Tucson Firm Rehires Staff as Contractors

Tucson, AZ PR firm LP&G “fired” 15 of their 17 staffers and brought them back on a contract basis in an attempt to survive the downturn according to the Arizona Daily Star.

This is a worthwhile experiment, rather than axe a bunch of people and I won’t disparage the agency for trying it. However this is interesting to note for those who think the freelance existence is just as good. Slice it anyway you want, it’s a significant downgrade.

Here’s why:

–COBRA healthcare is about $1084 per month for a family in Arizona, about $350 or so for an individual
–A person who pulls down $52,000 a year, or $1000 per week is about to pull in $1500 in severance after taxes. Not enough to cover healthcare the first year. Not enough if they make twice that amount.
–Switching from a 401k to an IRA means earnings are single tax free, not double (an oversimplification but you get the idea)
–The article explains that employees get to keep their computers, desk and chair. They then have to maintain their own IT, and potentially upgrade other areas like phone, fax, software and printer
–A few less free lunches, dinners, and cocktails

The upside is thinner:

–No time spent commuting
–Some expenses including a percentage of square footage are tax deductable
–Less money spent on dry cleaning and other incidentals

I’m sure I’m missing a bunch of things here, and this doesn’t address the benefits of having people meet and collaborate in person.

Combine these challenges with the tremendous level of trust, determination and motivation it takes to run a virtual organization and the equation doesn’t add up to something sustainable. This is one of the most radical adjustments we’ve seen an agency make. Others include furloughs, reducing benefits while increasing vacation, and either moving to cheaper space or renegotiating the lease.

Get in touch and let us know your survival plans at our mediabistro email address or on Twitter. As always, confidentiality is guaranteed if you choose to go off the record.