of Labor and the court for creative classification of W-2s as 1099s, with the expectation of doing full-time duties at lower salaries.
    I agree with Nick on having the liability agreement for recruiters to sign, in order to make them accountable.

  20. Companies will continue this sort of abuse as long as we employees take it. Just say “No!” Oh….the economy is good; if these companies can gaslight you into thinking the economy is “bad” then they just found a way to save money. Clever, yes. Nice? No. Don’t let them gaslight you anymore! PS: The term “Gaslight” comes from the title of a 1940’s classic. It was about deception.

    • No gaslighting here, we now live in a world where a strong economy does not translate into a strong job market. Here’s the latest example I came across that flies in the face of that “full employment” nonsense, note the number of applicants stat at the bottom, currently at 364, https://www.linkedin.com/jobs/view/257851592/ (gotta wonder how desperate a person must be to apply for a job knowing there were 363 previous applicants).

      • My wife is a librarian, and she gave up her previous job a few years ago to join me (along with our 2 kids) on a cross country move that included a great pay raise for me. Unfortunately, she has not been able to find work in her field as it is highly specialized. Even so, she is continuing to look, but in the meantime, she volunteers at public and school libraries in the area to keep her skills up, and it also gives her a chance to “hang out” with the people she wants to work with. We happen to be in a very literate town, so there are lots of unemployed librarians here. She is also looking into other kinds of work she can do. If you think Google and Amazon have killed librarianship, just remember two things: (1) Libraries have more patrons than ever before, and (2) Librarians know how to search for the GOOD information – and it may or may not be on the internet. Also, librarians have specialized search sites that you and I don’t have access to as these sites are accessed with an expensive subscription.

        As I re-read this, I am asking myself what it has to do with the clusterf*ck economy, and my answer is that employers all over the place a mesmerized by magic computers. In time, people will realize the importance of the human touch.

  21. Hi Nick,

    In general, re: this whole discussion:

    BLS knows jolly well what the true stats are. The latest (April) report, has the same stagnant numbers of chronically unemployed (with a slight reduction), same numbers of those who are working two jobs, whether it’s one FT/one PT, two PT, or two FT! My state is publishing “happy talk” nonsense about full employment, and even their data shows that the those in the fatal layoff age group (55-64) still are barely being hired, while some who are 65 and older are getting jobs–they have Medicare and SS so companies can skip health insurance.

    Nothing will change until people quit taking crappy job offers, or until we see nationwide boycott of companies that ripoff workers (which would be most companies!). I’ve had the same elaborate background check garbage for stupid short term jobs, as others who commented.

    A few reporters, mainly NPR (Next Avenue) are covering stories of what’s really happening to workers. We all need to scream a little louder.

  22. I’m a bit late to the conversation, but this too seems silly. Back in the day, the LW would have called a temp. If you’re a temp, your employer is the temp agency. Usually, your paycheck came from the temp agency (the site where you worked paid the temp agency, who took a cut and paid you). You may or may not have earned benefits (the benefits would come from the temp agency, not from the site where you go to work). Some jobs were temp to permanent, some long-term temp, some short term temp.

    The confusion with the SC and CC and the client company seems like a three ring circus where no one knows or will admit to knowing what they and the others are doing. It sounds like the client company (job site) has outsourced everything.

    I like Nick’s advice to work for your employer, not a middleman, who gets a cut of your wages. Years ago, I signed up with a temp agency, who placed me with an insurance company. The temp job worked out, and we both got a look at eachother, so when a permanent job opened up, my site boss encouraged me to apply for it (I was hired).

    Even more years ago, my brother worked as a temp for the phone company–phone company paid the construction company that hired him out $30.00 per hour, of which my brother got $4.00 per hour and no benefits.

    At the insurance company where I worked, when we were in the process of moving our site and jobs out of state, the company hired two “consultants” who were experts in getting the operations running at the new site long distance. They worked in our office and were there for 18 months. They were from Texas, were called “consultants” not temps, and but weren’t paid directly by us but thru their firm. They had keep very careful track of their time (time away from the computers, even for a short bathroom break or to get a cup of coffee had to be docked and/or made up). I didn’t understand the difference–they saw themselves as consultants, not temps, but in a real sense, they were temps too. The job wasn’t permanent, and when they finished, they went on to the next assignment.

  23. Clusterf*ck is right. In addition to the many issues is the rise of the gig economy and don’t kid yourself this is NOT limited to just ride share deals. Many consultants are working from home/library/ect. working on everything from basic reports/presentations to more complex tasks.

    At a Fortune 100 company I worked for, one of the VP department heads was fired for using an outside consultant to create his department budget for more than five years. He sent confidential corporate information by USB stick and by email to his friend to complete the budget. The company caught him by accident while they were reviewing data usage and were trying to figure out why he was sending and receiving such large files on a regular basis.

    With many employees overworked these days I am not surprised this happened. On a more global scale this means that many company’s FTE (full time equivalent) metrics are under counting the full number of people required to complete tasks/projects as well as creating a significant risk with lost/stolen data.

    Really haven’t seen too much written about this but it would be interesting to know how people working off the books may be leading companies to assume they don’t need to add headcount.

    • @Anna: That’s a good insight. Companies shoot themselves in the foot in many ways when they outsource their work and employees.

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