Corrections or additions?
This article by Bart Jackson was prepared for the March 20, 2002
U.S. 1 Newspaper. All rights reserved.
When to Use Contingent Workers
Two reporters write for the same newspaper. Madly
they compose markedly similar stories; filling their 40-hour weeks
with markedly similar work. One man, however, is labeled a "core
staffer" — reimbursed with a set salary and full benefits.
The other is a "stringer" — paid either by the article
or the printed word. Long a newspaper tradition, this blending of
core and outsourced talent has been aggressively adopted by all fields
of business for the past decade. Question is: Just how well does this
Those seeking the optimum method of bringing aboard temporary,
and contractual employees will want to attend the Employers
of New Jersey’s panel discussion "Strategic Use of Contingent
Workers," which is one of many panels taking place at EANJ’s
on Tuesday, March 26th, at 10 a.m. at Seton Hall. Cost: $165. Call
moderates. Panelists include
of AT&T; and
Memorial Sloan Kettering. A series of new survey studies and practical
panel experience will shed light on the actual cost saving benefits,
morale difficulties, and even the legal aspects of taking on
It seemed a marvelous plan to pull American business out of its tight
money problems. After the recession of 1992, every company of every
size sought desperately to cut costs. Massive layoffs provided
solutions, but alas someone had to be retained in the shop to do the
work. Analysts quickly brought compensation under the financial
and discovered the astounding differential between actual salary and
cost-to-company of putting that person on the job.
The solution, already growing since the early 1980s, became obvious:
bring on the temps, part timers, and independent contractors. Call
them consultants and let them take care of their own benefits and
bookkeeping, and pay their own Social Security taxes. From 1990 to
2000 the temp market tripled to 3 million active temporary workers.
Independent consulting firms in the U.S. jumped 15 percent, from
65,000 in 1992 to well over 75,000 in 1997. Then the law jammed a
stick in the spokes.
Microsoft, ever the trend setter, carried this outsourcing to an
Keeping a minuscule salaried core staff, it hired vast numbers of
independent contractors, paying them a flat fee, and providing them
with a 1099 tax form instead of the W-2 salaried workers receive.
This arrangement attracted the attention of the IRS.
The same unimpeachable agency that had so deftly gobbled up Al Capone
squared off against Bill Gates — with the same results. The IRS
indicted Microsoft for misclassifying its workers and in December,
2000, the Supreme Court demanded that the computer giant pay $97
in back benefits to its not-so-independent contractors. In addition,
Microsoft faced the mammoth underlying expense of re-classifying,
refiguring, and re-accounting its entire salary and wage system. This
precedent set employers, human resource workers, and attorneys
But, Microsoft’s troubles aside, Peterson insists that "the mixing
of part-time and outsourced staff with a salaried core has a host
of benefits for both workers and employers alike." Peterson, a
native of Teaneck and a graduate of Princeton Theological Seminary,
has spent the past decade at the Institute for Work helping employers
make exactly such staffing decisions.
He lists several excellent reasons for expanding with part time,
and contingent workers, but warns each comes with a caveat, demanding
a special strategy.
are away at school. The local hospital or library, open seven days
a week, has all sorts of odd hours that need filling. Frequently it’s
a great match with both employer and worker accommodating to the
needs. However, costs lurk hidden here. Usually some highly-paid
staff member must now devote a hefty portion of her time to working
out a schedule for these part-timers. Secondly, temporary and
help typically may demand more money per hour than core staffers
basis offers both employer and employee a chance to test the fit.
If things do not work out, both can part, without harm, foul, or
Here again, however, Peterson adds a warning: Be totally honest. A
very justifiable misrepresentation lawsuit awaits the company that
lures a worker in part time with the promise of a permanent staff
position, only to renege on the deal later. A recent American
Association survey reveals that the vast majority of temporary workers
are not temporary by choice. They see their time with you as a much
coveted foot in the door. Unfortunately, only 13 percent will receive
permanent positions from any of their temporary employers. Another
47 percent will find permanent jobs, but elsewhere in the labor force.
amount of time spent on salary and wage bookkeeping is invariably
an expensive headache that any employer would gladly leave to a
of contingent labor. However, human resource executives would be well
warned to examine into whose hands these contingent workers’ payroll
accounting processes fall. If a temporary agency or hiring hall comes
under indictment for illegal practices, your firm can be named in
firm, contingent workers provide an adaptive labor force that can
be more easily let go if the economy or your plans begin to falter.
Of course, setting up workers as canaries in your firm’s economic
coal mine may not prove the best way to inspire loyalty. Establishing
a potential upward pathway for workers and concentrating on how much
corporate success depends on them may be a counterbalance to the
grumble of "last hired — first fired."
bottom-line-driven firms to cut core staff and swell the ranks with
outsourced folks who can jolly well look out for their own health
care, retirement, and everything else. Undeniably, in an age when
a firm must shell out $200,000 a year to woo and keep a $60,000
assistant manager, the $75,000 outsourced consultant can look pretty
good. "The problem with staffing by math," points out
"is that you tend to get what you pay for."
All those costly benefits the guys in accounting are now moaning about
serve to keep morale up, loyalty and productivity high, and to hold
the intellectual capital of your business inside. The contract or
contingent worker owes you nothing but his work in trade for your
cash. He stands on the outer ring, looking in. A definite separateness
and even antagonism can evolve within work teams.
Many managers and department heads have in the past years tried to
overcome this problem by equalizing all of their team. While the
reimbursement may differ, all members are invited to Christmas
given similar work spaces, praise, and other perks. "Ah, but now
here comes Scrooge," laughs Peterson. "The legal departments
in many firms, fearing the IRS’ ruling against Microsoft, are
in with a segregation maxim. They are demanding contingent employees
be treated distinctly from core staffers." This, of course,
all the morale-building efforts the managers have labored so hard
traditional work schedules and remuneration into ways more adaptive
to both the employer and the employee," says Peterson. "But
this part of business growth, like any other, must be carefully
from every aspect."
— Bart Jackson
The Girls Scouts of Delaware-Raritan recognized eight New Jersey women
who exemplify dedication, leadership, and commitment in their
and in their fields of expertise. The awards were made on Thursday,
March 7, at the Girl Scouts’ 11th annual Women of Distinction dinner.
Recipients of the awards include
president, advertising, Johnson & Johnson;
Trinity Episcopal Cathedral;
the College of New Jersey;
Medical School; and
Retail Merchants Association.
exhibit, A Question of Truth. The exhibit examines how the search
for truth in scientific inquiry has been influenced by bias and
throughout history. Fleet contributed $100,000 to the exhibit. At
the presentation ceremony, Jack Collins, president of Fleet New
said: "Especially now, while we are reaching out to our neighbors
in the aftermath of September 11, it is important for all of us to
continue to support the great cultural, educational, and arts
that enhance our communities. Through this exhibition, Liberty Science
Center is advancing efforts to bridge our understanding of different
cultures and beliefs."
drive at its Princeton office at 707 Alexander Road on Saturday, March
23, from 8 a.m. to 1:15 p.m. The organization reminds potential donors
that the blood supply must be replenished almost daily because red
blood cells last 42 days, unfrozen, and blood platelets, which are
so important for cancer patients, last only five days, and cannot
a building expansion project in order to increase services to the
community. The project, which will take one year to complete, will
add approximately 3,000 square feet to the soup kitchen’s existing
6,500 square feet of space. It will include a kitchen expansion,
storage space, offices, and a community meeting room.
Over the past few years, the number of patrons coming to T.A.S.K.
has steadily increased, and the soup kitchen is now serving over 2,500
meals a week. In describing the soup kitchen’s need for additional
space, Peter Wise, its director, said "poverty is clearly on the
rise. The lines at the soup kitchen are getting longer. The level
of need is greater than ever. The gap between the `have’s’ and the
`have not’s’ is continually growing. If we are to provide T.A.S.K.
patrons with meals and other much-needed services, we must have more
In addition to meal services, T.A.S.K. provides adult education
including one-on-one tutoring in literacy, basic math, GED
and computer skills. The organization’s fundraising goal is $300,000.
An anonymous area businessman has agreed to provide one dollar for
every two dollars T.A.S.K. raises before August 1.
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