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Thursday, July 30, 2015

Why I'll Never Hire You

It doesn't matter which political philosophy to which you subscribe, the hard, cold truth is that seven years after America's worst financial meltdown since the Great Depression, its economy might be off life support, but it's hardly thriving.  Government agencies tally up the data on a monthly basis, producing meaningless (and often baseless) statistics designed to measure just how well or poorly the economy is doing.  One of their favorite numbers is the unemployment rate.

I'm not here to justify one man's figures against another man's numbers. There are infinite ways to calculate the unemployment rate, producing a range of "reliable" results from 5% to 25%, depending on the extremist view to which you subscribe. I don't believe any of them. What I do believe is that the jobs lost in the Great Recession are never coming back. Not because there's no need for workers, but because beyond NAFTA and TPP, employment itself is a daunting, if not impossible, proposition.

Most people believe that businesses employ people in order to keep the business moving. The employees are the arms and legs that propel products and services through its pipelines for eventual consumption and profits.  Unfortunately, there are a lot more reasons not to hire employees, to which few people pay any heed.  I've put together a little list of those reasons, just in case you were wondering why nobody wants to hire you:

1.  I have to match your Social Security payments.  You know all those deductions taken out of your paycheck on a regular basis? Roughly 7% is what you pay into Social Security. Bet you didn't know that I, as your employer, have to match that with another 7% I pay out of my own pocket. That's makes you 7% more expensive than your salary would imply.

2. I have to pay you even when you're sick. If you're on salary and not working, I still have to pay you, which actually costs me twice as much, because I have to pay someone else your going rate to do the work you're not doing. That means my costs can double at any time, unpredictably, throwing the viability of my business into question.

3. I can't fire you, even if you do a bad job.  Even if I hire you on an "at will" basis, labor laws are such that if I fire you -- even for just cause -- you can sue me for back pay and punitive damages. Just the threat of a lawsuit will cost me time and money.

4. You can sue me if I provide a negative reference.   If you leave my company after a less than stellar performance and your next prospective employer calls me to verify what you put down on your resum√©, I can't make one negative comment, even if it's to dispel any blatant lie you may have composed. If I do, I can be sued for "costing you a potential job."

5. You might have a baby.  I can invest all kinds of time, training and money into you in hopes of retaining a long-term, productive employee for my business, only to have you get pregnant and either take leave or simply quit. There's no way I can recoup my costs from you. I just have to find someone new -- at my cost.

6.  I never know when you'll leave for another job.  It's a market economy, I get it. Which is why I can't ever be sure you're going to stay with the company or be lured away by a competitor. Since there's no real allegiance, I have to stand ready to replace you, usually in less than two weeks, because nobody wants an employee who's leaving in two weeks to spend those two weeks poisoning the rest of the crew.

7.  The government makes me pay health benefits if I have more than 25 employees. Same argument as Social Security, which chews into my business's profitability with no tangible benefit to me.  As a result, I may have to raise my prices and lose market share.

8. The government regulates the minimum hourly wage I have to pay you. No matter how unenforceable or ridiculous its programs are structured, the government dictates the minimum amount I can pay my employees, never taking into consideration how my business operates or whether it can afford it. Again, I may have to raise my prices and lose market share.

9. Any minority can sue me at any time.  No matter what you look like or where you come from, if you decide there aren't as many of your ilk in my company as you think there should be, you can sue me for discrimination -- even if your work product is inferior to those who occupy the positions you seek.  That costs me time and money -- and maybe even my business's work product quality, which ultimately can tank my entire enterprise.

Those are just nine quick reasons that give business owners pause to think before they hire. And when they do, they often arrive at two conclusions that don't involve employees:

1.  It's smarter to outsource with independent contractors.
2.  Software never calls in sick.

1 Comments:

Blogger Unknown said...

Small biz owner with 8 employees chiming in with two thoughts.

When it comes to "extra costs" I think it is important to spell out the total cost of employment to each of my people annually. We put it in writing and break it all down. It's just as important to be marketing to my staff as it is potential customers. The grumpy, business only, side of me wants to toss that notion to the side - but I believe it's required to be successful.

The Department of Labor just gave some "guidance" on 7/15 that changes how they classify Independent Contractors.

http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm

The criteria is ugly enough to have second thoughts about an IC strategy. It's obvious they want to push more people into an employee role for the purposes of tax collection and health care enrollment.

Every decision we make comes with some type of risk (even if just lost opportunity). Owning a business and hiring employees are just another in the cadre of items to keep one up at night.

1:20 PM  

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