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The Contractor's Life: Overlooked, Ground Down and Stuck

The Wall Street Journal logo The Wall Street Journal 9/14/2017 Lauren Weber

Michael Preiss was happy to escape the corporate grind after being laid off by International Business Machines Corp. in 2001. He became a contractor, earning more than $100,000 a year from steady assignments helping companies figure out how to do things faster and cheaper.

That work eventually dried up. The past decade has been a revolving door of outsourced jobs for shrinking pay, fear that any day at a company could be his last, and reminders that full-time employees live in a different world, even though they often sit at the next desk. Mr. Preiss says one manager reprimanded him because co-workers complained that he laughed too loudly.

“My career is shot,” says Mr. Preiss, 59 years old, who lives in Atlanta. “There just is no career anymore.”

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Millions of contractors now do heavy lifting, paper pushing and other jobs for American companies that have replaced employees with outside workers. Within the next four years, nearly half of the private-sector workforce in the U.S. will have spent at least some time as a contractor, temporary employee or other type of outside job, estimates MBO Partners, a provider of support services to self-employed professionals.

The contractor model offers companies lower costs, more flexibility and fewer management headaches. Workers get far less from the arrangement.

Interviews with dozens of current and former contractors, as well as more than 150 responses to a Wall Street Journal survey, reveal costs that hit home in every paycheck—and every day on the job.

Outside workers usually aren’t surprised when they get no paid holidays, sick days, employee-sponsored health insurance, 401(k) plan or other perks routinely offered to traditional employees at the same companies.

What wounds more deeply are things taken for granted or barely considered at all by regular employees, outside workers often say. The work lives of contractors frequently feel like a series of tiny slights that reinforce their second-class status and bruise their self-worth. Even when contracting jobs are easy to get, they can vanish instantly, and turning a series of contract assignments into a real career remains out of reach.

At many companies, contractors aren’t allowed to attend important meetings, go to the company gym or bring their kids to Take Your Child to Work Day. They keep quiet because only full-time employees are expected to speak up. Working harder, smarter or longer offers little advantage when applying for a job directly with the company.

Nothing is loathed more than the nametags or identification badges that advertise the lowly ranking of contractors in the workplace pecking order. Technical writer Don Cwiklowski Jr. worked as a contractor at Mastercard Inc. for four years. He says co-workers often glanced at the badge dangling from his neck, saw the red color that signaled his contractor status and looked right past him.

He got a green badge when he was hired as a full-time employee at Mastercard in St. Louis in 2012. Some of the same people who had shunned him started saying hello in the hallways, says Mr. Cwiklowski, 53.

The company says it “puts our people at the center of everything we do” and isn’t aware of the examples cited by Mr. Cwiklowski.

Such experiences are becoming more common as the outsourcing wave moves from less-skilled jobs such as security guard and cafeteria worker to a wider range of corporate tasks. Those include information technology, customer service, research, human resources and sales.

No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people. The surge might help explain a riddle of today’s labor market—jobs are plentiful, but many Americans feel anxious and insecure about their finances and careers.

Some contract workers say they like contract work for some of the same reasons companies do. Kara Sanders, 36, says it feels like contractors “have control over our destinies by putting ourselves out there and taking risks.”

She says she chose contracting after watching round after round of corporate layoffs hit family members and friends, while growing up in upstate New York. She has moved cross-country three times for data-analysis and consulting projects. She also is finishing an online master’s degree in data science.

“I don’t think it’s ever safe to let your skills atrophy or become too tied to one employer,” says Ms. Sanders.

People usually don’t go looking for contract work. It finds them.

Fernando Granthon, 35, saw an outsourced human-relations position at Cisco Systems Inc. in Research Triangle Park, N.C., as a foot in the door. He says a recruiter at staffing agency ManpowerGroup Inc. told him contractors had a strong chance to get hired as Cisco employees.

The son of immigrants from Peru, Mr. Granthon grew up poor in South Florida, joined the U.S. Marine Corps straight out of high school and worked as a personnel clerk. He earned a bachelor’s degree at the age of 30 and was eager to parlay his experience into higher-level human-resources jobs.

At Cisco, Mr. Granthon worked on a team of employees and contractors who answered HR queries. He says he felt valued and trusted.

In 2014, the company split up the team. Outside workers including Mr. Granthon got simpler job duties than employees, he says. Worried that his career was stalling, he asked a Manpower representative about training opportunities and was told nothing was available. The same answer came when he pressed about getting a full-time job.

He left Cisco in 2015. Mr. Granthon didn’t receive a pay increase while working there. He is now pursuing an M.B.A. at St. Edward’s University in Austin, Texas.

“I realized there was no mobility,” he says. While he is grateful for the experience he gained as a contract worker, Mr. Granthon says he wishes bosses had realized that “contractors, like any other employees, want greater experiences, want to learn, and to move on.”

Manpower declined to comment on individual employees but says it offers workers free online training programs. Cisco declined to comment.

Just asking about job openings can be risky, says information-technology project manager Neil Gimon, who for years has taken contract jobs that he hopes will turn into a full-time position.

“The manager says: ‘You’re unhappy with this position? What’s going on?’ ” says Mr. Gimon, 53.

When the manager at a recent assignment with Wells Fargo & Co. sent around job openings, contractors were steered to a general website, while bank employees got to apply through an internal system that reveals details about the hiring manager and human-resources contacts.

The bank says nonemployees “are subject to Wells Fargo recruiting requirements in the same manner as any other external job seeker.”

Last year, Mr. Gimon and his wife, Anita, opened the Dreamchaser’s Brewery in an old firehouse in Waxhaw, N.C. If all goes well, he will stop doing contract work. “I’m tired of being laid off,” he says.

While job security has ebbed in all walks of corporate life, many employees get a relatively stable paycheck, benefits and often some help to find a new job if they lose the one they had. Contract workers are on their own.

Dan Fischer, 61, says his yearlong contract to install software for health-care provider Kaiser Permanente was abruptly cut short after nine months. “Boom, it was gone,” says Mr. Fischer, a contractor since 2013. Contract assignments usually include a clause saying they can be terminated anytime.

In June, he finished a two-year assignment at Bank of America Corp. in Charlotte, N.C., where he worked in a cubicle alongside other outside workers in an area they jokingly called Contractor Row. Most of the hand-me-down swivel chairs at their desks were broken, says Mr. Fischer.

After working from his home in Colorado for a few weeks, he discovered upon returning to Charlotte that his ID badge no longer unlocked the doors. Since there was no manager to agitate on his behalf, he had to work from his apartment until the ID was reactivated a week later. Mr. Fischer saw his wife every eight weeks or so when he flew back to Colorado for a visit.

Mr. Fischer hit the bank’s time limit for contractors this spring, which meant he had to stop working there for at least 90 days. After that, he went back to Bank of America doing the same job as before, except he is called a consultant and is on the payroll of a different contracting firm. Bank of America and Kaiser declined to comment.

Bob Zwicker had a 10-week contract in 2015 designing an electronic circuit for a medical-device maker. Officially, he was on the payroll of a contracting and recruiting firm near his home in Olympia, Wash. After that, he became an employee of tech outsourcing firm HCL Technologies Ltd. of India, which put him on an 18-month assignment at Microsoft Corp. to test power adapters for Surface laptops and tablets.

He gives Microsoft credit for maintaining a manual testing operation, rather than simply automating the task. He spent his time at a workbench with his laptop and electrical equipment, running rote checks such as testing adapters.

“I used to design such things,” says Mr. Zwicker, 65, an electronics engineer. The adapters are now mostly designed and made in China. He attended product meetings and felt that he had the respect of Microsoft managers, even though he felt his opinions carried less weight than those of employees.

His contract ended in June, a couple of months ahead of schedule. Mr. Zwicker says he was told the position wasn’t in the budget for the next fiscal year. A new consulting project involves more design work and is a better fit.

At Microsoft, he missed making decisions on his own and having pride of ownership in his work. Those are the moments “where you realize, if this thing doesn’t work, it’s my fault,” he says. Microsoft declines to comment.

Outside workers say they are leery of doing anything that might backfire into them suddenly losing their contract assignment or hurt their chances at landing a full-time employee job.

Veronica Peinado, a project manager in Raleigh, N.C., says a manager recently asked her to conduct a product analysis, which wasn’t part of her contract assignment. She put about 60 hours of her own time into the project.

Ms. Peinado, 59, says the manager didn’t thank her when she turned in the project. A few months later, her contract ended with less than two weeks notice.

She also was forbidden to ask the company about her compensation or schedule. To take a day off, she was supposed to inform a staffing-agency representative, who then told another outside firm, which sought approval from the company, even though she spoke every day to the manager who ultimately said yes or no.

“It’s very, very weird,” says Ms. Peinado.

Ever since Microsoft agreed to pay $97 million in 2000 to settle an eight-year-old class-action lawsuit filed by “permatemps” who accused the tech giant of using temps to do the work of employees, companies have tried to keep their outside workers at a distance.

At the large logistics firm where Mr. Preiss, the former IBM employee, was reprimanded for laughing too loudly, contractors were denied access to company email and calendars, making it hard to schedule meetings. The contractors had to use a separate email system, but employees often didn’t respond, so Mr. Preiss had to buttonhole them at their desks.

Mr. Preiss recalls spending three weeks trying to set up an important meeting with a company executive who worked in a different building. He finally asked the project’s leader to schedule the meeting. The person did but forgot to invite Mr. Preiss or mention the meeting until everyone else was assembled in a conference room, he says.

After the scolding about his laugh, Mr. Preiss felt obliged to train himself to snicker, he says. “Either that or just smile or put my hand over my mouth or whatever I could do to muffle the sound,” he says.

On some Wednesday nights, he gathered with friends for trivia night at an Irish pub in Roswell, Ga., near Atlanta. Most of the men work as contractors, so they called their trivia team Outsourced. They have had some second- and third-place finishes.

Between trivia questions, Mr. Preiss and teammate Rob Jones often swapped stories about work. Among their frustrations: Employers want to essentially rent employees for short periods but then wonder why workers hop from company to company.

Mr. Jones, 59, has held more than a dozen jobs in nearly two decades of project-management contract work. He calls himself “one of those ‘forgotten men’ you hear about that has not had a raise in 18 years.”

The 2001 Toyota 4Runner that Mr. Jones drives has 215,000 miles on the odometer, but he won’t buy a new car. Monthly loan payments would be too risky, he says, since he never knows when a job will start or end.

In the late 1990s when companies were panicking about Y2K bugs, Mr. Jones bargained directly with clients and commanded $65 an hour. Few large companies are willing to manage thousands of self-employed contractors anymore, so they sign high-volume contracts with a handful of staffing or contracting agencies.

Mr. Jones says he now gets take-it-or-leave-it offers from recruiters, and the rate is usually about $45 an hour, or about $30 in 1999 terms. Some big projects offered as little as $24 an hour.

Foreign workers with H-1B visas compete for the types of jobs he used to do, he says. Such workers often are paid less than U.S. workers doing similar jobs.

“What am I doing wrong?” Mr. Jones asked a former boss, who took him out for a beer but offered no helpful advice.

Mr. Jones says he is now looking for any kind of work he can get, such as a government job, something “with a little bit of a pension to it.”

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