average % salary difference between contracting and permanent position?

[Dear Summer]

Other than having the risk of not getting a permanent position when the contract ends, no standard benefits like healthcare and 401k matching, what else is missing?

It seems like contracting is the way to go. Would you leave your permanent job if it resulted in 40% increase by taking a contracting role? (contracting role = standard 40 hour work weeks for 1.5 years with potential for permanent role)

This is W2 by the way, not 1099 if that makes any difference.

 

[bhanson]

I know a lot of people that do this.

Staff pay might be $30-40/hr but working contract they make $60+.

One common voiced downside is that they will always get the worst assignments. If task sets are of varying crappiness the staff will always get preference.

It's harder to mesh as a team with people floating in and out on short contracts, too.

 

[Kanalua]

Contract and W2?

I was a contract attorney for the last three years (just got picked up as an attorney with a Federal Agency). Mind you, this was in Hawaii, but the biggest downside for me was:

- Tax disadvantage: In Hawaii there is a General Excise Tax (not sales tax) on ALL transactions, currently 4.712% on Oahu. As a contractor I had to pay and file quarterly tax filings on my income for 4.712%. On top of that I paid the 1099 income tax rate. Sucked!
- No health insurance: In Hawaii employers must provide pre-paid health insurance for all employees working over 19 hours a week. As a non-employee I was not entitled to the health insurances that employees of the law firm were given.
- Uncertainty: I only got paid what I billed. If no work, no pay. Slow times meant slow pay. There was little certainty of what my paycheck would look like any time in the future.

 

[OBLAMA2009]

i havent worked that many different places but in my experience contract workers/consultants got paid a lot more than permanent workers, but didnt get the benefits. if youre reasonably young that is definitely the way to go. contract/consulting work is also quite stable, most such workers had been there several years in that capacity. a lot of them had previously been permanent employees. people making $100 and hour would make $300 when rehired as consultants

 

[kranky]

A W-2 position that's a contractor? Not familiar with that setup.

Sounds to me it's really an employee position but with no benefits. It makes a huge difference (W-2 vs. 1099) because the self-employment tax (an additional 8% or so) would apply to 1099 jobs.

 

[The Boston Dangler]

i have never envied any contractor i've worked with - a bit more cash, no bennies, the worst jobs, and the first to be cut loose. i would imagine high-level hired guns, like union busters, don't mind paying for everything out of pocket.

 

[GasX]

A W-2 position that's a contractor? Not familiar with that setup.

Sounds to me it's really an employee position but with no benefits. It makes a huge difference (W-2 vs. 1099) because the self-employment tax (an additional 8% or so) would apply to 1099 jobs.

1099 is simple for the employer. He cuts you a check and issues a 1099. He can opt to pay you w-2, but then he has to put you through the payroll system and pay all the taxes (hence the lower pay). You can be a contractor either way.

 

[Wyndru]

- Uncertainty: I only got paid what I billed. If no work, no pay. Slow times meant slow pay. There was little certainty of what my paycheck would look like any time in the future.

This is why I try to avoid them. Also I see a lot of contracts that go 6-12 months, then you are completely done. You have to start looking for work again.

 

[alkemyst]

It's close to a wash when benefits and 401k type stuff is figured in a lot of times. The shorter the contract the bigger desparity of income.

If you can get creative with deductions and do Sch. C then you can recoup a bigger difference.

 

[RearAdmiral]

For 40%? No way.

 

[Bignate603]

I've never done contract work but my wife has. With one of us working a normal job with benefits it was actually pretty nice. My benefits cover her and we can do just fine off my salary so if she goes a while between contracts its no big deal.

 

[Fritzo]

I did contract work when I first started, and it sounded great the first year. Then reality set in:

- You have to pay your own taxes, they're not deducted.
- Your tax rate is generally higher (depends on state, mine sucked)
- You have to pay 100% of your own health benefits
- You don't get any company perks

So, in the end I made less than a regular employee, had worse health care, and had to sit out of things like company parties, outings, and missed out on things like free tickets to sporting events, Cedar Point, etc.

It sucked. I demanded I be hired as a regular employee and here I am-- posting on ATOT on the clock.

 

[Gibson486]

seems like the norm now is to have you get a position as a contractor while only paying them a 10% increase in hourly wage....

Also, it depends on the type of contracting...I used to work with a guy who was a contractor, but he worked on a project basis. He would be paid in lump sum. That said, he is known as one of the top in his field (mixed signal design).

 

[zebano]

It depends on how good you are. We hire two different types of contractors. The first is just a general senior software engineer no better than I am, he gets about $50/hour, no benefits and works on what we tell him to.

The second are guys that are extremely good at what they do (often specialized), they make $80+/hour, mostly choose their projects and my boss begs them to work 40+ hours per week. We constantly rehire the same 3 guys because they get $hit done and they get it done well.