They're employed, but not “employees.” They're technically independent contractors, according to some companies.
Not so fast. Sometimes companies misclassify their workers as independents to get out of paying unemployment compensation taxes to the state. Other times, it's a misunderstanding about the definitions.
I wrote about independent contractors for this week's Business Journal. Here is more about misclassification in Pennsylvania.
The number of misclassified workers at Pennsylvania companies runs in the thousands every year, according to the state Department of Labor and Industry.
In 2012, the state conducted 5,078 audits of worker classification at companies, according to L&I. It discovered 8,978 misclassified workers.
To give you some context, consider that the Department of State has active registrations for nearly 2.3 million for-profit companies that do business in the state. The number of audits is just 0.22 percent of the companies registered in the state.
It's an even smaller percent of the total workforce. There were 5.6 million people employed in December 2012, according to the U.S. Bureau of Labor Statistics. Those the state found to be misclassified is just 0.16 percent of statewide workers.
I don't think that's the end of this issue, particularly when it looks like those percentages are going to be higher depending on misclassifications per industry.
The trouble with airline mergers
You may have heard by now that the U.S. Department of Justice and six states are trying to block the merger of U.S. Airways and American Airlines. Pennsylvania has signed onto that lawsuit, saying the deal will hurt consumers through reduced competition and higher ticket prices.
"This merger would not be good for consumers," Pennsylvania Attorney General Kathleen Kane said in a statement. "Competition would be reduced, and the cost of flying would go up. We know this from past experience, and we know it from our economist's analysis."
A list of concerns with the merger can be found here at the attorney general's website.
Harrisburg, too, would be affected, Kane said. But those familiar with airports and airlines have a different story.
Harrisburg International Airport officials said in February they expected a small impact to leased space in 2014. The latest news is unlikely to change things much, said Tim Edwards, executive director of the Susquehanna Area Regional Airport Authority, HIA's owner.
"I think they're doing their due diligence," Edwards said about the federal suit.
But he expects the merger to proceed, and even if it's blocked, the status quo of airline service from U.S. Air and American would continue at HIA.
One can't help being skeptical about mergers — or their dissolution — and their impact. In 2010, some analysts expected the Southwest-AirTran merger would be good for medium-size airports. However, Southwest pulled AirTran from those airports, including HIA.
Loss of a popular low-cost airline sounds bad, right? But AirTran's exit ultimately brought two new airlines into HIA, giving midstate travelers a variety of options, prices and destinations.
That gets a bit off topic, though, said Bill Fife, a transportation analyst who sees the mergers as a good thing. The lawsuit illustrates the attorneys general know nothing about the airline industry, he said.
"It doesn't make any sense to me," he said of the suit.
Like the United-Continental and Delta-Northwest mergers before it, the U.S. Airways-American merger is about the airlines creating a globally competitive business that can tackle high fuel costs, which ultimately will be better for the flying public, Fife said.
U.S. Airways needs American's global business to improve its viability, and American needs help out of bankruptcy proceedings, Fife said. So, if this merger rescues two companies and provides a global option to consumers, how is the merger anti-competitive?
"You have two majors out there and it makes sense to have a third," he said.
Overall, the matter shouldn't harm Harrisburg, Fife said, but it certainly throws a wrench into the airlines' strategy.
"They're going to have to figure out a new game plan," he said.