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The Challenges of Being in the New Contract Workforce

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Re: The Challenges of Being in the New Contract Workforce

#241

Post by paulclinger »

AgalmicVentures wrote: post #101
acconrad wrote: post #76

Am I in the minority here for being a contract developer who is happy to be in this place? * I make over 40% more than I did when I was full-time, and I was already in the top band for pay in my title. This far exceeds the 15% markup for self-employment tax. * My wife works full time so she has our back for health insurance * I can save way more for retirement with an SEP IRA than I ever could with a company-sponsore…

Disclaimer: I am not an accountant and I am definitely not your accountant. Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. This is because you can contribute up to 25% of your taxable income, but your contributions are deducted from your income. For example, if you make $1, and put $0.20 in your SEP-IRA, your taxable income is $1 - $0.20 = $0.80, so the $0.20 you put in…

> Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA.

I don't think this is correct. We are talking about employER contribution to the employee SEP-IRA account, which is 25% of the compensation, not exceeding the annual limit (https://www.irs.gov/retirement-plans/retirement-plans-faqs-r...).

Re: The Challenges of Being in the New Contract Workforce

#242

Post by acdha »

module0000 wrote: post #137
trfergus wrote: post #64

Earlier quoted context omitted.

This is why a Social Health Care system would be such a boon to entrepreneurship. It would remove one of the biggest worries for people creating their own business.

Yea - we can work and pay taxes to give you a "boon" as you try out your next big idea. Sounds great for you, not so great for me. Hard pass.

As FireBeyond noted, the system you’re defending takes more of your money: not only are U.S. medical costs substantially higher – on average! It’s even worse for independent buyers — but the layers of inefficiency designed into the system mean that the outcomes are worse.

The other side of this is considering what happens if you get sick: should we just let you die and bill your next of kin for the cleanup costs? If you’re not that heartless, all of the alternatives cost more than helping people get medical care. I’d much prefer to pay a little more so people can get treated rather than pay for them to be disabled and out of the workforce, or to spare their families the crippling cost of trying to effectively be an insurance pool with a single-digit number of members.

Re: The Challenges of Being in the New Contract Workforce

#243

Post by sedachv »

korethr wrote: post #209
sedachv wrote: post #168

Earlier quoted context omitted.

> As I recall, Obamacare didn't do much Do you have any actual experience purchasing health insurance before ACA, and later through an ACA exchange? I am not sure what exactly you are "recalling." I purchased health insurance for me and my wife through Covered California last year and found the process quick, the comparisons easy to make, and the pricing clear and reasonable. I have not purchased health insurance mys…

I was laid off in late 2013, shortly before the ACA took effect. When I was laid off, I had the opportunity to keep my existing plan on an individual basis through COBRA. My savings and cash flow would not permit such. Some web searching lead me to believe that I'd be facing similar rates if I went shopping myself, so I opted to go without, and see what happened when the ACA took effect. In the beginning of 2014, I l…

> So, no, in my experience, the ACA did not decouple the affordability of a health plan from one's employer -- it made it worse.

I still don't follow your reasoning. You seem to be saying that any health insurance is too expensive for you to afford, so the ACA doesn't work? As you saw from COBRA, health insurance is expensive, and your compensation package from full-time employment obscures that expense, because typically your employer asks you to pay only part of the expense from your salary. You have to figure the real cost of health insurance into your rates as an independent contractor. The ACA made it easier to shop for health insurance as an independent.

I was in a similar situation to yours - when I was laid off last year, I ended up picking a plan from Covered California that was $80 less expensive per month than the offered COBRA plan, with significantly lower out of pocket costs ($0 vs $9,000 deductible, for starters), in a much more highly rated provider network. So the plan that I was getting from my employer was a lot worse than what I chose to buy through ACA. This would be more apparent if your employer paid out the cost of all of your benefits in your salary and then had you pay the full cost of insurance (which is essentially what happens when you are an independent contractor).

Re: The Challenges of Being in the New Contract Workforce

#244

Post by danans »

SamReidHughes wrote: post #188
ryandrake wrote: post #145

Earlier quoted context omitted.

If companies were, all of a sudden, no longer required to subsidize health insurance, who wants to bet that they will immediately pass all the savings on to each employee in the form of a raise? I guarantee you shareholders pocket the difference.

Why don't companies just give everybody a pay cut and pocket that difference, too?

Because doing it that way would be a public relations disaster, and likely destabilize the company.

The way they do it is by layoffs and planned attrition to return to growth. I'm sure everyone has seen a stock price jump when large scale layoffs are announced.

Re: The Challenges of Being in the New Contract Workforce

#245

Post by brudgers »

powvans wrote: post #236
brudgers wrote: post #108

One aspect of the "gig economy" that I've not seen covered is the way it effects gigsters professional social graphs. At the deep end of Mechanical Turk services where work is dispatched by an algorithm (Uber/Lyft/AirBnB/etc.) there are no upward connections to supervisors and managers and officers and no lateral connections to coworkers. This means that working does not provide insider access to potentially better (…

This is a really great insight. It certainly bolsters the argument that these are dead in jobs. As in, the professional social graph literally dead ends. On the other hand, I know a couple of people who started driving for Lyft recently to supplement income when their other freelance work slows. They've found pretty creative ways to make the most of the gig. One guy in particular is doing some social/influencer type…

Sure, people can get creative. The difference is that gigsters have no alternative to being creative. But chatting up riders is part of Lyft driver's work because they must maintain high ratings. To put it another way, being a content writer or social influencer is entirely orthogonal to driving a car or delivering groceries or walking dogs on demand. A person can be a content writer or social influencer while having a regular job with benefits and coworkers and an expanding professional network...and most people would be better off career-wise in such circumstances.

I mean in the story, it is the lawyer in the back seat making some rain. It isn't the driver getting hired at the law firm or even getting a lead on a better job. The driver just avoided some of the costs of doing business that they might otherwise have payed. Not that that's nothing, but it's not career enhancing.

Re: The Challenges of Being in the New Contract Workforce

#246

Post by acdha »

SamReidHughes wrote: post #188
ryandrake wrote: post #145

Earlier quoted context omitted.

If companies were, all of a sudden, no longer required to subsidize health insurance, who wants to bet that they will immediately pass all the savings on to each employee in the form of a raise? I guarantee you shareholders pocket the difference.

Why don't companies just give everybody a pay cut and pocket that difference, too?

They do: this thread is about one of the most common ways – and there are plenty of stories of people being ordered to train their replacement contractors to do the same job at lower rates – but other popular strategies include cutting benefits, reducing annual raises relative to the cost of inflation, or not hiring adequate numbers of people and pressuring the staff to try to do the extra work anyway (i.e. unpaid overtime).

The main counterbalance is market pressure, which is why high-demand programmers don’t see this as often as other fields where people have less leverage, and, in bluer states, the risk that doing so will trigger government action.

Re: The Challenges of Being in the New Contract Workforce

#247

Post by brudgers »

Robotbeat wrote: post #163
brudgers wrote: post #108

One aspect of the "gig economy" that I've not seen covered is the way it effects gigsters professional social graphs. At the deep end of Mechanical Turk services where work is dispatched by an algorithm (Uber/Lyft/AirBnB/etc.) there are no upward connections to supervisors and managers and officers and no lateral connections to coworkers. This means that working does not provide insider access to potentially better (…

Perhaps there's not social connection directly in the workplace, but there IS social connection between Uber/Lyft/etc drivers online. It was on HN a week or two ago: https://www.fastcompany.com/40501439/the-network-uber-driver... https://news.ycombinator.com/item?id=16110598 The Network Uber Drivers Built: Ride-hail drivers work alone, but they’re banding together online to compare notes, uncover new policies, and he…

One of the ways people get better jobs is when a former boss or coworker moves into a position with the authority to hire. Online communities centered around driving for Lyft/Uber don't provide that. As described, they tend to provide support to help people survive as gigsters not advance their careers. Perhaps they provide some ways to marginally leverage the system to obtain somewhat better wages, which isn't nothing but its not career enhancing.

Re: The Challenges of Being in the New Contract Workforce

#248

Post by AgalmicVentures »

paulclinger wrote: post #241
AgalmicVentures wrote: post #101

Earlier quoted context omitted.

Disclaimer: I am not an accountant and I am definitely not your accountant. Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. This is because you can contribute up to 25% of your taxable income, but your contributions are deducted from your income. For example, if you make $1, and put $0.20 in your SEP-IRA, your taxable income is $1 - $0.20 = $0.80, so the $0.20 you put in…

> Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. I don't think this is correct. We are talking about employER contribution to the employee SEP-IRA account, which is 25% of the compensation, not exceeding the annual limit ( https://www.irs.gov/retirement-plans/retirement-plans-faqs-r... ).

Disclaimer: I am not an accountant and I am definitely not your accountant.

You are correct to say that you can contribute 25% of compensation. However, your wages are different than your profits, even as a self-employed person.

Let's say you are self-employed and you make $1 of profits and pay yourself $0.80 of wages. You can contribute the other $0.20 you have to your SEP-IRA, since it's 25% of your wages (or 20% of your profits).

Because of this, you need $275K of profits to generate $220K of income and a corresponding $55K SEP-IRA contribution.

For more, see: https://en.wikipedia.org/wiki/SEP-IRA#Reduced_rate

Re: The Challenges of Being in the New Contract Workforce

#249

Post by WalterBright »

> According to the poll, 51 percent of freelance and contract workers do not receive benefits common to many full-time jobs — sick leave, unemployment insurance or retirement savings.

Back when I worked at Boeing, there were many contractors. They usually were paid double the hourly rate of the salarymen. But they got no benefits, and could be let go without notice.

Turns out that the Boeing benefits package was worth about 40% of the salary, and coupled with the unreliability of contract employment, it worked out about even steven to be paid double.

Sadly, the article does not delve into the pay differential aspect of salary vs contractor. Safety nets don't come for free.

Re: The Challenges of Being in the New Contract Workforce

#250

Post by adamsea »

Consultant32452 wrote: post #232
dragonwriter wrote: post #220

Earlier quoted context omitted.

They are certainly capable of buying it (at least, when regulation means that it is something you often are compelled and assisted to do before taking a newly-purchased car home, and reminded you must do under penalty of law when registering a car, and actually cited for if you fail to do it and are pulled over driving a car—which is a whole lot of pressure taken together), and many do; whether they are capable of ma…

This discussion started out with me saying that you can start your own business even without another person in the house backing you up financially. Somehow we've gotten from there to a point where you're suggesting that a poor person who is somehow capable of starting their own small business is, by the very nature of being poor, fundamentally incapable of making a good decision regarding disability insurance option…

> Somehow we've gotten from there to a point where you're suggesting that a poor person who is somehow capable of starting their own small business is, by the very nature of being poor, fundamentally incapable of making a good decision regarding disability insurance options.

I don't think anyone is actually suggesting that.

I was suggesting, essentially, that poverty is a vicious cycle. That, to quote the movie Hell or High Water, "I been poor my whole life. So were my parents, an their parents before 'em ... It's like a disease, passing from generation to generation. Becomes, a sickness, that's what it is ... Infects every person you know"

And obviously this isn't a universal. There are always exceptions, that goes without saying.

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