[E. Pluribus Unum]

"A good deal of the whining I read concerning disappearing tech jobs claims they are headed for China and India. Sure they are: the numbers are irrefutable. But only certain kinds of jobs, and they’re almost all jobs at large corporations."

Big companies only provide a minor fraction of US employment.

Small businesses employ the most people, and they aren't moving to India.

[Gideon7]

They begin to envision in their minds a larger operation, in which they hire staff to do the work, paying the staff perhaps half of what they're charging the clients, and thus being able to take on the additional clients they might otherwise have to pass on. Of course, they hope to make a killing in the process.

For me, the evidence that this is a bad move is clear. In order to take on that additional staff, and pay for incorporating, lawyers, accountants, office space, and other administrative costs, ...

Yes. Welcome to the world of employment as seen from the employer's side. The extra costs associated with hiring a staff include,

• 15.5% for Social Security (half paid by you as employer, half shows up on the pay stub)
• Medicare, another 2.9%
• Unemployment insurance - required by state law, varies around 0.5-4% depending on the state/region/industy.
• Workman's compensation - required by law in most states, varies a lot depending on state/region/industry, anywhere from 1-8%
• Retirement bennies. Since you have one (you are self employed and trying to minimize your own taxes) federal law essentially requires you give equal benefits to all your employees (I am over simplifying but unless you have expert accountants this is unavoidable) - assume 10%.
• Health insurance (getting outrageous) - nowadays typically 10-15% (assuming you can offer it at all with your small pool risk).

So you are looking at 30-50% overhead before you pay your first dollar of wages. Add the cost of renting an office, getting liability insurance (insane not to with harassment and discrimination lawsuits), futzing with state and IRS payroll forms, complying with OSHA regulations, taking time to train and manage said employees, the rule of thumb is 80-100% overhead for your first employee.

And that is why Acme Corp charges you $50/hr to do something but only pays their employee $25/hr to do it. You can do the equivalent work self-employed while charging a lot less and beat Acme Corp every time.

[TheMole]

Very interesting post. I note that the guy is in NYC, which does have a few more potential clients than some less populated areas.

[anymouse]

I came up with this same conclusion and formed this business when I was laid off from a long career in the corporate tech field:

Handy-Tech^tm at handy-tech.net

[DaGman]

bump to read later... looks like an informative article.

[RaceBannon]

I do CAD at home, this is giving me some ideas

[Reelect President Dubya]

bump

[Eaker]

Placemark to read later.

[js1138]

I've been "unemployed" since last April and survived. I'll be reading this for tips on how to expand. Although I have been a programmer for most of my life, I always got called on to make things work. My heart is in the hardware.

[Alouette]

I tried home-business technical consulting when I was laid off from GM, AT THE BEGINNING OF THE CLINTON ADMINISTRATION.

It didn't work out well for me. The main obstacle was convincing people they needed a computer to begin with (this was in '92, before the Internet caught on).

Secondly, since my customers were also friends and neighbors, they expected me to work FOR NOTHING.

All in all, I made less money than I do now between contracts assignments than I make from the revenue on my website.

The tech industry can't be that bad. I had two interviews last week, I have another one scheduled for Friday, and I still get calls from recruiters for contract work.

[Drew68]

bumped and bookmarked

[thackney]

Bump for later read

[lelio]

bump to read later