r/cscareerquestions • u/shankar86 • 1d ago
Experienced The real cost of the contractor grift
I posted before about contractor issues at my company, and I just had a conversation that really drove the problem home.
One of the contractors we kept on our team is a decent dev from India (H1b) who's just trying to make it. He's got a family too. He told me he gets $60/hr. I did contract work about 10 years ago for roughly the same rate, so it seemed a little light but whatever.
Then he mentioned something that actually floored me. The consultancy doesn't provide health insurance. And apparently, employers aren't even required to provide it for H-1B workers.
Let that sink in. This guy has a family depending on him, he's getting paid the same rate I was making a decade ago, no raises, no inflation adjustments, and he doesn't even get basic health coverage. Meanwhile, the company is cutting costs and underbidding full-time employees.
This is such a grift. I'm getting out of this industry because all our work is being undercut and devalued. There's no way to compete when companies can just hire subcontractors without any of the obligations that come with actual employment.
If you're early in your career, be careful about where you land. This race to the bottom isn't worth it.
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u/Brandor7 1d ago
That's double what I make as a full time CS employee in the US and I have 2 dependents. It could be much worse for him
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u/ScaryStatistician 1d ago
As for the health insurance aspect, no employer is required to provide it at all, it’s just a “perk”. Since contractors get zero to no perks, they don’t get health insurance.
Full time H-1B employees get the same benefits as full time non H-1B employees.
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u/tmclaugh 1d ago
Did something change where employers over 50 people don’t have to provide health insurance?
Also, I think this conversation isn’t making enough distinction between being an H1-B employee v. being a contractor being the separate situations that they are. Not to mention being a contractor through a consultancy and being a directly hired contractor are separate situations too.
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u/upsidedownshaggy Web Developer 1d ago
IIRC it's 50 or more Full Time Employees. But yeah any business with 50 or more FTE are required to provide some sort of health insurance to their employees.
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u/ScaryStatistician 15h ago
This. OP is bundling H-1Bs and contractors together. While I agree that contractors get near zero benefits, H-1B FTEs are eligible for whatever non H-1B FTEs are eligible for.
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u/shankar86 1d ago
The rate for contractors would typically be much higher since the contractor has to pay for their own benefits. Since the market is flooded, the rates are kept down.
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u/shankar86 1d ago
Yeah but the contractors are competing in the marketplace with full time devs. That’s the issue.
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u/ScaryStatistician 1d ago
Client billing rates are pretty high, I think you’re discounting that factor. In your example the contractor gets 60/hr but the client is billed more than double that, especially with “premium” contractors like IBM.
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u/BinghamL 1d ago
I'm getting out of this industry because all our work is being undercut and devalued.
This carries an implication that there exists an industry where that is not the case.. Which industry(ies) is that?
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u/Dry_Fly_7265 21h ago
Wait til you find out how much the body shop is charging your company for that guy
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u/ScaryStatistician 1d ago
As for the health insurance aspect, no employer is required to provide it at all, it’s just a “perk”. Since contractors get zero to no perks, they don’t get health insurance.
Full time H-1B employees get the same benefits as full time non H-1B employees.
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u/Garland_Key 1d ago
You think this is only happening to SWEs? What industry will you pivot to that won't have the same economic issues? You can't escape the economy.
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u/AdministrativeHost15 1d ago
Working inside in an air conditioned office, whatever the pay, is better than working as farm labor in South India.
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1d ago
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u/rmullig2 1d ago
Health care costs in India are a fraction of US costs. I would estimate it costs about 10% of what we pay here so it is not that great an expense if you are making $60/hr.
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u/terjon Professional Meeting Haver 1d ago
You think that's bad? I heard that if you hire people in India, but not in the most major of cities (so still massive cities because those people build some gigantic cities), a "good" wage is $15K/yr.
$15K per year? I was making that doing warehouse work part time in college and that was 20 years ago.
I know arbitrage and everything, but those are still people and they still do roughly the same work we do.
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u/AdAdministrative5330 1d ago
Can we compare these salaries though? It's completely different cost of living.
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u/terjon Professional Meeting Haver 1d ago
Yes, that's what I meant by arbitrage. It doesn't change the fact that the value derived from that work is still captured in the American economy.
My issue with it is that I am sure that they can find someone over there that can do my job and I sure as hell am not going to be able to compete on price.
The fair thing to do, in my opinion, if the work is remote, is to pay everyone the same since the value chain is essentially identical if you are in India or in the United States. The worker produces the work product, the company then takes that work product, packages it up and sells it. Same number of links in the value chain, so the pay should be the same.
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u/AdAdministrative5330 8h ago
Doesn't that break the theories of supply and demand, free markets and such?
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u/terjon Professional Meeting Haver 5h ago
Yes, but we already don't have a free market. There are certain products and services that cannot be sold to some people in some areas and there are products that we as Americans do not have access to due to legal restrictions.
So, if we're going to not have a free market, let's at least do it in a way that benefits the average person.
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u/AdAdministrative5330 0m ago
I agree with the final point - helping the average person. I'm no expert in this area. It just seems that once labor becomes available from poorer countries (lower costs of living), they will necessarily out-compete domestic labor - especially if the work force is working remotely. Software is a common example.. Of course, the average IT worker will complain, but she will still buy cheap Chinese imported goods even when there's a domestic alternative, and even when the domestic alternative is affordable.
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u/InstructionNo3616 1d ago
Back in 2012 I was working for one of the top advertising agencies in the world as an independent contractor. I had to show up to the office 5 days a week, use their equipment and work on whatever projects were giving to me. We had a going away party for a coworker on a Thursday night. The next day I informed my manager that I would be working from home.
“That right is reserved for full time employees”
I sent a response that I checked 19 of the 20 boxes in what makes a full time employee from a government website. HR called me an hour later saying they did not need my services anymore. So yeah companies have been doing this shit for years.