A tough labor market for white-collar workers has turned recruiting upside down
wsj.comThat’s the contract agent, something I wished existed years ago. Some interesting discussion: https://news.ycombinator.com/item?id=32838336
I am working on contract work through a third-party company, and I proposed them such a solution: I employ them, pay them a percentage [1], they keep me busy with work, just like any serious actor has an agent. It is a great business model for everybody, and their workload is small enough they can represent a dozen people with ease.
They actually liked the idea, have spoken of switching to such a model eventually, but the sad reality is that they make much more money the “classic way”: the big client gives them the contract, and they subcontract to me. This way they can skim 30-60% off the amount paid to the sorry bugger that does all the work at the bottom, without lifting a finger.
It is very sad no one seems interested to serve this need, except very few examples (there’s that NY management agency people have been recommending for the past 10 years, which have such a backlog of candidates there’s no real chance of getting in). If I had any interest in being a salesman and recruiter, I’d build such an agency in a heartbeat.
1: I’d pay for an actual agent 10-15% of my daily rate for the duration of the contract, which is much more than the numbers presented in the article.
The difference between a 10% agent and a 30-60% subcontractor is what's being purchased, and from whom. Actors and other famous creatives are selling their particular work, which is unique and demanded by clients mostly independently of details like who their agent is. When a client pays 2x to an agency that pays the subcontractor implementing the work 1x to complete it, what's being purchased is the agency's work - working directly with the client, finding developers to complete the work, and managing the process of delivery (and all the related bits: making sure their subcontractors know what they're doing and are appropriate fits for the project, keeping work on track, being accountable for delivery/operational execution to the client).
If that extra 20-50% were so easy/useless that it can be grabbed "without lifting a finger", why aren't you finding enough work on your own to keep yourself busy, or, why are you still working with that third-party company to begin with? Oh, you would, if you "had any interest" in doing that. That level of accountability to the client and attention to their needs is literally what clients are paying the agency for, and why they're the ones handling the demand for work rather than their subcontractors.
If clients aren't seeking out your particular involvement in their project, you're the guy working the mic, not the movie star.
> making sure their subcontractors know what they're doing and are appropriate fits for the project, keeping work on track, ...
I think this is where the reality falls apart. Often agencies are just skimming their percentage without adding real value to the project.
I.e. all those scenarios where a consulting company requires a PM and BA be billed, but the dev+customer are doing 99% of the communication and work directly
> being accountable for delivery/operational execution to the client
This is actually what most VPs are paying for: being able to pick up a phone and chew IBM GCS, TCS, CG, etc. out when the schedule slips.
Exactly, there’s different types of agencies.
Some focus on sourcing labor at a markup.
Others focus on producing a work product that they specialize in. From my experience these guys tend to have larger margins.
In my experience that’s the opposite: the sweatshops are extracting the most.
I remember early in my career learning from the client I had been posted at for 2 years that they were paying for my expertise 6 times my daily rate. I was furious to say the least; I demanded a 3x raise the next day or threatened to quit, which they could only grant me. 15 years later, I won’t allow these egregious amounts of markup anymore but 2x is routine and I have to swallow it if I want to get any work at all.
Let me be clear: these companies have no role in the day-to-day, just introducing the contractor and just sitting back collecting money with no effort at all. Absolutely disgraceful.
> these companies have no role in the day-to-day, just introducing the contractor and just sitting back collecting money with no effort at all
The company is also responsible for the job getting done if you get hit by a bus or say "Fuck it" and disappear.
But in long-term customer contracts with the same personnel, there should absolutely be a decrease in the gap between billable rate and salary.
If the customer keeps someone around that long: they're working with that person, not the company.
The other legitimate reason for markup (on both sides) is optionality around immediate arbitrary filing. Even in the US / "right to work" states, firing can be messy. Severing contracts is much less messy / quicker.
So some of the premium is for being able to treat contractors like contracts rather than employees/people.
As a client, I could just hire a consultant. There’s no shortage and they have reputation to uphold / less risky to me potentially.
It’s basically the same. I pay hire rate for labor knowing only a portion reaches the laborers. I can select based on the exact expertise I need which consultants would be most appropriate
> As a client, I could just hire a consultant.
True, but in practice large clients can’t be bothered with hiring consultants directly for a number of reasons, so that’s why they go through agencies, basically delegating the entire HR portion.
well, maybe you should own your agent and fund a cooperative for that purpose?
You said it yourself - they make more money and have more control doing it the other way.
Put differently - why wouldn’t you do it?
Because contractor satisfaction is important to them, as they're the ones that make them money at the end of the day? Of course this doesn't work for sweatshops, but when we're talking about big contracts and managing experienced devs, we're not so easily replaceable.
I have given them notice that I will end my engagement with them this summer, for example, and now they'll have to spend a couple months finding a replacement; if we had had a more sane arrangement, I might've stayed.
Of course being greedy and extracting maximum profit out of workers is a valid strategy, but I do not think that it is the only way to run a business.
In the current market, they may be able to find folks easier than they previously were.
What they do may be a local optimum.
That doesn’t answer my question?
I you have the vision and don't have the "tyranny" of say, impatient shareholders, you can you chase a longer term goal than maximum profit right now.
They're going to turn this into a double dip model where the client and the freelancer both pay them.
If you think the labor market is tough now, just wait until if/when the claims AI aficionados come to fruition.
This seems like such an easy way to create perverse incentives and profit off people who are already down on their luck. Imagine being told that the only way to get considered is to pay a fee. Then later on you get told to pay the gold fee for priority. Oh you're still not getting hired? Go for our platinum package that will definitely make the difference! Not enough money? No worries, we'll take 30% of your salary for the first few years. Or maybe we'll just give you some a fixed debt at a high interest rate. Aren't you glad you used us?
1. What you describe already happens (has always happened?) in some blue collar jobs, its just the agencies dont call them gold or platinum plan, they call them "mandatory traning sessions" or "medical checks" that has built in admin fees.
2. Even linkedin upsells their plans "to increase you visibility"
I wonder how the real estate market will look like in the biggest cities in the coming years. I haven't changed jobs for quite a while so I don't know if this article is accurate but if it's really that bad, then I wouldn't be surprised if we see a big crash. After all, the appeal of biggest cities was always, at least to me, the availability of white collar, highly paid jobs. If these ceased to exist, I don't see reason why people would want to move there anymore.
so: where do you go and what do you do? All your land and food is subject to property laws and the way things are going the owners will be allowed violence to enforce their rights. Essentially you'll be a serf again just like 99% of other people and 95% on this site (which sadly has owners very much intent to become our lords)
>so: where do you go and what do you do?
Literally anywhere else where a house doesn't cost 7 figures? I think you're missing the point of the OP, which is that nobody is going to want to buy overpriced houses in superstar cities, and that bodes badly for real estate agents.
White flight all over again but this time it’d be white collar flight.
But white collar flight to where? Rural areas don’t have any jobs. There are only so many businesses a town can support. What will people do?
1. medical specialists and hospitals 2. sports clubs and vibrant leagues 3. professional sports facilities 4. concerts: arts and music. …
Demand for all those services (with possible exception of essential medical care) will shrink if big portion of white collar workers end up unemployed. Without a job people simply won't have much extra money to spend on them.
5. Bars (and pubs, in appropriate cities) that you can walk to.
It's much cheaper to drink at home when you're unemployed though. I live in a country with seriously rising unemployment rate (highest in EU), and bars/night clubs are going bankrupt left and right here.
Younger generations are also drinking far less (and smoking more weed, in general).
Yes the broader economy would crumble without white collar jobs. They employ many blue collar jobs. It would be a huge shock to economic activity
> After all, the appeal of biggest cities was always, at least to me, the availability of white collar, highly paid jobs
You are definitely unusual.
Since remote work became more common because of Covid, remote workers have moved within the same city or moved to smaller cities. Only 4% relocated to rural areas[1].
Cities are appealing to most people because they have entertainment, variety, walkability, and many other benefits that rural places don't provide. The urbanization of America isn't only because work has changed, but because people generally prefer urban or suburban living over rural living.
I don't think he's arguing for rural, just expressing concern about the *biggest* cities.
> entertainment, variety, walkability, and many other benefits that rural places don't provide
I appreciate all of this as well, but at the end of the day, I moved to a city with 80x the population of my hometown because of a (specific) job. Rent is also significantly higher, and if I had to consume my savings to survive here, I'd surely move out. Entertainment and walkability have secondary importance compared to putting food on the table and saving for retirement.
> Rent is also significantly higher [in a larger city]
For most people, pay is also significantly higher. Most employers adjust salary based on location.
‘Smaller cities’ in the US are what most of the world calls ‘rural’.
Rural in the US is truly remote, not just ‘has farmland’.
> ‘Smaller cities’ in the US are what most of the world calls ‘rural’.
What? No it's not. In the study I linked and also for most people's purposes, "smaller city" is something like Milwaukee or Pittsburgh, a place with an urban center, a real downtown, some skyscrapers, and probably a few corporate headquarters.
Generally smaller cities are the surroundings and suburbs to cities like that.
To somebody that lives rurally in the US, a town of 10,000 is where you go to get groceries. 100,000 gets you a movie theater and shopping. Pittsburgh? That's basically a megacity.
Yes, that town of 10,000 is probably rural, and in the study I linked, people were not moving to those towns. They were moving to actual cities.
What are we even talking about here?
We were discussing your belief that everyone in the world has a city slicker inside struggling to get out.
The views of rural people can be disregarded in favor of the superior City Person viewpoints, since that's what we're all secretly striving to become. Before long there will be nobody living in the country at all, because why would anyone want that?
No more fresh air or clean water for me. Nope, I'm moving to some city somewhere so I can enjoy living in a 300 sq. ft. luxury apartment with a pet cockroach. The only people still living out in the countryside will be my backwards hillbilly cousins, like in Hunger Games.
Is this where you believe things are headed? Because we all want to be you so much?
I can find data that points out two trends right now.
1. Decentralized growth into exurbs and rural markets. This is further driven by USDA home loans into those markets, where people can not only afford to live but buy homes 90min or less away from a metropolitan area (but living outside the metro). This move into exurbs and rural markets is reversing a 40 year trend!
2. Movement from major top-5 us cities into smaller cities with a university or two (Knoxville, TN; Boise, ID; and Tulsa, OK are seeing the highest inbound-to-outbound ratios). Major cities like New York and Los Angeles are still seeing net domestic outflows in 2026.
In fact the Yankees, Californians, and city slickers of all sorts are FLOODING into the southeast USA, and have been since they suddenly decided all at once in 2020 this is where they need to be for some reason. I've never seen so many foreigner plates in my life here in Alabama. (New York, California, etc.) Between them and the half of Mexico/Guatemala who already lives here, it's getting pretty crowded out here in rural nowheresville these days.
At least I can be thankful it's not as crowded here as East Tennessee, North Carolina, etc are getting to be. Yet. The very bad reputation of Alabama among a certain crowd seems to keep more of those types away.
The big reason people were in the cities was because of jobs. When remote work happened, all those people were still making big city pay, but could now move and live in lower cost areas (with fresh air, less crowding, etc.).
Not only expect to see a "big crash", but expect to see total collapse of Capitalism with French style Revolution within 5 years. There will be blood in the streets literally not methaphorically as it should be.
We know people need to eat or else they die painfully. We also know you can buy food with money. We also know job gives money for majority of populus. We also know jobs are being eliminated completely within 5 years and then physical jobs also with robots.
So knowing this, if people have no job, no salary, no money to buy food with, they will get their food by force. It's just a logical conclusion.
And no, nobody will give you UBI, stop being naive. UBI has been depunked by economists numerous times, it just doesn't wokr mathmetically. World will transition to communism and the upper class will be simply eliminated physically as it has happened in the past.
Oh and this is a good thing btw
Looks like suits are making a comeback.
(For those who don't get the reference: https://www.paulgraham.com/submarine.html)
https://archive.li/OAEU2 (archive.is seems down for me)
Maybe this is new in US, but paying recruiting agencies is nothing out of the ordinary in many European countries, at least if you actually want to have a recruiter that cares about where you land as position.
I do care. Please, give me a couple of such good recruiters if you know them.
I never used this kind of recruiters, but after a quick search, this was one I found,
https://www.ircgmbh.de/en/applicants/application-coaching-an...
Usually what is asked to pay for are improvement related activities, regarding coaching for better CVs, training for interviews and such.
Is this still the result of COVID-era overhiring (caused by free cash)?
That seems incredibly grim. Pay to play but you need to have played to be able to pay
“If you are not paying, you are the product,” said Andre Hamra, Refer’s CEO. “It incentivizes us to actually help the person.”
And that dude thought it would be a good idea to take the money of people looking for jobs instead of the companies that are swimming in cash.
I bet he actually believes his lies himself.
I think this could be a fair model and a true characterization if you only charged on successful placement.
Don't do it. Move instead. It's substantially easier to get a job if one is willing to relocate to where the job is (within the same country).
The jobs today are in India, which has its own unemployment woes.
Can you share a bit more about the situation in India?
My (distant, probably flawed) gestalt is that there's tons of jobs moving there, and lots of new college grads vying for them.
The problem with this of course is that the contract agent at some scale, becomes a gate keeper...like health insurance companies.
That's an interesting way of saying "total collapse of capitalism and built-up for bolshevik style revolution"
Does this have an alternative market-based solution?
I see a big problem with job scams from "legitimate" companies advertising jobs they have no plans to fulfill or which do not exist at all. They seem to do this because they employ HR and recruiters, and it looks good if job openings are on their site. It's a real problem.
I believe there could be a solution: charge $500 to post an opening and give $50 to each of ten AI-vetted qualified candidates. That means the candidate had a real job interview and passed it without AI assistance. They get $50 to interview.
If the company doesn't hire any of ten qualified candidates, then they can pay another $500, or stop pretending that the job they're advertising for is real.
What do you think of this novel model?
On the candidate side, it allows them to interview once and then only be called into a job interview if they're being paid $50 to do so.
The system could also go the other way and prevent candidates from making interviewing their living, by only inviting them to a limited number of interviews with job offers on the table - such as three such interviews job offers. After that they don't get more job offers since they're not really on the market.
The AI could also represent salary reality more transparently.
Basically, overall it should be the companies hiring that pay, not candidates who have lots of their time wasted.
What do you think of such a market-based approach?
Sounds like crony capitalism, which is quite common in developing countries.
This is not what "crony capitalism" usually means. Crony capitalism is where businesses are in bed with politicians. Getting regulations passed to inhibit their competitors, and such like.
I would call the USA a developing country except it’s deteriorating.
coming soon to a town near you: indentured servitude.
hopefully they will at least have nice bunk beds in the corporate dorms.
That reminds me of the grim lodging houses described in Orwell's The Road to Wigan Pier.
Nah, they can save money by buying larger beds and making employees share the beds. A single king-size bed can fit 4-5 employees.
The smart ones have to share a bed and start a family together so we can have better future employees.
> A single king-size bed can fit 4-5 employees.
... at a time.
So if you also run three shifts that's 12-15 employees per bed!
Exactly right.
On top of this, they're going to have mandatory bed position assignments. Just like you currently can't choose which desk you're going to sit at, and have to put up with the most annoying person on the team as your deskmate, in the near future you're going to have to cuddle with him/her at night too, whether you like it or not, and regardless of his/her bad hygiene, just because your manager decided to stick you two together.
> in the near future you're going to have to cuddle with him/her at night too, whether you like it or not
A solid solution to reduce heating costs. Maybe one can go a step further and remove the bed though, a large mattress (or let's say rubber mat) should be enough.
It's most efficient if you can figure out how to get them to sleep standing up.
Stand on Zanzibar
Soon? Most people pay taxes on their income and have a mortgage for their home, or even worse pay rent.
Slaves used to have the option to purchase their freedom.
Oh. Basically this is the scam they use at Offerzen.
When I saw wsj.com I figured this would be an "article" that's mostly manipulative, fear-mongering and doom and gloom.
If you're paying to maybe get hired, you're not the client - you're basically being sold to yourself.
It's a strange kind of concept creep that "scam" came to mean "bad deal", or "suboptimal deal", or "worse deal" to some users, instead of deception. Not clear what is fraudulent about the listed practice, just sucky.
Special place in hell for people who share locked articles.