Tech workers' unions -- right track, wrong train

SEATTLE, Washington, August 8 -- Technology companies are making a ton of money these days. But not enough of that money goes into the hands of the rank-and-file people who actually work at these firms.

I've argued before (see Tech workers of the world, unite!, June 2, 1998) that if technology workers band together, share wage and salary information, and generally help each other out, they can get a bigger piece of the pie. Knowledge is power -- and if you know what other people at other companies are being paid to do the kind of work you do, you're in a better bargaining position when you look for work, especially as an hourly consultant.

Labor unions would have a lot to offer technology workers, if it weren't for the fact that most tech workers think of themselves as "professionals" who are above resorting to such an outmoded, blue-collar institution as a union.

A group called the Washington Alliance of Technology Workers (WashTech) is trying to organize workers in Washington State -- mostly temps who work for Microsoft. WashTech is a local affiliate of the Communications Workers of America and is doing its best to debunk the idea that unions are obsolete.

A good rate is the best benefit

Microsoft employs several thousand hourly temps, contractors, consultants, whatever you want to call them -- people who are, for the most part, W-2 employees of contracting agencies. A lot of these people don't get benefits along with their paychecks. WashTech thinks this is a problem, and that Microsoft should be forced to pay benefits to these employees, as if they were actual employees of Microsoft itself, rather than of the agency they work for.

This is the wrong approach. Instead of requiring technology companies to pay benefits to hourly workers they hire through agencies, unions like WashTech should simply help the workers get more money -- which they can then use to roll their own benefits.

As an hourly consultant, I don't get benefits. The consulting firm I'm working for does offer health insurance; I just find it more convenient to buy my own. I figure it makes little sense to sign up for company benefits if I'm likely to be working for the company for only a few months at a time -- I'd rather have an ongoing policy of my own, independent of employment. So I have an individual medical policy that I got myself. It costs me around $130/month, for a PPO plan with a $500 annual deductible.

If the client I work for were forced to give me a health insurance policy, they'd make up for it by paying me less (or at least trying to). This is entirely understandable -- the money's got to come from somewhere, after all.

Labor unions should be encouraging tech workers to be consultants, instead of trying to get companies to hire them as employees.

The Microsoft temps don't get benefits, either. Like me, they're employed through consulting firms, contract agencies, temp firms -- whatever you want to call them -- on a W-2 basis and contracted to Microsoft from there.

WashTech, however, feels that these people, many of whom have worked at Microsoft for years on end, should be considered regular employees. One of WashTech's goals is "to make sick pay, holiday pay, and decent medical coverage basic workplace rights that should be expected by anybody working full-time in this industry, whether they be `temps,' contractors, or regular employees."

I say they're barking up the wrong tree. They're underestimating the bargaining power technology employees have, in today's labor market. For the past several years, labor -- not management -- has been the one holding the cards, able to demand good pay and favorable working conditions. And if you're making a good hourly rate, who needs benefits?

Secret Agent Man

One of the problems WashTech points to is Microsoft's hiring practices. The company likes to resort to deceptive ways of hiring people -- they'll place ads for what look like W-2 positions at Microsoft, and they'll bring a prospective employee in for an interview. Only after the interview is completed will they tell the prospect that it's really a contract job -- and they'll tell the candidate to go to a certain contracting agency to make the arrangements to come to work as a contractor.

If a company did that to me, I'd tell them to go jump in a lake, and I'd take my skills elsewhere. WashTech and a lot of people who work in the technology industry don't realize how much choice workers have these days. While I'd certainly agree that it's unethical to misrepresent a job opening, that's a truth-in-advertising issue, not a contracting-is-bad issue.

I'm a consultant by choice. At various times in my career, I've worked as a full-time, salaried employee; but I've decided that for the time being, at least, I like the higher hourly pay and shorter-term projects available on a contract basis. Thousands of technology workers have made the same decision in recent years, for a number of reasons. For one thing, layoffs and downsizings (see Staffing Crisis? What staffing crisis?, May 5, 1998) tend to give workers a cynical attitude toward the promises companies make. Just show us the money and tell us what you need, say the consultants.

OPEC: Organization of People Empowered by Computers?

For some reason, most people in our society seem to think that salaried work is somehow more professional than hourly work. That's what corporate America wants us to think, so we'll go on salary and work 70 hours a week for 40 hours' pay. But there's nothing inherently unprofessional about working on an hourly basis -- doctors and lawyers don't think so, and neither should technology workers.

From a labor perspective, hourly consulting is a good, not a bad, thing. Independent hourly consulting is a way to develop a wide variety of skills in a short time -- skills that can be put to good use, helping client companies produce technology products that keep the economy booming. And let's face it -- hourly consulting pays much better than salaried work. Typically, consultants get at least a third more per week than their salaried counterparts -- and usually, they do much better than that.

Some companies like to offer stock options as an inducement to come on-board full-time; and a small number of people have gotten rich that way. But it's not a significant number of people. It's estimated that there are about 10,000 people at Microsoft who are wealthy enough to retire, based on the value of their stock options -- but this is the exception that proves the rule. For the vast majority of tech workers, stock options are a chimera that'll never net them a dime.

WashTech -- and unions generally -- should be encouraging technology workers to work as consultants, instead of trying to get companies to hire them as employees. The reason is simple: bargaining power. A consultant with saleable skills in a strong economy can increase his or her income much faster than a salaried employee can. That's because every time you finish a project, you get to re-negotiate your rate for the next one, and sell your skills to the highest bidder.

When you've got skills companies need, they're going to pay a lot more on an hourly basis than they'd pay for the same person on salary, because they see a consultant as a short-term expense that's not part of payroll. When you work as a salaried employee, on the other hand, the only time you have any bargaining power is before you're hired. As soon as you agree to terms and start working, you're pretty much stuck with the salary you've got, plus a 4 or 5% annual raise.

Unions should expand workers' choices, not restrict them. A tech workers' union should be part artisans' guild and part price-fixing cartel -- make sure everyone knows the going rate for a given type of work, so that no one will have to work for less. Instead of assuming that the tech worker is a helpless drudge who needs a union to protect it from evil capitalist overlords, the union should view workers as the human computing power without whom the technology industry couldn't function. Encouraging them to work as consultants instead of salaried employees would be a big step in that direction.

I don't begrudge the consulting firm their cut, because they're insulating me from having to worry about billing, dunning the client, or getting stiffed.

There are a lot of ways to find out what the going rate is for the work you do. One of my favorite sources is Janet Ruhl's Computer Consultants' Resource Page, which compiles large amounts of bill and pay rate information from consultants of every description.

I don't know the exact bill rates for the projects I've worked on, but I know, from having worked on the inside at a consulting firm's headquarters recently, that they typically try to get roughly a 2:1 bill/pay ratio. If you're a well-informed consultant, negotiating from a position of knowledge (and, ideally, with some saleable, in-demand skills), the firm will usually end up getting something less than 2:1, but that's what they're shooting for.

Personally, I don't begrudge the consulting firm their cut. That's because they're doing two valuable things for me: (1) Finding work and (2) paying me on a regular basis, regardless of when they actually get paid by the client. Typically, companies like to pay their vendors on a delayed basis -- often 30, 45, 60 days or more after receiving an invoice. This may be OK if you're a big company with no cash flow problems, but if you're an independent consultant without much money in the bank, it's far from ideal. (This is why my lawyer says you should always put a clause in a consulting contract that makes the client pay interest if they're late; he suggests specifying a rate of 1.3% per month.)

Working through a consulting firm (as I've been doing), I don't have to worry about when the client is paying the consulting firm, because the firm is paying me every two weeks, independent of when they get paid by the client. I know the consulting firm is taking a healthy cut of what they bill the client -- but in return, they're insulating me from having to worry about billing, dunning the client, or, in the worst case, getting stiffed for work I've done.

The more you know, the better it gets!

Instead of trying to force companies to take on their hourly contract workers as employees, organizations like WashTech should "organize" the temps by improving their knowledge of what's out there and helping them find work. Forget the benefits -- just get 'em some more cash.

Although the approach is different, the goal I'm laying out is the same as that of WashTech: Getting a better deal for technology workers. The best way for labor to accomplish this is by exercising bargaining power, refusing to come onto the corporate payroll, and demanding more money for consulting work.

I've worked with many extremely talented people who were grossly underpaid; they worked year after year on salary, in the service of companies that had no intention of rewarding them for their efforts. These people don't need better benefits -- they just need more information. They need to know that the consultant at the next desk is making twice as much as they are, and they need to know how they can get the same deal for themselves.

A union that approached technology workers from that angle -- instead of taking the traditional approach of collective bargaining -- would probably find workers a lot more receptive. Programmers, software designers, tech writers, and other "professionals" see themselves as cutting-edge workers who don't need or want the kind of help unions offer their traditional constituents like assembly-line workers and coal miners.

Tech workers could certainly benefit from union help, however. The way to get them interested is to appeal to their self-respect as talented people and say, "Isn't it about time you got your fair share of company profits, since you're the ones who do the brain work to make the products they're selling?" By exercising bargaining power and simply refusing to work for substandard pay, technology workers can get what's coming to them. If they know the market rates for their skills, they'll be able to demand a week's pay for a week's work.

Copyright © 1999 John J. Kafalas

Feedback?  Drop me a letter to the editor, and I'll post it on-line!

Urb's previous columns can be found in the Column Archive, where you'll also find letters to the editor.

Return to the home page