Archinect
anchor

Will full time interns that are not offered health insurance be negatively impacted by the Employers Mandate in Obamacare?

ArchJr

It seems that bigger firms will have to start offering all full time staff including interns health insurance or pay a penalty, 2k/employee not covered per year. Although this seems fair, I'm wondering if this will ultimately have a negative impact on lower level staff such as financial cuts, layoffs, etc.

Does anyone have input on this?

 
Apr 15, 14 11:57 am
won and done williams

For all reputable large firms, it will have no impact because most already offer employee health insurance. For a handful of firms, mostly bigger starchitects, it could have an impact, i.e. they get hit with a $2k/year/employee penalty or they cut off hiring at 49; either way, I don't really care. Screw 'em. These firms are by far in the minority anyway.

Apr 15, 14 12:24 pm

"So, to recap: “Obamacare” has extended coverage to a far smaller portion of the uninsured than expected, caused millions of others to lose coverage, raised out-of-pocket costs for many middle-income consumers, diminished patient choice of doctors and hospitals and exposed Americans to future premium hikes."

Don’t pop the cork for ‘Obamacare’

Apr 15, 14 12:32 pm
won and done williams

Miles, thanks for that link to that far left piece of garbage (that looks like a far right piece of garbage) that has nothing to do with this topic. Much appreciated!!!

Apr 15, 14 12:41 pm

You're welcome.

If you have no experience of oBOMBaCare (otherwise known as the Insurance Corporation Protection and Unaffordable Care act) then it all probably sounds really good.

It's a time-tested and widely used dodge to denigrate the source if you don't like the message.

Apr 15, 14 12:53 pm
ArchJr

I dont know. Now I see that that Obama is mandating all firms to pay overtime to staff. Everyone is rejoicing over this but I feel like only a few of us will actually benefit from this. Staff that they cant afford to keep will be laid off, no? 

Apr 15, 14 12:55 pm
ArchJr

Out of curiosity, Miles, how many full time staff do you employ at your firm, and of those how many do you insure, including interns?

Apr 15, 14 1:07 pm
curtkram

maybe they'll learn to manage their time better, so their employees don't have to work 60 hours while being paid for 40.

hopefully the people who aren't capable of running their businesses go under and are replaced by people who can run businesses.  we don't need to protect them just because they're too dumb or too greedy or too whatever else to provide reasonable living wages to the people that keep their businesses running.  paying people to work for a living isn't a bad thing.

Apr 15, 14 1:10 pm
ArchJr

And thus half the architectural workforce is out of a job. Dont you see what I mean? 

Apr 15, 14 1:23 pm
curtkram

if there are too many architects and not enough work, then a correction will ultimately happen whether people are paid overtime or not.

if there is work that needs doing, then the work will get done.  if that means architects have to charge more, then they'll charge more.  if it means salary cuts to the top brass, some will probably take salary cuts before watching their firm die, others will fail and new firms will step in to take their place.  if it's in the firm's interest to pay 2 people to work 40 hour weeks instead of 1 to work 80 hour weeks, then they will do that.

there might be growing pains, but the economy is pretty flexible and in time it will adjust.  having the economy adjust in a way that allows interns a reasonable living wage and access to minimum healthcare standards is a good thing.  concentrating too much wealth away from the people doing the work is a bad thing.

Apr 15, 14 1:29 pm
won and done williams

The new overtime rules are actually more interesting and potentially more of an issue for small businesses than Obamacare is. Because the new overtime rules are income contingent, i.e. they are only mandatory for those making less than a certain weekly threshold, they may have the bizarre effect of raising intern starting wages in order for employers to avoid having to pay 1.5x overtime. I believe that the threshold was mentioned to be $800/wk, i.e. $41,600 annually. In order to avoid having to pay interns overtime, you may see some employers start paying their interns $41,601 as "salaried" employees. We'll see, but I do think it will have a much greater across the board impact on small business than Obamacare (which really only affects large firms with the employer mandate).

Apr 15, 14 1:29 pm
toasteroven

And thus half the architectural workforce is out of a job. Dont you see what I mean? 

 

sort of - but I think it'll force firms to treat younger staff less as disposable production machines and as more of an investment.  Besides - forcing people to work 60+ hour weeks at essentially minimum wage is a recipe for burn-out.   It'll be painful in the short term, but I think it'll be healthier in the long term for our profession.

Apr 15, 14 2:53 pm
LITS4FormZ

Federal government mandates that employees are paid overtime...

Employers bill employees for time spent on Archinect, personal email, etc while "on the clock"...

Owners will always find a way to win. That's why they're owners. 

Apr 15, 14 4:52 pm
grneggandsam

I'm with a small firm on Obamacare - I pay $80 a month.  I haven't met anyone who pays that little for healthcare who works for a big company, even with the big company paying half their rate.  This is because big companies put people on plans that favor the older established members, who get their rates subsidized by the young.

Apr 15, 14 5:05 pm
won and done williams

I checked the Obamacare small business marketplace for my employees and was pleasantly surprised how inexpensive rates were for quite good plans. It doesn't cost much to insure someone in his or her twenties in good health.

The more stringent overtime regs are more problematic because wages are so closely tied to billable rates. Let's say I bill out an intern at $50/hour which is very competitive in my market and allows me to beat out most competitors on price. If I pay my employee a decent wage, say $20/hour with 100%-covered health insurance, paid time off, and an IRA contribution, it costs me about $30/hour for that employee. That means I have to cover overhead (which is extremely low in my case) and profit in that remaining $20/hour. Tight, but doable. Say now that I am required to pay that employee 1.5x overtime for each overtime hour worked, that same employee now costs me $40/hour which is pretty much unprofitable at that point. I then have a choice: stop work at a 40-hour work week which affects the quality of the product, raise my rates and pass along the increase to the client, making me less competitive on a cost basis, or lower the starting wages of my employees. Clearly, I, and many small business owners like me, will figure out what works best for the business, but there are real world consequences to these seemingly benign strokes of a pen; often I get the feeling our elected leadership (and many of our citizens) have no idea what those consequences may be.

Apr 15, 14 10:00 pm
curtkram

If your employee worked 8 hours, you billed 8 hours of their time.  If they worked 10 hours, you still just billed 8 hours of their time?  Or did you pay them overtime, just not 1.5 times?

Your competitors will also have to pay their employees overtime under these rules, so it's not like your ability to compete is being  limited.

Apr 16, 14 7:39 am
won and done williams

Your competitors will also have to pay their employees overtime under these rules, so it's not like your ability to compete is being  limited.

That's not necessarily true. Because there are different ways to make the equation balance in order to turn a profit, my competitor could either raise rates and pass the expense along to the client (as you suggest) or pay his employees less and keep the billable rates the same. In the latter case, the effect of expanding overtime pay ultimately has the effect of bringing down wages and increasing the number of hours worked for an employee. In a for-profit environment, I think you will see more employers opting for the latter in order to stay competitive. All pointing to the fact that government needs to be very careful how and where it regulates business; regulation that may seem on the surface to be in the best interest of the people can in fact often have the opposite effect.

Apr 16, 14 8:50 am
grneggandsam

You are right Won and Done.  Regulation does usually distort marketplaces and the market (sometimes) has a way to correct itself.  Another example is Licensing.  The more stringent the requirements for licensing, the less possible employers are out there, which makes it more difficult to find a job for young people entering the field.

Apr 16, 14 9:31 am

the effect of expanding overtime pay ultimately has the effect of bringing down wages and increasing the number of hours worked for an employee

So ... in order to compensate for having to pay overtime, you're going to cut the base salary of your employees so that their overtime pay is not an additional expense? Maybe you should just use interns, apparently you don't have to pay them at all.

Apr 16, 14 9:50 am
curtkram

grnegg, i really don't think the licensing hurdles are what is preventing young people from getting jobs, or limiting the number of potential employers.  there just isn't enough work to absorb all the people who want to work.  maybe if we were able to further limit the number of people trying to compete for what limited work there is, no matter how small a job it may be, we could also limit the race to longer hours for lower wages.

Apr 16, 14 10:24 am
mightyaa

Or how about this idea on the overtime thing.  Learn to manage your employees so there is no overtime.  If there's work for overtime, and you and one other have to 1.5 be paid, then there's work enough to hire a new person so no one has to work overtime.  Creates jobs.  The work is already there.  If it wasn't, why are you working overtime?

Apr 16, 14 11:01 am
3tk

So I have to ask, how many employees out there are 'required' to work over 40 hrs/wk (billable) as opposed to 'encouraged' or self imposed?  I've worked in places where we as employees chose to put in extra time to produce better work (with a certain amount of goofing off time -team building-), but it was in no way 'required'.

I remember visiting offices that locked the doors at 5:30 so employees couldn't work pass that time w/o a supervisors permission (they, incidentally, paid overtime & comp time).  In Japan companies are having massive problems with employees wasting time during the day and working at night and charging overtime (they are changing their policies to not guarantee overtime pay) and in Germany I had friends who would take 'vacation' days and work so that their companies weren't fined for their OT comp time and pay.

Apr 16, 14 11:14 am
toasteroven

won - $20/hr is $41,600 a year.  If you want to get the numbers to work, you'd have to go down to maybe $10-11/hr if people are consistently putting in 50-60 hours a week - but the problem is you'd have a hard time attracting quality staff for that rate - even if you promised they'd get paid overtime.  It's much smarter to pay the minimum for salaried employees and then "encourage" them to work beyond 40 hours a week.

Apr 16, 14 11:21 am
won and done williams

If there's work for overtime, and you and one other have to 1.5 be paid, then there's work enough to hire a new person so no one has to work overtime.

It doesn't work like that. A project fee sets the number of FTEs I can assign to a project. Just because I may have an employee billing overtime to a project does not necessarily mean I can afford to add another FTE to that project. The more projects I can bring in, the more FTEs I can add. New projects are what actually creates/sustains jobs. 

In terms of overtime, both from my own experience as an employee and from what I have observed in my employees, an additional 5-10 hours per week can make the difference between a mediocre-to-average project and a truly exceptional project. Beyond those 5-10 additional hours, you get diminishing returns with employee burnout, lack of focus, etc. 

I believe I pay my employees generously, provide 100% employer covered health insurance, contribute to their retirement accounts, and provide generous paid time off. In return, I expect them to produce high quality work (if that takes 40 hours/week, great; if that takes 50 hours, so be it). I'm not forcing any one to stay, and generally everyone is happy. Sure, there are employers who take advantage of their employees, but where do you draw the line to prevent abuse? Personally I believe government is increasingly overstepping its bounds.

Apr 16, 14 11:28 am
won and done williams

It's much smarter to pay the minimum for salaried employees and then "encourage" them to work beyond 40 hours a week.

That's actually the approach I have taken.

Apr 16, 14 11:29 am
grneggandsam

"maybe if we were able to further limit the number of people trying to compete for what limited work there is, no matter how small a job it may be, we could also limit the race to longer hours for lower wages."

 

So, what you are suggesting is that we make it artificially more difficult to get into the profession so that it props our salaries up and decreases competition?  I guess this has worked for doctors quite well.  I'm actually surprised how close I'm getting to licensure, so maybe it will protect me from the ills of capitalism as well.

 

Welcome to America - home of the free(ish).  You are welcome to compete in any sector as long as you are able to jump through the loops and hurdles that we have set up to keep competition at bay.  As long as you are hardworking and intelligent enough, you might be able to put yourself in a position where you can someday use your talents to compete in the market (if you bs enough to get in the "cool" club that allows you to).

Apr 16, 14 11:35 am
grneggandsam

Also - I've always thought it a strange business practice to charge by the hour...  I suppose it can protect you from client changes taking too much time.  It also can guilt the employees into thinking they are wasting money.

 

If I am to buy a new car - I don't ask the car dealer to show me the cost of labor of all the components in the factory and all the salesmen working.  I negotiate based on the value in a competitive market.  This is how architecture should be.

 

If an architect has a good reputation (like a BMW), their value will be higher for the same project, regardless of how they configure their "billable hours" to appeal to the client.  At the end of the day, a smart client will just look at the overall number anyway.

Apr 16, 14 12:19 pm

What kind of encouragement do you use in lieu of money?

I won't fire you?

Apr 16, 14 12:28 pm
won and done williams

What kind of encouragement do you use in lieu of money?

I hire people who have a strong work ethic and take pride in producing high quality work. We work collaboratively in teams. I provide the design direction and mark-up all drawings; they produce the work. While my business is relatively new, I have rarely if ever had to ask anyone to work overtime. They do it because there is work to be done, and they want to see it done well. Hiring talented, motivated people and compensating them fairly is what makes the system work.

Apr 16, 14 12:46 pm
3tk

A kind word here and there goes a long way, though having perks does help - a few of those european offices provide a rather nice selection of freebies (food/beverages) and better work environments and seem to get a lot more hrs out of their interns.

Apr 16, 14 12:49 pm

An overly wealthy person once described fair as 'what the rich guy is willing to pay'.

Apr 16, 14 3:45 pm
mightyaa

"It doesn't work like that. A project fee sets the number of FTEs I can assign to a project. Just because I may have an employee billing overtime to a project does not necessarily mean I can afford to add another FTE to that project."

Yes and no.  The project fee is probably set and based on standard rates.  If you are paying 1.5 times your employee's pay for overtime, and you've got over 40 hours of it on your team per week, that overtime cost pays for a full time employee.  Hell, it isn't even hard to find someone who's willing to work part time; Just look to the working mothers or fathers who want work, but also want to be with their kids (no daycare).  And with those after hour rates, you aren't getting 1.5 times the quality; it's still the same person doing the same stuff. 

On top of this, turn-over, employee retention, moral, and quality become issues with over-worked and burned out employees. Kick them out of the office at the end of the business day, be flexible with personal time and hours.... it goes a long way towards them actually wanting to be there and being in the right mindset to be productive. 

Apr 16, 14 5:05 pm
won and done williams

All right, mightyaa, when you start a firm, you can try picking up a few part-timers to cover 5-10 hours of overtime per week, so everyone else can clock out 5. Good luck with that. 

Apr 16, 14 5:44 pm
( o Y o )

Just get some more interns, they might not be good for much but they don't cost anything.

Apr 16, 14 7:09 pm
mightyaa

Um.. won and done; I do own my firm.. 20 years now.  Just run the math and monitor your employee turn-over rate when you work them regularly with overtime.  How much does it cost you to train someone new? How much are you dishing out in overtime pay?  How is moral? When to hire and when to fire is always tricky in our industry....  

Finding part-time folks are easy.  Find a young architect or even an existing staff member who just started a family.  Tell them you can hire them to work between 9-2 (school hours) and align their schedules with the school calendar; same holiday breaks, late starts, days off.  It also means you aren't getting an intern; It's probably someone with about 6 years of experience (late 20's, early 30's) who doesn't want to give up a career, but also wants to raise their kids versus daycare (which is expensive).  They love being able to have a career AND raise their kids in this nice balance where it isn't either or, it's doing both.

There's also job-sharing.  I do this with marketing/PR folks all the time.  You probably know some small engineers too who also can't afford a person in that position full-time.  So you team up and split that person's time and effort.  Ditto with bookkeepers, basic drafters, modelers, or whatever. Cheaper than contracting out if you have that much of a need.  Contract for anything less than 20 hours a week.

Apr 17, 14 6:28 pm
won and done williams
Thanks for the follow-up to my snarky (and just plain off-base) comment. It goes to show that there are many ways to run a practice. My office is a small start-up. One full-time employee and one contract manager. As a start-up I can't even fathom clocking out at 5 everyday. My full time employee is wired the same way. We both work hard, but when the work is done, we go home. Eventually if he stays on he would likely become a partner as he gains more experience. The 9-5 mentality just doesn't work for me, and I can't imagine hiring someone who desires that work environment. It would not be a good fit for either of us.
Apr 17, 14 9:30 pm
mightyaa

Not a problem.

Same boat right now; Me and my business manager (who's my sister)... I've been up to 16 employee's.  My Dad's firm (also and architect) got up to 60 or so architects and 3 branch offices.  Oh, and my cousin also has a firm (residential architect; just him).  And my other sister runs a University architectural division dealing with incomprehensible huge budgets and buildings sitting on that other side of the table...  Lots of experience on running various sized firms.  Personally, that 7-9 employee's is my sweet spot where it's enjoyable and you aren't just dealing with putting out fires and pushing paper.  I need that design stuff.

We don't do 9-5.  Our hours are 7:30-5:30 M-Th... then 7:30-noon on Fridays.  40.5 hours per week; So if there's a Monday holiday, we take off that Friday before it too.  So today, like every Friday I get a halfday,  

Also, as the boss, I'm the first in, last out.  I don't force my employee's to do anything I am not willing to do.  If my employees have to work overtime, it's really my fault for not scheduling well or being 'overly optimistic' about their productivity when setting milestones.

You'll probably also find like I did... You don't hire interns until you reach that 5+ mark.  Project Architects are a better return because they don't need as much handholding (which isn't a good use of your time).  So a part time PA is going to be as much, if not more, productive than a untrained intern.  With short work days for them, they are still around more than enough to guide, and there's a lot less 'messing around and chatting' since they know their time is limited.... I've even job shared receptionist positions with part-time college students.  Lots of ways and selling points. 

Not everyone values $$$ alone. And you are better off with employees who aren't just in this for the money anyway.  You can spot them (or at least used to before the crash) when the resume is filled with job skipping as they are always seeking the bigger better deal.

Apr 18, 14 1:16 pm
grneggandsam

Not everyone values $$$ alone. And you are better off with employees who aren't just in this for the money anyway.  You can spot them (or at least used to before the crash) when the resume is filled with job skipping as they are always seeking the bigger better deal.

What are you in it for, Mighty AA? If you're not in it for the money, that's wonderful. I imagine you don't mind distributing your profits evenly among your employees, right?  The money isn't important, its what you are doing, right?

 

I think you have a great background with your family, and it sounds like you enjoy running a firm at the right size.  I'd love to find an employer who treats me like they treat themselves.  The thing is: after being laid off twice its hard to really trust any of them.

Apr 18, 14 3:55 pm
grneggandsam

By the way, I should clarify: I'm currently switching jobs, not for the money but for the professional growth opportunity, which seems vacant at my current position.  I think experience is valuable and should be rewarded.  I just think everyone needs to be paid what they are worth, and would like to have a decent enough salary to buy a house/raise a family with.  I hope that's not too much to ask.

Apr 18, 14 4:12 pm
Paradox

Sorry but if you have to work more than 40 hours a week you're either too inefficient or charging too low or both. There are many ways to boost productivity at work such as cancelling unnecessary meetings and removing interruptions such as emails. If you still can't get quality work done after 40 hours just hire someone on a part-time or contract basis. Firms in other design fields have rosters of freelancers who can help them out whenever they get too busy but for some weird reason architecture firms only have employees. Can't they wrap their head around contract work?

You need to charge more. Yes you will lose clients if all your clients are bottom feeders and you do the same thing as 100 other firms in your city but the more you charge the more you can concentrate on 1-2 clients and produce more quality work instead of worrying about the cashflow. 

Working more than 40 hours a week won't make your firm more productive, it will make it less productive. I'm actually looking for ways to reduce hours to 30-35 hours a week so that I can only work 4 days a week. Your life shouldn't revolve around work.

Apr 19, 14 6:48 am

If you build up a big firm you tend to end up working for it rather than having it work for you.

Nothing wrong with that, but the trade off is more business and less quality output unless you happen to have a magical designer. Lots of people think they are, but in reality they are rarer than hens teeth. And they tend to come with lots of personality and require special handling. 

In the end it's what makes you happy. I like doing nice work and find that gets more difficult as projects get larger.

Apr 19, 14 11:14 am

... and the office gets busier.

Apr 19, 14 12:58 pm

Block this user


Are you sure you want to block this user and hide all related comments throughout the site?

  • ×Search in: