I SAY START YELLING AT THE LAZY SOB'S AND IF THAT DOESN'T WORK TELL THEM TO HIT THE ROAD!!!!
I had a kid working for me this spring that was very much like you describe. After about a week on the job, he thought he was king. Work slowed to a crawl and I was so frustrated and irritated when I got home at the end of the day. After about a month I weened his hours back to almost nothing. "I just don't have much work right now...." He ended up quitting and getting a job with a competitor. Who's laughing now???