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Independent Programmers' No-Win Scenario 552

snydeq writes "Fatal Exception's Neil McAllister writes about the no-win scenario facing today's independent programmers: 'In a knowledge economy, programmers rank among our most valuable workers, yet the current legal and regulatory climate makes a career as an independent software developer virtually a dead-end prospect.' Section 1706 of the 1986 Tax Reform Act, the hurdles and costs of obtaining health care for one's own family, a hostile legal climate in search of accountability for any defects in code — these harsh realities make it 'easy to see why software developers would give up on entrepreneurship. For many, the risks simply don't match the potential rewards. Better to keep their heads down, not rock the boat, and hope they can hang onto their jobs until retirement.' Great news for big software vendors, which will be 'ensured an endless supply of programmers desperate for the safe haven of a steady paycheck, predictable taxation, health benefits, and a shield from civil prosecution when their code turns up buggy. But where will the next Microsoft come from? A field that discourages self-reliance sends the message that the status quo is the highest goal.'"
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Independent Programmers' No-Win Scenario

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  • Bagh! (Score:3, Interesting)

    by WrongSizeGlass ( 838941 ) on Thursday February 25, 2010 @04:12PM (#31276846)
    I'm willing to take my chances being an independent. I do it every day of the year.
  • Not Completely True (Score:3, Interesting)

    by ( 830361 ) on Thursday February 25, 2010 @04:13PM (#31276872)
    I do well building a reselling software. I make most of my money off something I built two years ago. Working as an independent programmer for someone else may suck, but working for yourself is the only way to go. Build it once, and get paid forever.
  • by sopssa ( 1498795 ) * <> on Thursday February 25, 2010 @04:13PM (#31276880) Journal

    It's hard to do anything as a beginner.

    Of course, but the thing here is that you can't necessary choose the better way either, so you have to go by that. Of course it's easy to yell about "working for soulless big company like EA" from the moms basement, but that's not how it goes in the real world.

    But the amount of such things you need to care of in the US isn't even bad yet. In other countries there's so many things you need to take care of it really, really puts you off. You'll be spending a lot more time trying to figure out all the overhead things than getting any work done.

    You would need to right away get some lawyer to tell you everything little minor detail in law, an accountant to make sure you fill the complicated taxes correctly, take care of payment processing, and pay large amount of money for irrelevant things like health care and so on. If the workless people don't have to pay for health care, why should a beginning entrepreneur do so if they don't like to?

    In beginning you really need someone. If you're an games programmer, this means someone that can handle the distribution and paying your share of it. PopCap and such might be good for a beginner.

    On the internet it might also mean starting your site with no financial incentives first and hope someone picks you up, or provides funding and other expertise.

    But yourself alone, as a newbie with no money to invest with - no, it's too hard.

  • Next Microsoft? (Score:1, Interesting)

    by Anonymous Coward on Thursday February 25, 2010 @04:19PM (#31276996)

    Next Microsoft won't appear, that business model is not working that well anymore. Programmers that view their profession as nothing more than a job are not the type that innovate or try something like entrepreneurship. The other type of programmers will still want to make something new or just to work on something where their view counts, that's why I expect the open-source community to grow even larger.

  • Yep, I've lost hope. (Score:3, Interesting)

    by GarryFre ( 886347 ) on Thursday February 25, 2010 @04:24PM (#31277066) Homepage
    When I started working as a programmer some 15 years ago I had an AA degree in computer science. I learned on my own and wrote some pretty fantastic code. My first job was to write a multithreading app and I did well. Now I'm out of work and I can't get a job doing stuff that I could do in my sleep because I don't have a BA and I'm 54 years of age. I can't get a job, in a month or two I'll be homeless. I have pneumonia and I can't even afford to go to the doctor, stinking california denied my medical aid because I didn't state whether i was PREGNANT or not!!! Recently I decided my only hope is to go into business myself and now i read about this situation. Not a day goes by that I don't think about suicide and can only manage to get to sleep by pretending I'm dying. How pathetic I know but that's the way it is. Its over for me.
  • Re:Deploy offshore (Score:4, Interesting)

    by Grishnakh ( 216268 ) on Thursday February 25, 2010 @04:26PM (#31277090)

    I wonder if it'd be easier for independent software contractors to simply move to Canada, and then contract with US-based companies, doing work remotely?

  • Re:Deploy offshore (Score:3, Interesting)

    by sopssa ( 1498795 ) * <> on Thursday February 25, 2010 @04:31PM (#31277146) Journal

    If you're going to move somewhere for it, you might as well move to some cheaper country and where they don't require one-man online startup's to take health care or any other high expenses and complicated things.

    Hell, you'd probably find a nice island somewhere and can code at your beach house (right after you've gone morning surfing and taking some sun). Not Hawaii though, that place is expensive.

  • by Low Ranked Craig ( 1327799 ) on Thursday February 25, 2010 @04:33PM (#31277194)

    Step 1. Form an LLC. It's not hard, you can do it yourself for under $100 in most cases

    Step 2. Get an EIN number from the feds. Free and easy

    Step 3. Open a checking account for your new LLC. might require a credit check.

    Step 4. Get a decent accounting package.

    Step 5. Keep track of EVERY business expense. Keep milage logs in your car. Keep receipts. What percentage of your utilities, etc are business related? Track it.

    Step 6. If you think you need the additional coverage get E&O Insurance. It can be pricey, true. On the other hand if you LLC doesn't have a lot of hard assets, why worry?

    Step 7. Get health coverage. We found insurance through a local trade group for $600 a month for my wife and I. Pay it out of the company, it's a write off.

    Step 8. Work your ass off and enjoy the benefits of being able to write-off things you probably would have purchased anyway.

    This should have been step 6 - get a good tax guy (or girl) to help you figure shit out.

    Now get creative. Like to go to theme parks? Set up another LLC and create a website dedicated to reviewing them, talking about which ones have what etc. Now you get to write off trips to Six Flags and Cedar point as legitimate business research.

    Life is far more enjoyable when you do what you want, when you want, for whom you want. All the accounting is a pain in the ass, yes, but not as big of a pain in the ass as working for Bill Lumberg the rest of your life.

  • Bunch of FUD (Score:1, Interesting)

    by Anonymous Coward on Thursday February 25, 2010 @04:39PM (#31277280)

    I really don't understand this sort of post.
    I'm 26; I made 118k last year as an independent contractor. I get job offers all the time. Nobody is looking to out-source me, move me oversees, anything like that. Why? Because I'm good at what I do and easy to work with.
    I doubt I'm going to see that change any time soon.

  • by Grishnakh ( 216268 ) on Thursday February 25, 2010 @04:42PM (#31277320)

    Republicans are liars. They're always posturing and claiming they're for small government, small business, etc., but it's all complete lies. They're really little different from the Democrats. They favor BIG business, and helping out already-rich people instead of providing a level playing field or doing anything at all to encourage entrepreneurship. The main difference between the Dems and the Reps is which BIG businesses they're allied with. With the Reps, it's oil, gas, and defense contractors; with the Dems, it's the RIAA, MPAA, etc. The other main difference is which special-interest groups they pander to: Reps pander to fundamentalist Christians, gun owners, and homophobes, while Dems pander to environmentalists, gun-banners, and minority groups. However, it should be noted that in their pandering, they talk a lot to these groups about how much they support them, but in reality, they don't actually do that much to help them when they're in power (Obama's environmental policies aren't really any different from Bush's, for instance). They're all a bunch of liars.

    The best thing America could do later this year in the election is to vote out EVERY incumbent (except maybe Ron Paul; he's the only one who isn't a liar from what I can tell, even if I don't agree with him on everything). Of course, that's not going to happen; the people complain about Congress all the time, but they're really complaining about everyone else's Congressmen, not their own. When it comes time to vote out their own Congresscritter, they re-elect him. Of course, part of the problem here is that we don't have very many decent people running. For instance, my state, Arizona, has to elect a new Senator this year for McCain's seat. McCain is running for re-election of course, but lots of people (including myself) hate him for various reasons, such as selecting that twit Palin as his running mate. So another guy named JD Hayworth is challenging him for the Republican ticket, but that guy's even worse: he's a blowhard moron that was involved in a corruption scandal when he was a Representative, and was replaced by a Democrat in a Republican stronghold. Maybe we'll get lucky and a "blue dog" Democrat will run against these two morons and win, but it's unlikely as AZ is very hard for Democrats to get elected in, even if they're not the liberal type. Or who knows, maybe a Libertarian will run and get elected because everyone's so pissed that they don't want to vote for either of the two main parties. One can dream.

  • by Anonymous Coward on Thursday February 25, 2010 @04:48PM (#31277412)
    I know exactly what you're going through because it is the same for me. California turned me down for help basically because I'm not an illegal nor pregnant. However some advice for you on the medical issues. I saw my doctor today and explained I faced job hiring discrimination, could not get any work, had no health insurance and limited money and was sleeping on a friend's couch. He told me that I could apply to Palo Alto Medical Foundation and request "I need to apply for financial hardship" to cover doctor visits and some lab work. If you have pneumonia, first try going to an ER for it, they cannot refuse to treat you. If that is not viable, try the above approach either with PAMF if you're near them or another health care organization accessible to you. We need to fight against incompetent and corrupt legislators who are doing us harm, and we need to stop excessive use of foreign labor over hiring of Americans. It has to stop before we all are homeless. Oh, and I wish Joe had flown a plane into the Indian agencies in Silicon Valley who refuse to accept Americans applying for contract jobs. Discriminatory bastards, I have so many stories about their fraud to bring in H1-Bs.
  • Be Puma, not Nike (Score:1, Interesting)

    by Anonymous Coward on Thursday February 25, 2010 @05:02PM (#31277578)

    Good independent companies take advantage of their small scale. If you make something for a niche market, or if you provide an extreme degree of personalization, you beat the big boys, because no megacorp cares about those markets--they're not profitable.

    Or you can invent a disruptive technology for a pressing problem and develop it faster and better than existing companies (Google). More money, but more luck required.

  • maintaining monopoly (Score:3, Interesting)

    by roman_mir ( 125474 ) on Thursday February 25, 2010 @05:06PM (#31277626) Homepage Journal

    This is an obvious move by the large software manufacturers to keep their monopoly, that's how large corporations create unbearable situation for anyone who maybe able to compete, they create enormous barriers of entry.

    Large corporations lobby the government to get what they want, be it bailout money, interest rate free money, laws that discourage competition, unfair advantage for taxation etc. It's the same old 'struggle of the classes', just moved to a slightly different plane - keeping your tools of production away from you, so that you would be forced to go work at the factory. Marx was wrong about what capitalism is, he mixed the term with mercantilism, but he was right in some principle things: those who have capital want to be the only ones with it, to make sure that it is so, they will do their darnest to be the only ones who have means of production so that the rest are forced to work for them and be paid a wage. Wage slaves.

    I work as a contractor since 15th of January 2001, never looked back (worked in Toronto most of the time), the laws in Canada are better for this than in the US. US definitely sucks balls in this particular instance. Tomorrow maybe my last day with a company I worked with for 4.5 years, that's my longest contract yet.

  • by cptdondo ( 59460 ) on Thursday February 25, 2010 @05:12PM (#31277700) Journal

    You've never been sick or had a child, have you? Current individual health care premiums approach nearly 50% of the average family income, and one kid with a broken arm can drive you into bankrupcy.

  • by Maxo-Texas ( 864189 ) on Thursday February 25, 2010 @05:24PM (#31277880)

    Spend $50k to $80k on a degree.

    Get a job with required overtime, required holiday work, low status, poor dating prospects.

    At least you used to have freedom, security, and high pay.

    Now you've lost freedom (sarbanes oxley is horrific. at my company, a one line change requires review and approval by multiple people (including me as I'm a supervisor).

    You lost your security since so many jobs are being offshored (at my company we are down about 35 people and up about 80ish indians onshore and probably another 150 indians offshore.).

    And lately, you've lost the high pay. I have friends who only make about $58k a year. That's about $46k after taxes but let's say $48k. Interest on the college debts is $4k a year. How do they live?

    Stay away from computing for corporations. It's a terrible job right now. Perhaps things will be better once the dollar falls enough or enough baby boomers retire.

  • by TheSpoom ( 715771 ) <> on Thursday February 25, 2010 @05:40PM (#31278134) Homepage Journal

    Wait. Wait, wait, wait.

    You state that a broken arm should cost around $2500, and you think that's reasonable? For a treatment that has been around for decades, possibly centuries?

    What the hell are you smoking?

  • by Anonymous Coward on Thursday February 25, 2010 @06:05PM (#31278540)

    However some advice for you on the medical issues. I saw my doctor today and explained I faced job hiring discrimination, could not get any work, had no health insurance and limited money and was sleeping on a friend's couch. He told me that I could apply to Palo Alto Medical Foundation and request "I need to apply for financial hardship" to cover doctor visits and some lab work. If you have pneumonia, first try going to an ER for it, they cannot refuse to treat you. If that is not viable, try the above approach either with PAMF if you're near them or another health care organization accessible to you.

    In his case it's probably a good idea.

    For someone who actually has a chance at getting back on the treadmill and going back to work, once you've got treatment on your medical record, you're basically uninsurable. There's plenty of examples in the media of people getting their cancer claims denied because of their acne, and so on. I'm sure the insurance company can come up with a perfectly cromulent explanation of how his pneumonia caused whatever else he's got so they'll scream "preexisting condition!" every chance they get.

  • by sucitivel83 ( 1752354 ) on Thursday February 25, 2010 @06:06PM (#31278550)
    oh jesus bloody christ... seriously? socialist? are you completely mad? if socialism worked, then we'd still have a U.S.S.R. -- and if we would stop implementing fundamentally idiotic socialist reforms to our capitalist society, that would be a start in the right god damned direction. i don't understand how so many people out there, hate the direction our government is going, and then blame capitalism, and pray for more government sponsored programs and interventions (that is the definition of socialism my friends)... are you completely stuck in the clouds? we may as well have called the past 2 or 3 decades in the United States the "Socialist Era" (for that matter you can go back even further to the late 19th / early 20th centuries) Oh, btw. libertarians would not likely be "nutbags, racist nutbags and homophobic racist nutbags" -- and they aren't a party (lo siento) -- its a term for a view that is socially liberal and fiscally conservative.
  • by CodeBuster ( 516420 ) on Thursday February 25, 2010 @06:08PM (#31278570)
    IANAL, but as I understand it one has 5 years in the US to show a profit or the IRS will deem the business to have been "declared in bad faith" (i.e. as a tax dodge) and you will owe back taxes and penalties for any write offs or other tax benefits derived from the illegitimate "business". This can happen even if you honestly were trying but just couldn't get the business off the ground. This sometimes happens to people who try to turn a hobby into a business for tax purposes.
  • by CohibaVancouver ( 864662 ) on Thursday February 25, 2010 @07:36PM (#31279532)

    The only reason the U.S.S.R. collapsed is that the U.S. had enough of an advantage in terms of their economic output and ability to incur debt to spend them under the table

    My friends who lived in the Soviet Union would disagree with you. Certainly this was a contributing factor, but was by no means "the only reason." They argue the Soviet Union collapsed because there was no motivation or reward for excellence and no environment for entrepreneurship. If you worked at Glorious State Rocket Factory #12 you were not rewarded through better salary or perks if you innovated. Compare this with the environment at Grumman where they were building the Apollo LEMs where innovation and engineering excellence were rewarded. This extended across the entire Soviet economy and was the reason the west, in your words, had an advantage in terms of "economic output."

  • by Nefarious Wheel ( 628136 ) on Thursday February 25, 2010 @08:40PM (#31280100) Journal

    To quote an old Husqvarna hare & hound racer some years back, "A downhill is just like a straightaway, only you can go faster."

    Put anybody in front of a wheeled mass, headed downhill, and check their attitudes. The one who whoops at the speed gain is the one you want if you want to survive the run, not the one who covers their eyes and spends their nervous energy in total flinch-mode.

    Your country is changing, fast. You want someone who admits to the speed and steers like hell. Honestly, from an outsider's perspective, you could have really screwed up badly in your last national election, and you didn't.

    Ok, well, there's Biden, but even he's better than that eyes-connected-to-lime-jelly turkey strangler he ran against.

  • by Insightfill ( 554828 ) on Thursday February 25, 2010 @08:56PM (#31280248) Homepage

    Next time you are at your doctor, ask him/her how much the visit will cost if you pay it out of pocket.

    Yeah, for the office visit, if it's a single doctor, and not a group practice, this may have a chance. But the minute you involve anyone else it disappears as an option.

    My dad is self-employed. Dental insurance is a 'wash' - pays as much - if not more - than it costs and covers. He pays the dentist cash and gets a break. Oh - dentist is a friend of the family and owns the whole practice.

    My wife went to a group practice general doctor a few months ago and needed a culture done for a possible infection. We have one of those new "High Deductible" plans - nothing is paid until you reach $2500/person (still costs me $330/month from my paycheck and my employer is kicking in another ~$600-1000/month). Before she hands the container with the sample to the nurse, she asks - " Hey, we pay for everything with the new plan - what does this cost?" Nobody knew. Took 20 minutes of running around and calls. Final answer: $800 for the sample.

    Paying cash and getting a reasonable rate is only an option for small practices. If you have an encounter with a larger institution, you may get a break if you specifically ask for the "Blue Cross Rates". They sometimes come through and let you use that rate plan, as they'd rather get 100% of something rather than nothing and have to turn you over to collections.

    My own three day stay in a hospital last year would have cost over 20K "out of network" (aka out of pocket), but 4K in-network, and one lab in the hospital insisted on being treated as out of network and charging for an uncovered procedure. That was another $800 out-of-pocket.

    No other industry can work with such pricing. Any other business is expected to give you at least a ballpark pricing plan - even the damn cell phone companies. But: medical isn't one of them.

  • by shutdown -p now ( 807394 ) on Thursday February 25, 2010 @09:04PM (#31280304) Journal

    Most of the rest of the civilzed world has universal health care, and none of the dire things you say have happened

    Please read GP carefully. His "dire effects" are what happens when you have mandatory universal healthcare with no public option (i.e. you have to go and buy insurance from a private party), or when you have public healthcare which is non-mandatory (so you can opt-out and skip funding it). To my knowledge, there's no country which works like that today, and U.S. might just be the first one to get into that mess.

    Universal and public healthcare works, of course. That's the point.

  • by radtea ( 464814 ) on Thursday February 25, 2010 @09:46PM (#31280574)

    My kid's broken arm cost $7,500 for the ER visit, and another couple of grand for the cast work.

    One of my kids was thrown from a horse at the age of 10 or so. He was bleeding from one ear. I took him to emerg where he was seen in minutes. Busted eardrum. Doc cleaned it out, prescribed some kick-ass anti-biotic that's used for injuries in cases where there's a high chance of infection, and away we went

    Cost of antibiotics: about $100.

    Cost of seeing the doc: $0 (other than what I pay in taxes for health care).

    Oh, yeah: I am Canadian. There's great peace of mind in a situation like that, knowing that whatever happens your child is going to get the best care available.

    I've lived and worked in the States, and I wouldn't take your health care system for anything. My only major beef with the Canadian system is we have too many restrictions on private provision of medical services, and that is strictly a defensive move against the predatory health care industry to the south of us, which would move in, take over and fuck things up if we gave it the least bit of wiggle room.

  • by ScrewMaster ( 602015 ) * on Thursday February 25, 2010 @09:49PM (#31280592)

    they would still be around today, and they would probably be doing at least as well as China is.

    Unlikely. The U.S.S.R never developed anywhere near the commercial economy that is required to truly support a major high-technology military. They were not (and still are not) willing to allow their people enough elbow room to actually create something for themselves. Matter of fact, I would venture to say that China is doing so well because they learned from the negative example offered by the Soviet Empire, and are not making the same mistakes. Good for them, not so good for us (or the Russians, for that matter.)

  • by hrvatska ( 790627 ) on Thursday February 25, 2010 @10:33PM (#31280836)
    Maybe things vary around the country, but around here everyone I know (5 people) that has tried to negotiate a price with a hospital or doctor has found the price to be substantially more than what the insurance company pays for the same service. My friends' and family's experience has been that when you say you can't afford the price the doctor sends you down to their finance office and they give you a little brochure from a company that will loan you the money for the procedure. I've always thought the doctor must be getting some sort of kick back from the finance company. My neighbor requires back surgery, and the only neurosurgery group in the area is not in plan for his insurance company. He's talked to them, and they will not negotiate a price. They charge what they charge, and that's that. When my daughter was six years old there was the possibility that she would require eye surgery. I checked with two local eye surgeons, and they both charged the same price for the procedure, and neither would negotiate. And none of the local hospitals would discuss price.
  • by R3d M3rcury ( 871886 ) on Thursday February 25, 2010 @10:54PM (#31280954) Journal

    A few years ago, my friend wiped out on her bicycle. She ended up with a collapsed lung and a couple of cracked ribs. Ended up spending 3 days in the hospital.

    She had no health insurance.

    She had two choices: Pay $20,000 over 10 years or pay $5,000 up front, right now. She payed the $5,000.

    I asked about the reason for the disparity and was told that lots of people sign up for $20,000 and then skip out. After all, what's the hospital going to do? They can't repo. If they try to sue, the media will run a sob-story about this poor injured person. About all they can do is hurt their credit rating.

    I was amused because a bill showed up a week or two later for an extra $1500. "Ah ha!" I thought, "now we'll see the, 'Oh! That didn't include...' even though we asked, repeatedly, whether this includes everything." She went in with the bill and the hospital said, "Oops! Our mistake! Never mind." and tossed the bill.

    So never underestimate what cash on the barrelhead can accomplish.

  • by jeko ( 179919 ) on Thursday February 25, 2010 @11:07PM (#31281024)

    "and most days are 12~16 hours long"

    Do you have kids? Do you plan to? You work 12-16 hour days constantly and they will end up pregnant addicts. NOTHING screws up your kids faster than parents who don't have time for them.

    on vacations I do have to keep one eye on my email and be willing to get up a few hours early to handle anything

    That's not a vacation.

    There are no sick days.

    You are one car accident away from bankruptcy.

    When a client makes unreasonable demands I just charge more.

    No, no you really don't. Been there, done that. Over time, clients expect you to constantly get cheaper. In time, you'll find yourself competing against third-world labor.

    don't let a client down even if it means pulling all-nighters until your not sure what day it is

    I see you have your cardiac arrest penciled in for next year. What does your doctor think about this plan?

    I've never been happier in my career.

    Been there. Done that. Talk to me about how you feel after three years of this.

  • by Jurily ( 900488 ) <jurily@g m a i l . com> on Thursday February 25, 2010 @11:42PM (#31281246)

    In other countries there's so many things you need to take care of it really, really puts you off.

    If you play by the rules in Hungary, as an entrepeneur you'll be spending 95%+ of your income on various taxes, health care, retirement plan, etc. You even have to pay a significant amount if you had no income whatsoever. And people wonder why tax evasion is a national sport here.

  • by canadian_right ( 410687 ) <> on Friday February 26, 2010 @01:28AM (#31281776) Homepage

    While the government of Canada is by no means perfect, it does manage to deliver universal healthcare for much less than the private sector in th USA does. There are no insurance corps skimming profit from every transaction. The government actually uses it bulk buying power to lower costs. As pretty much everything is covered there isn't much paper work, and due to the loser pays court system, not as many lawsuits.

    There can be longer waits for elective surgery, and associated tests. If something is life threatening you get treatment right away.

    The government does not pick your doctor. You do. The government does not pick your treatment, nor does your insurance company. Your doctor chooses your treatment. you can't be denied coverage due to a "pre-existing condition".

  • by Stiletto ( 12066 ) on Friday February 26, 2010 @01:12PM (#31287080)

    What if a doctor could see you for your average "I'm sick" visit for the same cost as filling a tank of gas. You say that is too expensive?

    What if pigs could fly?

    In reality, an uninsured routine visit to the doctor can cost what, between $200-$500? A broken arm is in the thousands, and for anything more serious, the sky is the limit. Obama does not set doctors' prices, nor does the Department of Health, the ACLU, or the Illuminati. It's set by the good ol' free market. And the free market says that if I want to see a doctor in the USA, I'm going to have to shell out a ton of money. That's why we have to have insurance.

    Sure, I'd love to live in a universe where the free market results in $30 check-ups and $100 to set a broken bone, but we don't live in that universe.

Houston, Tranquillity Base here. The Eagle has landed. -- Neil Armstrong