Employment and Corruption in Large Corporations (sale, real estate, insurance)

[ak08820]

Many large corporations hire temp staff only via approved vendors, which gives the approved vendors a monopoly on the employer. They charge e.g. $100/hour for a temp IT worker and pay as little as possible to the IT worker, e.g. $35-50. I suspect that one reason for their huge markup is that they need to give kickbacks to the middle management and upwards at the hiring company. I have heard that this rate is $2-3 and up per payee within the hiring company.

It is a vicious circle, too as the IT worker cannot move to a higher paying job in a company, e.g. employer B where this corruption does not exist because they will not pay him $75-100/hour if he truthfully indicates that he makes $35/hr doing the same work at employer A.

The problem is that there are enough laid off and unemployed IT workers available that this chain cannot be broken. I know of a person who had to take a pay cut to continue with the same job via different vendor when his contract was over. Most people get a raise for doing a good job and be needed after 3 years.

This is a form of human trafficking. The IT worker does not get what he deserves and several other people make money off him without lifting a finger, like pimps.

I wonder if many other people are first hand victims of this racket and want to unite and do something about it. It is very difficult to get concrete evidence to fight this. Only a large pool of victims and a class action suit or similar can be effective.

[nybbler]

Nothing you've described is illegal, except the kickbacks which you only "suspect" exists. The reason for the approved vendor list is an IRS rule which makes it difficult for independent IT contractors to maintain their independent status; take it up with them, preferably not the way this guy did: Pilot Crashes Into Texas Building in Apparent Anti-IRS Suicide | Fox News

[foodyum]

Human trafficking usually involves forced prostituition, slavery or human organ extraction. Not quite the same thing as IT consulting is it?

[ak08820]

I am not sure about the IRS regulation you mention which makes it difficult for independent for IT contractors to maintain their independent status! All the IT-Pimps ask weather you want to work on W2 or C2C (corp to corp) meaning you can be an independent.

As I understand, the large corp. hire only from approved vendors as they don't want to setup and investigate new vendors for liability insurance, etc for each new temp they hire.

I will add to the original post here that I was seeking responses from first hand victims of this kind of exploitation to see if this is as widespread as i believe it is.

[ak08820]

Originally Posted by foodyum

Human trafficking usually involves forced prostituition, slavery or human organ extraction. Not quite the same thing as IT consulting is it?

Pimps benefit from prostitution, vendors and corrupt employees benefit from the labors of the IT workers, I don't see much difference. Some IT workers have signed bonds to work for a certain period at low wage to pay for the services of the IT pimps and have to stay at the guest house provided by their IT pimps and pay them room and board, too, from the low wages. It is all happening today. It started from the whole sale import of foreign labor for preparing for Y2K which was one of the biggest hoax of the last century.

[ak08820]

Originally Posted by nybbler

Nothing you've described is illegal, except the kickbacks which you only "suspect" exists. The reason for the approved vendor list is an IRS rule which makes it difficult for independent IT contractors to maintain their independent status; take it up with them, preferably not the way this guy did: Pilot Crashes Into Texas Building in Apparent Anti-IRS Suicide | Fox News

I only implied the kickbacks by the hiring employees as illegal! That is illegal and it cuts into the wages of the actual worker!

[nybbler]

Originally Posted by ak08820

I am not sure about the IRS regulation you mention which makes it difficult for independent for IT contractors to maintain their independent status!

It's usually referred to as "Section 1706"; it's actually a statute rather than regulation, so you might need to take it up with congress.

All the IT-Pimps ask weather you want to work on W2 or C2C (corp to corp) meaning you can be an independent.

Working C2C for a middleman isn't the same as working C2C for a client directly.

As I understand, the large corp. hire only from approved vendors as they don't want to setup and investigate new vendors for liability insurance, etc for each new temp they hire.

The main reason is section 1706.

[Stone28]

These company's eat you up and spit you out it. There not in business to make friends, they are there to make money....This is why I tell my kids what my parents told me "Always have something to fall back on".

[sonofagunk]

Never seen any problem with any of this. The only issue now is a lot of companies are only hiring contractors C2C since they are unsure how long they will need them because of the economy.

Sounds like you are just whining because you cannot get a high paying job. I know my company pays good money for the right person, just so many people out there that are just not that good (they my think you are, but they are not). We usually have to talk to 10-15 candidates to find someone any good, and truthfully most of the time we just hire an average person because the project is about to start and we cannot wait any longer.

[bhsx1187]

Congratulations you just discovered the world of capitalism. Inorder to make a profit companies must charge rates which are higher than their expenses. Hence the charge $100 but only pay $50 to the staff member providing the service. The company has overhead to pay (real estate, electric, etc.) as well as support staff and back office personel that also need to get paid from that initial $100. So no it is not "human trafficking" it is business. This has been going on for thousands of years. If your a farmer and you higher a helper to pick berries. You would pay say $30 for every $100 of berries he picked if not less. You, as an employee, are paid to make your company money not make yourself money. It is common practice all over the business world from Consulting, to finance, to temping, and every other imaginable corner of the business world. Businesses will pay for talent. You just may not have the talent to get a job outside of the temping world.