These same shops charge Customers $90-$120.00 an hour for IT work, and then pay the IT guy $19.00 an hour POCKETING The huge profits.
Except they don't pocket the difference between billing rate and employee pay rate as profit. To work with round numbers, say that the company pays the IT guy $20 an hour and bills at $100 an hour. Employer-side payroll taxes, health insurance premiums, and the like, usually end up being about 50% of the rate paid to the employee, so that's $10. The company also has to pay other people who don't get to bill clients directly, such as HR, janitorial, or other overhead-type employees. 15% of employees working overhead is normal number, so call that another 15$ of the billable rate. Oh, and the company has to pay for electricity and other utilities. I'm wildly guesstimating that to be about 15% of the overall budget, call it $15. There's office supplies, maintenance on the building, and all the other stuff the company has to buy. I'm not a finance guy, I don't know how much that costs.
But even so, out of the $100 per hour billable, we're down to $40 still in the company's hands, and I know that there's other expenses that I haven't covered. I don't know where the other expenses go, but I do know that when you account for those, the profit ends up being around 8% for most industries.
That being said, I agree that the working conditions in a lot of IT shops are poor. At the very least, overtime should be paid if you're consistently asking people to work over 40 hours in a week.