Should I take this contract position?

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IHAVEAQUESTION

Golden Member
Nov 30, 2005
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Well, long story short.

I am in a discussion for a contract position...supposely it's a contract-to-hire so there is a possibility to be hired by the client after the 6-month period. They can offer either a full benefit package (coming from the staffing company not the client) with lower salary, or no benefit w/ higher hourly rate. I am tempted to go with no benefit route.

The no benefit hourly rate will represent a 40% hike from what I am currently making..so it's very tempted. However, I'd give up job security, benefit at current company plus relocation hustle.

The client has a good reputation, the staffing has a good reputation...but I just don't know. Is there anything I should look out for? I am happy where I am except that I am making too little.
 
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purbeast0

purbeast0

No Lifer
Sep 13, 2001
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IHAVEAQUESTION said:
Well, long story short.

I am in a discussion for a contract position...supposely it's a contract-to-hire so there is a possibility to be hired by the client after the 6-month period. They can offer either a full benefit package (coming from the staffing company not the client) with lower salary, or no benefit w/ higher hourly rate. I am tempted to go with no benefit route.

The no benefit hourly rate will represent a 40% hike from what I am currently making..so it's very tempted. However, I'd give up job security, benefit at current company plus relocation hustle.

The client has a good reputation, the staffing has a good reputation...but I just don't know. Is there anything I should look out for? I am happy where I am except that I am making too little.
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a 40% increase in salary with no benefits might not even mean you will be making more than you currently do. benefits are worth a lot when you break it down. you should do the math and see what the REAL increase in salary is because it's definitely not close to 40%. and then go from there and figure out if it's worth it.
 
I

Insomniator

Diamond Member
Oct 23, 2002
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purbeast0 said:
a 40% increase in salary with no benefits might not even mean you will be making more than you currently do. benefits are worth a lot when you break it down. you should do the math and see what the REAL increase in salary is because it's definitely not close to 40%. and then go from there and figure out if it's worth it.
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Depends on your situation. 40% is 40%... if you have no kids/family and are healthy then benefits are not worth THAT much to you.

I can get obamacare (inc. dental) for 200-300 bucks a month... I'd certainly take a 40% increase with no employee benefits in my case. In fact, I recently took a ~25% increase from a full time to a contract.

Go for the cash while you can!
 
PricklyPete

PricklyPete

Lifer
Sep 17, 2002
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purbeast0 said:
a 40% increase in salary with no benefits might not even mean you will be making more than you currently do. benefits are worth a lot when you break it down. you should do the math and see what the REAL increase in salary is because it's definitely not close to 40%. and then go from there and figure out if it's worth it.
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Agreed...40% does not seem like enough of an increase.
 
purbeast0

purbeast0

No Lifer
Sep 13, 2001
53,764
6,645
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Insomniator said:
Depends on your situation. 40% is 40%... if you have no kids/family and are healthy then benefits are not worth THAT much to you.

I can get obamacare (inc. dental) for 200-300 bucks a month... I'd certainly take a 40% increase with no employee benefits in my case. In fact, I recently took a ~25% increase from a full time to a contract.

Go for the cash while you can!
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i know it depends on the situation, that is why i told him to do the math then figure out for himself.

he won't get paid days off, and standard is about 3 weeks off, so that is 120 hours he won't be getting paid for. the he won't be getting 401k, which could range widely, but let's assume it is 5% of his salary, so that is another 5% of his salary he won't be getting. and then you have health insurance, which can range from being 100% free to paying over $500/month. then all of the other perks that he could have and be losing.

so yeah, it totally depends.
 
X

xeemzor

Platinum Member
Mar 27, 2005
2,599
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Don't forget that you pay additional social security taxes and have to file quarterly as a 1099 contractor.
 
I

IHAVEAQUESTION

Golden Member
Nov 30, 2005
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My friend just told me that it's normal to have 2-3 months gap between each contract...Hmm.

I am thinking of using this contract position as a leverage for future salary negotiation. My current is too low and I don't want to negotiate based on my current salary. 6-month contract being the sore point could spur me to look for other opportunity more aggressively.
 
S

smackababy

Lifer
Oct 30, 2008
27,024
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I did contract work for a bit (3 month to 6 month contracts) and hated it. Sure, I was able to command a higher wage (about 20% higher than I would expect at for permanent). I would have some down time between contracts (generally, no more than a month, but I was fairly proactive).

It just wasn't interesting as a developer. Short contracts aren't really enough to learn the system and fully get integrated anyway. I ended up landing a great permanent job and would never go back to contract work again.
 
alkemyst

alkemyst

No Lifer
Feb 13, 2001
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Keep in mind OP, that benefits typically make up about 30% of one's salary.
 
Carson Dyle

Carson Dyle

Diamond Member
Jul 2, 2012
8,173
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IHAVEAQUESTION said:
The no benefit hourly rate will represent a 40% hike from what I am currently making..so it's very tempted. However, I'd give up job security, benefit at current company plus relocation hustle.
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That option would only be while you're under contract and being paid by the contractor, correct? What will the salary potentially be if you're ultimately hired by the company? If you don't know that, then it's almost impossible to make a decision.

It would definitely be a gamble, either way.

If you remain a contractor, it will depend on how much demand there is for your services and your skillset. Months between contracts is commonplace.
 
R

radhak

Senior member
Aug 10, 2011
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I've been in both situations; contractual, followed by employment at the same work-place. I'd say 40% difference is a bit too close to the bone, but if I understand your post right, the staffing agency will pay for the 'employer' part of the taxes, which might make it better.

My contract rates were double the rate my employer paid later. (of course, the employer rate is what I calculated for comparison, using the take-home salary every week, ie. 40 hours. Using the take-home number worked best for me, as the gross salary has stuff that's not very tangible for simple calculation).

I was lucky to have a steady contract - with the same client, and for couple of years straight. If there are breaks expected, then your 'rate' stretches thin, having to cover the lean periods.

What I found was that as a contractor I was much more unwilling to take vacations or even sick days off, because each day I stayed back was a large amount of money not appearing into my bank account :\! After a year of that I forced myself to sit down and create a vacation plan so that I would not burn out, and having those days off 'built-in' into my budget sorta allowed me to be a bit logical about it.

And no, your contractual pay has no impact or leverage for your future employment salary. If anything, they completely ignore it and look at the last 'full time employment' you held for salary comparisons. Even between two contract positions, your earlier rate might not help get you a better rate. Because if you are sitting at home 'on break' for a couple of months, you will find it very difficult to hold out for a higher rate, and they know it. Actually, holding a contract position is supposed to be a 'con' when applying for regular employment. (I know because we toss out more contractor resumes who want to become employees, than others who were always on employee rolls).

Some staffing agencies are good at getting better rates for you (because they get a bigger cut too), but you can't tell.

Of course, the big question is, what's your field of work? Might make all the difference.
 
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Carson Dyle

Carson Dyle

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Jul 2, 2012
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smackababy said:
I did contract work for a bit (3 month to 6 month contracts) and hated it. Sure, I was able to command a higher wage (about 20% higher than I would expect at for permanent). I would have some down time between contracts (generally, no more than a month, but I was fairly proactive).

It just wasn't interesting as a developer. Short contracts aren't really enough to learn the system and fully get integrated anyway. I ended up landing a great permanent job and would never go back to contract work again.
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For a contract engineer, it can be exactly the opposite. Short, interesting jobs, learning new systems, working with interesting companies and people. Then on to the next challenge. Depends on your disposition: some people don't want to work on the same system for years on end, while others find that it suits them better to bunker down at one job.
 
S

smackababy

Lifer
Oct 30, 2008
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Carson Dyle said:
For a contract engineer, it can be exactly the opposite. Short, interesting jobs, learning new systems, working with interesting companies and people. Then on to the next challenge. Depends on your disposition: some people don't want to work on the same system for years on end, while others find that it suits them better to bunker down at one job.
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In a short contract (3-6 months), it is just a lot of work to get the system learned from both a BA aspect and a software design aspect. And, on top of that, you're expected to do actual work on it. If it is using a technology you are not familiar with, add that on top of it. I love learning new stuff, but it just got to be a grind with me. Especially, on complicated programs using dated technology.

I love actually doing work, solving problems, etc. So, spending more effort learning the rules that govern how the system works just gets in the way of that.

I am also a bit jaded, as I had a few contracts where the description didn't match what I actually ended up doing. But, I rationalized it with "well, if you want to pay me this much to be a code monkey, fine."
 
I

IHAVEAQUESTION

Golden Member
Nov 30, 2005
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Not a CS guy here...my line of work is accounting/finance.

So if hired by the client at the end of contract, the permanent position will represent a 25% increase. The client does have better benefit package than my current place though...so it's easily 30% increase if it works out.

Someone said the benefit is worth about 30% of the job...that's correct but it's nice to be able to convert them into cash especially for people who don't need all that benefit.

I probably won't be taking any day off under contract...that's the not-so-good part about this role.
 
Mermaidman

Mermaidman

Diamond Member
Sep 4, 2003
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To the OP: In my field, it's more desirable to get "1099" contracts than W-2. There a more perceived freedom. I work more when I want, and less when I feel like taking it easy. :p

If you choose 1099 and get paid by the hour, then will you be guaranteed a minimum number of hours? It would be bad if you don't get enough billable hours . . .

Conversely, will the W-2 route compensate you if you work more than 40 hours?

radhak said:
Actually, holding a contract position is supposed to be a 'con' when applying for regular employment. (I know because we toss out more contractor resumes who want to become employees, than others who were always on employee rolls).
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Hey Radhak - Why is that? (I think I know the answer, but want to hear your rationale.)
 
Carson Dyle

Carson Dyle

Diamond Member
Jul 2, 2012
8,173
524
126
IHAVEAQUESTION said:
Not a CS guy here...my line of work is accounting/finance.

So if hired by the client at the end of contract, the permanent position will represent a 25% increase. The client does have better benefit package than my current place though...so it's easily 30% increase if it works out.

Someone said the benefit is worth about 30% of the job...that's correct but it's nice to be able to convert them into cash especially for people who don't need all that benefit.
Click to expand...

According to the contracting agency, is the employer using this contract position as a means of finding a permanent employee? If so, and you're confident in your abilities and in your ability to get along with a new employer, I'd say go for it.

I probably won't be taking any day off under contract...that's the not-so-good part about this role.
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Is that a stipulation of the contract, or do you just not want to forfeit the wages?
 
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