A janitor no longer is an employee of a large corp with their pension plans, stock options, etc. He/She is just a commodity, they can have "on call".

To put it in a nutshell, with the way I understand it. Hiring, keeping an employee employed, dealing with labor-law issues, paying for harassment/dispute lawsuits, difficulty in firing misbehaving or under-performing employees are all costs. Costs that a company would not necessarily be able to burden.

So what happens is that all that risk, red-tape, etc gets consolidated in the form of an employment intermediary (for lack of a better term). So they consolidate, optimize and package all that risk and cost into a single figure which is both cheaper (due to economies of scale and concentrated knowledge) and easier to deal with and monetarily quantify. Companies then save money by rather hiring the employment intermediary instead of the actual employee.

I clearly see it immensely in South Africa. Even in the software-development industry, where software-development firms are called "body-shops" because all they do is re-sell developer-hours rather than working on projects. The client explicitly interviews, selects and has the developer sit in their offices under their management team with their hardware, etc. It's made worse in South Africa because there is no at-will employment, and the government has made it ridiculously difficult to dismiss/fire employees even for perfectly reasonable and straightforward reasons.

> So what happens is that all that risk, red-tape, etc gets consolidated in the form of an employment intermediary (for lack of a better term). So they consolidate, optimize and package all that risk and cost into a single figure which is both cheaper (due to economies of scale and concentrated knowledge) and easier to deal with and monetarily quantify. Companies then save money by rather hiring the employment intermediary instead of the actual employee.

Which is good for everyone. It's good for the first company, because they're saving money and can either deliver more profit to shareholders or they have more money to reinvest into the company. It's good for the janitorial company because that entire company wouldn't have existed before. Everyone there not scrubbing floors has a job because that company exists. It's good for the janitors because more janitors can be employed (again through economies of scale).

It's not the janitorial companies, it's the laws and regulations that make it cheaper to hire a company to perform janitorial services than hiring a janitor.

It's purely tax law with very broad implications.