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by jonnathanson 3187 days ago
(Warning: this post contains personal opinions and analysis, some of which might be deemed political.)

There are really two classes of 'contract work' in the US.

The first class is what I'd call skilled specialists. These are your independent marketing consultants, security experts, developers, designers, copywriters, etc. These folks are usually, but not always, fairly experienced. They take up contracting or consulting as a career choice, and while they have to hustle to stay above water, they accept the hustle as the price of freedom from a corporate life. Often they work remotely. If they're strong and well-networked, they have some leeway in negotiating fees and terms for their services. The catch is that there are very few availabilities on the market for their services at any given time, and most firms don't appropriately value those services. As such, skilled specialists thrive or stumble on the strength of their reputations and rolodexes. Many of them have served for years in the corporate world, or in high level academia. They may have the ability to reeenter corporate America at will, e.g., for a client who really wants to bring them in house.

The second class is what I'd call no-choice contractors. These are most often (but not always) younger workers, whom a company will hire for short term jobs, and then spit back out whenever it's done with them. Many of these workers are placed by temp agencies, or respond to open positions for fixed term jobs, and would probably take full time jobs if the jobs were available to them. This category includes seasonal hires, unskilled laborers, and skilled laborers placed at companies on short-term assignments with the vague (and usually fruitless) hope of ascending to full-time status.

Skilled specialists are a much smaller pool, on the whole, than no-choice contractors. And many skilled specialists are but one wrong decision, or bad run of luck, away from slipping into the no-choice pool.

If you're unfamiliar with US corporate culture, the best way to understand my distinction is to first realize that labor lost the war with capital here about 30-odd years ago. During the Reagan era, labor rights one might take for granted in Europe were effectively positioned here as socialistic, and thus cancerous to the 'competitiveness' (read: profit margins) of the firm. Wall Street and hedge funds, along with prevailing MBA management culture, have convinced us that the flexibility afforded to big firms by contracting out their jobs is necessarily a good thing. It allows them to be more nimble, and to operate with a higher degree of tactical freedom from quarter to quarter, or from year to year. More important, if not all important, is that a contract labor force is better in the short run for returning shareholder value.

This line of reasoning is very attractive, but almost too attractive. What we have now is a system, and a culture, that treats more and more jobs as holes to be filled, and which treats individuals not as prospects to be groomed, but as cogs to be worked hard and replaced when worn out. We have also traded strategic thinking for tactical thinking, and we no longer understand the difference. But that's a rant for another time, perhaps. :)

1 comments

It's fun to poke fun at the system we have in the US, but we're doing fairly well from a numbers standpoint. Our GDP is fantastic, our median income is quite good, and we still manufacture a bunch of stuff.

China didn't actually start to manufacture more than us until just a few years ago, and they have something like three times the population.

People say the middle class is shrinking, but seldom mention that the number of people in the upper class is growing. We have pretty good employment numbers and our securities market is booming.

Many of our businesses are the most profitable in the world. We are still sought out as the place to go for education and starting a business. We have more people trying to come here than we can even accommodate.

So, from a numbers view, we are doing okay. We may not be number one in every category, but we're up there on the list and still doing quite well.

Of course, there's more to life than numbers, but hopefully I expressed it well enough.

Numbers are only useful in relative terms. Median is going up, but so is the income and wealth gap. What most people look to achieve in their life is security. Security of resources, water, food, electricity, and physical safety. People want the security of being able to plan for a future, a family, education for their children, seeing their children and children's children move ahead in the world.

What GDP and median income don't capture is that the above security is slipping away from more and more people. Increasingly, you're either a professional married to another professional making $200k+ or $300k+ as a household, which is great. Then you search which metropolitan areas other high income households are moving to and go there and your life is pretty good.

The flip side is you marry someone who makes little, or not marry at all because it's not a prudent financial decision. Wherever you live, your kids are stuck going to school with worse resources and only have other poor kids to become friends with, many in single parent households.

I don't know how it plays out in the end, but I would postulate that large class divides aren't good for societies and nations. Everyone doesn't need to be equal, but there has to be a veneer of everyone being "in this together", and if it becomes too obvious that we're not, then it incentives behavior of "steal or be stolen from", meaning too many people start to game the system and we lost trust in each other.

I've been reading that we are doomed since the days of reagonomics. Well, technically longer. I've seen the very same predictions and arguments made, yet here we are.

To be absolutely clear - the system isn't perfect and could use improvements. My post was merely to point out that we're not only not doomed but are doing fairly well.

We have hungry people, but we don't have people dying of hunger in the streets. We have crappy medical coverage, but we have some of the best practices in the world - and horribly unaffordable emergency treatment that will probably financially ruin you. We have both wealthy and poor, but our poor are rather wealthy on the global scale.

It's not perfect, there's room to make improvements, but it's not really that terrible and the doom and gloom predictions haven't changed since the 80s. They've barely changed since the 60s. I can't speak for earlier than that, I wasn't cognizant.

Society isn't breaking down. The kids are as reckless as they ever were and old people complain about them as they always have. There isn't going to be a revolution, class warfare isn't going to erupt into violent confrontations on a mass scale, and nobody is going to eat the rich.

Call me when they are hanging bankers and politicians from lamp posts. It's not perfect but it's not horrible. It's actually pretty good for the average person. Even the below average have it pretty good if we examine them from the perspective of a global community.

Our poor people get more monthly food assistance than some people spend on food for an entire year. Not that we should emulate them, but we should stand back and admit that it's not that bad and acknowledge that the many predictions of doom have been grossly inaccurate.

Can we improve? Of course, and we should. Only insane people would think the system is perfect and can't be improved. I'm fact, the only differences I see between groups of people are the things they want to improve. I don't think anyone seriously believes it is currently ideal.

It's just not that terrible for the average person. You don't start getting massive uprisings with serious revolution potential until those average people can't get their football and beer.

I agree, people need to be pushed quite far to literally revolt. As long as they have something to lose (and they can't afford to lose it or are willing to, such as football and beer), they will behave .

But societies rise and fall on a greater timeline than one's lifetime. Wages haven't risen since the 70s or 80s and there is still no revolution, so it will take time. But recognizing that there is a problem is the first step to fixing it, before it's too late and it snowballs. Or perhaps ups and downs are unavoidable, and it's best to just plan for yourself.

Either way, the declines in birth rate, marriage, and equality are, by all indications, due to structural economic factors. Society is changing, maybe not breaking down to the point of violent confrontations yet, but it is something to watch out for in the future, but it could take a while.

> It's fun to poke fun at the system we have in the US, but we're doing fairly well from a numbers standpoint. Our GDP is fantastic, our median income is quite good, and we still manufacture a bunch of stuff.

NONE of that matters because those metrics measure the winners. The key measure is, does our system have a lot of big losers? If the answer is yes, then that system has failed.

No, those are your metrics. Your goals don't match those of the system. Ill defined terms like big losers don't really help.

I don't think anyone would argue the system is perfect. I'd conclude that it's not nearly as bad as you seem to think it is. By being a part of the system, you're already better off than some 40% of the globe, by default.

taking your argument to its logical extreme, the goals of the system are met so long as the median and averages look favorable relative to other countries... an ultra wealthy 1% can offset the relative lack of wealth in the rest of the 99% and the median can still look good - I think this is the point you may have been missing above
> an ultra wealthy 1% can offset the relative lack of wealth in the rest of the 99%

Citizens of western nations (the US in particular, median income there puts you among the .3% globally) and the rest of the globe have a similar dynamic yet I have seen no westerners who proclaim the evils of income inequality attempt to resolve that disparity, in fact they seem set to increase their own income making the problem worse. Thus I don't take that argument on it's face as a serious one.

Please point out where and how you believe I've been "poking fun at the system," or predicting its downfall, or in some broad way denouncing the US, as you seem to suggest I am doing? Critiquing an element of a system does not = opposing that system in its entirety. In this case, the element I take issue with is our short-term-optimized view of the value of human capital. Essentially, we fail to rationally calculate the NPV of a skilled worker's contribution as he or she grows more skilled over time.

In the context of this subthread, which you have missed entirely, I am explaining to someone outside the US what's led to the rise of the contract labor force here in the US, and providing a framework by which we might view the different types of contract labor in our industry. That is all I am doing. That is the whole, fairly narrow subject of my post.

Yes, I'm pointing some fingers in very specific directions where blame is due. I'm hardly denouncing the whole US system, or even the whole financial culture, and I'm hardly throwing the baby out with the bathwater. To be clear, neither is the Wharton professor in the interview we are ostensibly here to discuss.

You have also failed to cite a single number, which is ironic, given the crux of your post. You have provided a broad sweep of claims without citation or data. Put some specific numbers on the table if you're going to make them the basis of your argument. (And hopefully someone else can take you up on that argument, because once again, it's not at all the argument my post seeks to open. If you want to bait me into some broad argument about whether or not the US system is superior to the European or Chinese or Turkish or Brazilian or whatever system, I am not interested in taking the bait.)

Going forward, I'd appreciate if you actually took the time to read what I am saying in the context in which I am saying it. Instead, you seem to have latched onto my use of the words "MBA" and "Reagan" and possibly "Europe," and have thus attempted to beat me in some imaginary debate on a point I didn't even make. If all you're here to do is torch strawmen, you won't find many interested takers.

Which numbers would you like? They are all readily available at Google.

Median Income, adjusted: https://upload.wikimedia.org/wikipedia/commons/3/37/Median_U...

Gross Domestic Product: https://d3fy651gv2fhd3.cloudfront.net/charts/united-states-g...

Manufacturing Output: http://perspectives.pictet.com/wp-content/uploads/2014/03/US...

Unemployment Rate: https://infographic.statista.com/normal/chartoftheday_8974_u...

Poverty Rates: https://www.ers.usda.gov/webdocs/charts/82285/povertyratesby...

Now, if you feel you were attacked that is unfortunate, but the system isn't that bad and histrionics about Reagan and being seen as cogs in a wheel is rather dramatic when the system has demonstrated itself to be reasonably effective.

i seemed to have missed the part where you lavished us with citations. i really hate it when people go on for like 9 paragraphs without a single citation and you say something and they are like 'whats your source?! no source no truth!'

most of what you said I generally agree with (about contract workers). then you lamented with the trite: "if only we were like europe" type comment.

tbh, i want to be nothing like europe. who's economy do you lionize? Portugaul 9% ump, Ireland 6.1% ump, Greece 22% ump, Spain 17.6% ump? Even France isn't doing great. Or would you prefer to cherry pick one of the more Nordic countries like Sweden with virtually no ethnic or geographic diversity?

I'm sure Europe is great, but they are by no means an archetype of economic success. Nor is our situation anything like theirs, so this is why people get irritated by such comments.

"Many of our businesses are the most profitable in the world."

As an employee, who's not invited to share in those profits, why do I care? Why would I rather have that, than have more stability and more vacation time like they do in Europe?

Your salary and benefits are your share of the profits.
Not really. And that doesn't address my question. Why do I care that our businesses are more profitable if I don't get any of the benefits of it? What do I get for that "more profitable"? Do I get to work less? Do I get more vacation? Do I get more stability? Do I get more pay? The answer to all of these is no. So what do I get?
You don't have to care, though you might be grateful that they are profitable and thus able to pay your salary. Given that you're on HN, you're probably paid quite well and better than you would be in other countries.

So, it's in your best interest that they continue to be profitable. Your benefit is contined employment and the benefits that go along with that.

If you want to get more from a business profiting more, your best choice would be to buy shares of that business through the stock market. Even those that don't pay dividends can increase in value and increase your wealth along with it.

You are, of course, perfectly entitled to not care one iota. You don't need my permission to do that.

"You don't have to care, though you might be grateful that they are profitable and thus able to pay your salary."

Companies in Europe are profitable, too.

"So, it's in your best interest that they continue to be profitable."

I wasn't asking why I should care that they're profitable. I was asking why I should care why they're more profitable.

"You are, of course, perfectly entitled to not care one iota. You don't need my permission to do that."

So your answer to my original question of why I should care that companies in the US are more profitable while offering crappier benefits to employees than European companies is that I really shouldn't; and that it's a raw deal for everyone else.