Mandatory severance pay from companies for laid off workers

[Oozlefinch]

All this will do is do to most of the country what has already happened to much of the IT industry.

IT is frequently one of the most expensive segments of a large corporation, and one that has the largest flexability in workforce. They can frequently see the workforce surge then ebb, and many of them for decades now have simply contracted it.

EDS, Decision One, CCC, corporate America is full of companies like these. Companies like Disney, Chevron, Boeing, and others generally contract out their workforce in the IT section, as it is generally cheaper than hiring their own. They pay the contractor a set rate, and they are then responsible for providing the individuals who do the work.

And it can get even deeper than that. When I worked at Hughes Radar many years ago, I was a contractor to Decision One, which was then a contractor to CCC which actually ran the IT department for Hughes. The actual number of Hughes employees in the corporate IT department was less than 100 individuals.

Do this, and you are only guaranteeing a huge payday to contracting companies, and at the same time cutting the pay and benefits of the employees themselves. Because if I was the CEO of a company and this was in the works, I would start laying off as soon as I can and converting to contracted individuals. After all, since they would not be my employees, there is no way I could be held liable for their being laid off.

Every time I think I have heard the most stupid thing imaginable when it comes to killing jobs in this country, I then hear something even more stupid. ANd not only would it cause many to move to contractors, many more will simply move their operations off-shore, loosing even more jobs.

 

[Glitch]

All this will do is do to most of the country what has already happened to much of the IT industry.

IT is frequently one of the most expensive segments of a large corporation, and one that has the largest flexability in workforce. They can frequently see the workforce surge then ebb, and many of them for decades now have simply contracted it.

EDS, Decision One, CCC, corporate America is full of companies like these. Companies like Disney, Chevron, Boeing, and others generally contract out their workforce in the IT section, as it is generally cheaper than hiring their own. They pay the contractor a set rate, and they are then responsible for providing the individuals who do the work.

And it can get even deeper than that. When I worked at Hughes Radar many years ago, I was a contractor to Decision One, which was then a contractor to CCC which actually ran the IT department for Hughes. The actual number of Hughes employees in the corporate IT department was less than 100 individuals.

Do this, and you are only guaranteeing a huge payday to contracting companies, and at the same time cutting the pay and benefits of the employees themselves. Because if I was the CEO of a company and this was in the works, I would start laying off as soon as I can and converting to contracted individuals. After all, since they would not be my employees, there is no way I could be held liable for their being laid off.

Every time I think I have heard the most stupid thing imaginable when it comes to killing jobs in this country, I then hear something even more stupid. ANd not only would it cause many to move to contractors, many more will simply move their operations off-shore, loosing even more jobs.

I made a decent career contracting my software development services to other companies, including Hughes. It did a project for the Hughes Missile Division out of Carlsbad, CA back in the late 1980s. Most companies can't afford to hire full-time software developers. So they contract them for specific projects. By the way, I never accepted a fixed-bid contract - that is certain death. I only accepted contracts for time and materials.

For big ticket items, like company-wide custom applications, it makes fiscal sense to contract out the work. It is a lot better than hiring a software developer only to fire them once the project is completed.

There is also a myth that contracting out software development work to other countries, like India, will hurt American businesses. I found exactly the opposite to be the case. BP spent millions having software developed in India during the 1990s, only to have it redeveloped (by me) once it got implemented in the US. The difference in language/communications and culture made what was developed in India completely unusable in the US. Which gave me the opportunity to redevelop their work, and get paid large sums of money in the process. So in this particular case farming software development work out to another country greatly benefited me here in the US.

Personally, I like the idea of companies contracting out the services they require. More of them should do it. However, what most companies that contract services out fail to do is hire a decent in-house project manager. Without good project management the company could end up spending a great deal of money contracting out services and get nothing in return.

 

[Oozlefinch]

Personally, I like the idea of companies contracting out the services they require. More of them should do it. However, what most companies that contract services out fail to do is hire a decent in-house project manager. Without good project management the company could end up spending a great deal of money contracting out services and get nothing in return.

Myself as well. In the 1990's it was pretty much guaranteed work. I often moved from company to company as I specialized in "Roll Out" projects. I would often pull 3-6 months at one company, then move immediately to another. The pay was good, and it got me a lot of great experience.

But the problem is that it lacks stability. I also saw departments rapidly contract if another link in the chain had cuts in another project.

In my first tenure at Hughes, I was a contractor to Decision One, which was contracted to CCC. And when Decision One (formerly Bell Atlantic Business Systems) lost a big contract with another company (I want to say it was Downey Savings), they suddenly had 25 employees to find new homes for. So they let go all of us contractors at Hughes with no warning on a Friday, and on Monday all positions were then filled by D1 employees.

And yes, I found out later it was just as bad as you can imagine. Myself and 1 other guy supported the Executive Building, where the CEO and top execs worked. Into this they threw in 3 guys who did not know the network, the layout, the hardware and software used, nothing. When their contract came up for renewal D1 was canned and another company replaced them. The decision to replace 15 techs who had worked there for a year or more with absolutely no transition with their own employees was the final straw on top of many mistakes "Decision None" made.

But the point is, if this kind of regulation is ever passed, this is what most companies will do to get around it. Almost everything but management will be contractors, and the contracting companies will make even more, the employees make less.

And this has another effect. Contractors can not unionize, because they are not actual employees of the company. So say goodbye to many unions if that happens.

 

[Glitch]

Myself as well. In the 1990's it was pretty much guaranteed work. I often moved from company to company as I specialized in "Roll Out" projects. I would often pull 3-6 months at one company, then move immediately to another. The pay was good, and it got me a lot of great experience.

But the problem is that it lacks stability. I also saw departments rapidly contract if another link in the chain had cuts in another project.

In my first tenure at Hughes, I was a contractor to Decision One, which was contracted to CCC. And when Decision One (formerly Bell Atlantic Business Systems) lost a big contract with another company (I want to say it was Downey Savings), they suddenly had 25 employees to find new homes for. So they let go all of us contractors at Hughes with no warning on a Friday, and on Monday all positions were then filled by D1 employees.

And yes, I found out later it was just as bad as you can imagine. Myself and 1 other guy supported the Executive Building, where the CEO and top execs worked. Into this they threw in 3 guys who did not know the network, the layout, the hardware and software used, nothing. When their contract came up for renewal D1 was canned and another company replaced them. The decision to replace 15 techs who had worked there for a year or more with absolutely no transition with their own employees was the final straw on top of many mistakes "Decision None" made.

But the point is, if this kind of regulation is ever passed, this is what most companies will do to get around it. Almost everything but management will be contractors, and the contracting companies will make even more, the employees make less.

And this has another effect. Contractors can not unionize, because they are not actual employees of the company. So say goodbye to many unions if that happens.

I wouldn't want to unionize. I didn't work at the companies that contract my service me either, that would be a violation with the IRS. I had my own place and did my work there. I only showed up at the company for meetings, to install the software, or to maintain it. All development was off-site. As a result I never got involved in their company politics, and they had absolutely no control over development. Unless they wanted to cough up some serious cash to make a change, the company's involvement in the project ends once they signed-off on the Software Functional Specification document.

The downside you mentioned is something you get use to. When I did business with the oil companies it was "feast or famine." Either there was lots of work, or there was absolutely no work. When there was work, the oil companies always paid better than anyone else. Local, State, and federal government contracts paid the worst, but they were a good source for steady work. In Alaska my options were not as plentiful as they had been when I lived in southern California. Very few businesses, outside of the oil industry and government, could afford my rates.

With companies contracting out absolutely everything, except for management, it would significantly increase the prices for everyone. Businesses have overhead and if I wanted to attract competent help then I need to be able to pay a decent wage. So it was in my best interests to keep my overhead as low as possible. Nevertheless, businesses - no matter how small - are going to incur expenses that employees do not have. Like licensing, liability insurance, workers comp., etc. All that adds to the price. It is much more efficient for a company to hire their own IT staff, but they have to be a certain size for that to happen. You may only need one competent IT employee for every 20 to 30 computers, but it would still be cheaper than hiring a contractor to perform the same function.