Most of you just don't get it. I bet those of you complaining of your sub verses employee status were begging for the job you are bitching about when you took it.
You see, it goes like this.
The company that holds the prime contract is likely paid a piece rate. Which means they can handle business in one of two ways, hire employees or 1099 the work. Now, lets say that the prime gets $100.00 (and that's just a number from thin air just for number's sake) to complete a job task, that is it, that is all they have to work with. And let's just say it takes an average of 3 hours to complete this job. Now if they decided to 1099 a sub to handle the job task they would typically pay out between 60 and 70 percent....let's say they paid you 70%.....70 bucks right? That leaves $30 to cover operating expenses and profit margin.
Now lets say they decided to go with employees instead. They now have the additional costs associated with employees like matching social security, unemployment taxes, insurance costs, overtime, administrative support etc. That cost can be calculated to around 35 to 40 percent of what the employees hourly rate is (and that is being conservative). So a $20 per hour employee (again, just for number's sake) is costing the prime $27 to $28 per hour. Now do the math, for that same three hour job it has just cost the prime $84. That only leaves $16 to cover operating expenses and profit. Huh.......NOT WORTH IT!!!!!!!! So what does the prime have to do in this situation? LOWER THE HOURLY RATE!!!!! If my math is right somewhere around the $12 to $14 per hour mark.....which makes it tough for YOU.....Now that $70 piece rate job just paid you $40 to be an employee. Bottom line is the prime only has so much to work with and they are not in business to lose money or even swap nickels.....they are in it for profit....God forbid!
What all this boils down to is a perpetual problem that will not turn around just because you want to run to the IRS and slam the people you work for. What needs to happen is a forced process that is very hard in today's cut throat economy to do. Supply a better product and demand a decent rate from the MSO's. Support your prime....now there's a concept.
Wake up America!!!!!!!!!!!
Re: Independant Contractor? Read This
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