Do I include the amount I paid a contract worker in my business income, and deduct the amount as an expense? When I do this, I only get back $1 K of the $5K I paid them.

Yes you want to claim all your expenses.  It is not a 1 to 1 Deduction.  It lowers your Net Profit on Schedule C so you pay less income tax and less self employment tax on it.  You never get back all your deductions and expenses.

I guess wages seems like they should be a 1 to 1 deduction, since they're making it and I'm not.

Well they are a 100% Deduction.  I didn't say that very good. It just doesn't directly reduce the tax by the same amount.  You just get a percentage back.  You are paying about 15% self employment tax on you Profit so adding expenses only saves the 15%.

If you paid someone for working for you, you don't include it in income. It is not income, it is an expense.

So, I don't include that amount in my self-employed income and then expense it in the Contract Labor part? I deduct the amount from my income and still expense it in the Contract Labor part?

You neither add it to or subtract it from your income. Enter your income, what you made, as income. Deduct your expenses afterward.

Depends,  you have to report all your income.  But you don't enter this expense as both income and expense.  

I guess I meant business receivables, as opposed to my income.

What is the difference in your mind? If you were paid, or you earned, or you received payment in the amount of $10k, that is what you enter as income.