[seacapt]

I had a real eye openner this week. Because of my reputation my business has managed to stay relatively productive , not as good as it was 3 years ago but better than many. I am actually backlogged right now and needed a little extra help this week.
I called on an aquaintence who could do exactly what I needed with minimal supervision that has been unemployed for roughly 1.5 years now. I offered him 3 days work at $25.00 per hour. I didn't have to 1099 him because this total was just below the limit. I picked him up and drove him to the job. I even bought him lunch. He took home more in 3 days than he used to make in 5.
For 3 days I listened to this guy complain that I was making money on his labor!
He thought I should subcontract him off the books and pay him at my full labor rate! He even asked me to write the check out to his wife so he didn't have to declare it in his weekly unemployment report.
After talking to a few other people in the business I found out they had tried to help this guy out and thow some work his way too with simillar results. He has also turned down good offers because the job discription was slightly different than his specialty. What he has been doing is collecting unemployment and doing side work off the books for all this time. Basically extended benefits have ruined a man who was previously known for being a great employee.

---

Last edited by seacapt; 03-24-2011 at 08:17 PM. Reason: spelling

[JohnInIndy]

And that's a surprise because…?

[skyredoubt]

Well, this is the necessary evil. If the guy had a prospect of permanent work this wouldn't have been a n issue. But since he is employed on and off, he doesn't want to lose the UI while picking up some extra cash on the side. It wouldn't be possible to construct a system which is bullet-proof against abuses. The question remains what to do about many who are not so lucky as to even have side jobs and who are unemployed through no fault of their own.
Your story is appreciated but it hardly invalidates the need for extended benefits, it just highlights the inherent downsides.

[Coeurdechene]

Basically extended benefits have ruined a man who was previously known for being a great employee.

It sometimes happens...people learn to play the system, and feel more secure than having to actually put an effort to keep a steady job (or learning to manage just by themselves). I'm sure there are more factors than welfare that spoiled this man though.
The thing about wellfare is that there will always be people who will try to cheat and live off of it, that does not mean that everyone in that position will get corrupted. In fact it's a safety net that allows some people to live through hard times and then recover without falling out, without becoming vagrant. In a big picture terms what has to be decided is if those benefits, that carry with them some parasites, but help others and prevent them to fall into poverty are worthy enough.
It's a values thing, people with strong moral values, self esteem and security will never like the dependency and control that those programs carry with them and will only adhere on the times of real need.
Sorry to hear about this guy, but i'm sure there are other cases where it's been more helpfull than harmfull.

[GeneV]

When you find that someone is stealing from WalMart, do we talk about "the problem with WalMart?"

[Ratmagiclady]

Well, while it seems you're dealing with someone who's trying to play the system (to what end, maybe staying afloat somehow,)

but, not knowing what you usually pay per hour for that work, Seacapt, *aren't* you in fact kinda taking advantage of the surplus labor pool to get cheap on-demand workers?

I mean, it seems we're dealing with an utterly different order of magnitude if 25 an hour is cut-rate, but I can see both needing the work and not being able to afford to get kicked off benefits for the sake of a few good days' wage, cause that's just one good little chunk, and he's probably in a hole on whatever lifestyle/family he was supporting already.

I mean, of course the conclusion we're supposed to draw is, 'Ah, the bums don't need it,' they could get cut-rate pay no benefits as long as constant chances like Seacapt offers roll in with regularity, and of course they don't get sick or evicted... but a few good days' work *is not a job,* you know? Apparently not even adding up to a few days *wage* in that field. (Sure sounds like a lot of money to *me,* of course. )

Just sayin'. Claiming 'lack of incentive' doesn't mean you offered the man a regular job.

From my point of view, (dealing with disability,) a little more security in benefits and everyone not *wanting* to treat every couple days' work that I could get that might coincide with a bit of good health and my stamina as a 'potential excuse to force a review process, then there'd be more 'incentive' to get out there and take a few more risks. Obviously, with such unemployment, competing with able-bodied people who have real work records isn't a very likely proposition, but you never know. I mean, I'm damaged goods to an employer even if there's some reliability on the *employer's* end, you know?

I'm sure lots of more-capitalistic minds will play that unemployment system just like they would government subsidies if they had big titles on Wall Street or the Chamber of Commerce, but even if some *do,* that doesn't mean 'a few days' work' is actually 'employment.'

It's one reason health care is so important, as well as actually getting the economy *moving,* ...a lot of the companies that are presently doing *well* *are doing well cause they hung onto employees, anyway, and those employees were a great resource in helping those companies adapt.*

There's a difference between the systems, policies, and anecdotes about how someone's personal morality appears to you, y'know? I can't say my own scruples got me far in the world, it's just sometimes they're all you've got. (Fact is, I perceive that whatever the people involved, the person writing the checks is almost always presumed to be in a morally-superior position whatever the situation or ethics are.)

[Nesster]

Because it is on a personal level, this sort of behavior rankles - sort of like seeing someone you know stealing or doing something unethical.

The fact that hardly ever do we experience corporations acting in these ways on a personal level - there's no single person there, it is an organization - seems to remove some of the immediacy of the transgressions. But consider: I know a guy who truly believes that offshoring is a long term bad thing for the company, that the savings on the spreadsheet will be eaten by the increased inefficiencies and miscommunications... yet goes along with all the other managers, offshoring his workers - laying them off here, in a tough economy and a shrinking industry - in order to keep his own job and bonus. And I know a different guy who mismanaged his departmental finances so badly that he's begging for money or he will be forced to lay off a bunch of his workers. And I know yet another guy who built a company with many loyal employees, only to cash in by selling to a conglomerator, at the cost of many jobs. And then there's rumors of a top level vice president who came in, and hired his cronies to cushy jobs at the top, and cut the workers pay in order to pay their high salaries...

So these are people in that non-person corporation, and there are many of these hiding in every large corp. They are shielded by a honor-among-thieves code, and only occasionally come to general awareness - People like Tony Hayward with the BP oil spill comes to mind.

Even when American workers are willing to take a ding due to bad economic times, these corporations seem unwilling to do much for them - the jobs keep going overseas, or being outsourced to 'factories' the offshore companies are setting up in the USA... and all the while there's the well funded corporate whine engine going on about competetiveness and too many regulations and too many taxes and too much this and that keeping us from creating jobs. I think the corporate welfare extensions have gone too far: just like the big car companies got fat and lazy and greedy, so have many big businesses done.

[Ratmagiclady]

Well, I dunno if Seacapt is 'The Corporations,' either, but I do note that it sort of starts out with, 'I want to pay the unemployed on a cut-rate-temporary basis when business picks up a bit and it suits me, then use this to advocate denying benefits to the unemployed cause I was so magnanimous as to do so and come say 'this guy I know' is a cheat.'

It's still not 'jobs,' you know?

(And, you know, it's a bit of work, maybe a mutually-beneficial arrangement in this case, not saying Seacapt is being dishonest, here, just it's interesting how it's played out 'politically.' Frankly, I think that if we had something like single payer health-care, this kind of thing would be *exactly* how someone like me might be able to contribute, it's just not the same as 'a job,' nor fair to make out like it's the unemployed's fault if Seacapt comes along with a bit of this once in a while.)

'The Corporations' sure are making lots of short term profit again and have been all along, ...no 'jobs,' though, that you can support a family or even onesself on... I wonder how *that* happens, eh?

I mean, they *want* a highly-skilled and educated labor force at their beck and call on demand, they just want to blame some lack of religious obedience to the 'free market' when they *don't want to pay for one.* Then claim this is all somehow for our own benefit.

I mean, frankly, the big money wants that extra penny of profit on each dose of things that can potentially disable people for life or put them in hock if they even *can* get decent medical coverage before their bodies break down, they want to deny the risks and pains of a *lot* of the irresponsible things they've done for balance sheets, risks people tended to accept cause of promises that this was some kind of *society* and that part of what we *work* for involves sharing in some of the risks and consequences.

Instead they spend their billions moralizing, blaming those who don't have the billions, dividing us against each other, and squalling for ever-bigger cuts in social safety and accountability... to go in their pockets.

[ihasa]

Basically extended benefits have ruined a man who was previously known for being a great employee.

Or, in other words, he has taken up fraud as his new career.

You could argue that if the benefits system was more agile, less lumbering and inflexible (I'm presuming the US system is similar to ours!) the guy would be less dis-incentivised to accept work, even unpredictable short term work. But that does not excuse benefit fraud which takes money from people who really need it. And presumably he is able to undercut tradesmen who aren't 'on the fiddle', pushing the amount they are able to charge for a job down. So it's a double sin.

[MRRiley]

Sounds like an anonymous call to the Unemployment office is in order....

[jeffkrol]

"independent contrating" when they are actually an employee is a common problem in the US. Both the employee and specifically the "employer" encourage it.. MUCH cheaper for the employer than the empolyee who "should" claim the taxes for himself.. Actually that is a bit arguable since most would want to be an "employee".

Cash under the table is an ancient game... maybe worse now, maybe not...


In the current state of the economy (probably not caused by the now "crooked" person) with nobody offering full time stable jobs ... really.. what do you expect.

You should pay him his standard rate (which btw is effectively much cheaper if he is not an employee) BUT tell him your filing a 1099 voluntarily in order to encourage him to claim. Working doesn't not disqualify you for benefits, just reduces the rate and/or gives you 0 payment for that week...

bottom line.... IT'S Complicated...

BTW: John got any "independent contractors" that are really employees??????
check your state and fed regs. before answering


I have more sympathy for an out of work, on unemployment, taking odd jobs, worker the the corps and companys that ROUTINELY skirt the law for decades...

It's getting to the point that it's only the honest people that get screwed, be it taxes, loopholes, wages, or the courts.. THAT is sad.

IF we were actually such a rich country (no not for 400) then maybe we wouldn't have to scrounge around like rats.....

The IRS and many state governments are stepping up enforcement of the use of “independent contractors” who are actually employees.

While there are plenty of legitimate business-to-business independent contractor arrangements, other businesses sidestep the law by misclassifying employees as ICs. (lay person readable information at the IRS site, http://www.irs.gov/businesses/small/article/0,,id=99921,00.html).

Example: Sam the General Contractor needs plumbers to work on new homes. He finds three plumbers, but treats them as “contractors” rather than as employees, although they meet the statutory definition of employees. Sam issues Form 1099 at the end of the year, in an attempt to look legit.

Taxation agencies know there is a lower percentage of income reporting from the ICs, and for those who do report the income there are usually expense deductions not normally useful to a real employee.

Taxation agencies receive less revenue, there are no state and federal unemployment taxes paid, and the ICs are not covered by workers compensation insurance.

This tactic is not limited to small businesses, ten of thousands of engineers and computer programmers have found themselves in similar arrangements (some by choice, some not). Also, millions of undocumented workers fall into this somewhere, with very little reporting by either employer or employee (or reporting with stolen or fictional identities).

Businesses using this dodge derive a huge advantage over legit employers. However, for those needing work, be a phony IC is a lot better than sitting at home. Raising costs is a bad idea right now, but legit employers already have those costs.

This is a game of whack-a-mole with millions of moles, and even I have some empathy for the tax agencies trying to get this under control. But then Sam might decide to get by with only 2 plumbers.

http://www.angrybearblog.com/2010/02/independent-contractor-problem.html


BTW: the problems big enough to fund the "health care" bill.. Thus the 1099 thingy..

So where is the bigger problem?????????

[jeffkrol]

When you find that someone is stealing from WalMart, do we talk about "the problem with WalMart?"

[seacapt]

Allow me to clarify a few points on this.
1) The gentleman is able bodied and a skilled installer. Typical pay in this area for what he does is $14-$16 per hour. As shop foreman before starting my own business I made $22 per so giving this guy $25 per is by no means "cut rate".
2) I truely believe that a safety net is a good thing but when unemployment was extended beyond a year lots of folks decided that the safety net made a good hammock. If there truely is no work available or if a person goes back to school /retrains extended benefits have merrit but in this case the man has been offered full time work closely related to what he was doing at a pretty close wage and turned it down.
3) As far as having to scrounge to keep a roof overhead , NAHHH! Dude owns his house , wife has good job and kids are on their own. He does in fact currently have more money on hand than I!

Several years ago I got laid off at age 47 . For the first time in my life I collected unemployment. Benefits lasted for 28 weeks. During this time I was able to set up my own bussiness and used the "safety net" while getting started. I just don't believe unemployment benefits lasting in excess of a year give the average person motivation to go find another job. Most people over 30 years old have at least once lost a job. With limited benefits they more or less had to figure out what to do next and in most cases made it happen. Yes I know that some ovepaid white collar data entry folks were forced to take blue collar or service jobs but they did what they had to do. I once spent 8 months steam cleaning carpets while "between jobs".
My point is that long term unemployment benefits make it too easy to not work. I think people get too comfortable with it. They seem to loose motivation , skill and current knowledge of their fields. For many people putting as much effort into finding a way to earn a living as they do working the system would be enough. I to some degree fealt this way before but my recent experience was really a slap in the face. Yes I realize I'm using a single individual as an example but I know there are a whole lot more doing the same thing.

BTW Whenever I hire day labor I pay them very well for what they do . I as the business owner have to pay insurance , advertise , set up jobs , order and pay for parts and materials , supply tools etc. etc. etc. It's called overhead and when this individual told me that he was doing the work while I was making the money (I was working right next to him most of the time) it fealt like I got kicked in the balls!

[shooz]

He's just a capitalist trying maximize his profit.
You should have seen this when he asked you to "make this out to my wife".
At that point it sounds like a con.
Tell him you have 40hrs for him, and watch him run.
Was his work that special?

[MRRiley]

Maybe you should call him and tell him you have reconsidered and that he did deserve a slightly higher hourly rate... Then tell him you will be sending him both the extra money AND his 1099...

It'd be worth the extra few bucks you'd be out to hoist this guy on his own petard!

Mike