Someone I know is contemplating quitting his fulltime job for a contract job. I asked why, he said the contract would basically double his salary. But he was not given a definite length of how long the contract would be, could be a year or less or more. He has complained about his fulltime job before, and a few of his coworkers have already quit finding better paying jobs, doesn't want to be left behind I guess. So any opinions on contract jobs vs fulltime? Would any of you take the contract over the fulltime given the right circumstances?
Depends on the industry. In technology, contractors can make great money, but you're completely expendable, hence the high salaries. You also have to consider the cost of health care and all the overhead for taxes. It all depends on how good this guy is at his job. If he can make himself irreplaceable, then he's got it good. If not, he's a dead man walking.
It's really a wide-open question. What industry is he in? In the computer-related field, yes, as a contractor you can potentially make more money as a contractor than a permanent employee (note : they're almost always both full-time employees). As a contractor you run into the issue of usually not having health insurance, no 401k/no matching on the 401k, etc. You're usually given a length for the contract, but sometimes that contract is extended. Another negative is that you may be looking for a new job every 3-9 months so you may have periods where you aren't making money - factor that into the "I'm making much more" equation. Of course this also means that you only have to put up with a company's bs for 6-9 months at a time.
Yeah he's in the computer industry but that contract job is more mechanical related, which is why I questioned him wanting to quit. I just told him to keep looking but he's kinda got the $$$ in his eyes. I also wonder about him as he is not the most driven person around, I doubt he will make himself look irreplaceable in the eyes that matter. Oh, yeah I meant a permanant job with all the benefits when I say fulltime.
Being someone who left a full time, decent paying job in the past for a contract job that paid double I can tell your friend to NOT DO IT. Sure, I made double the pay but what I was told would last "2-3 years" lasted all over 6 months... and by the time I found a new job all of the extra money I made and had in savings was gone, so I was right back at where I started WITHOUT a year into my 401k. I guess it all depends on what your job is... demand for your job title plays a big role. I can tell you a full-time IT position is a keeper over any contract position. I've been on "long term contracts" that have ended without notice months, even years in advance because of cutbacks... when cutbacks come the first thing they do is axe contractors. I turn down better paying contract positions about twice a month, because for the first time in years I have a full time gig.
Has anyone mentioned the tax difference? Being a contractor you will have to pay for the full amount of the FICA and the medicare. It can be quite a substantial amount.
Most contractors (at least the type I believe he is asking about) are hired by an agency who they pay their taxes through, this is big in IT. However, if they don't work for one of those agencies and are paid straight from the employer then they should definately get an accountant, putting off paying your taxes isn't a smart move... I believe as someone who is paid with a 1099 you have to do your taxes quarterly unless you don't mind paying the high ass interest rate.
I guess what you are talking about here is that the agency will withhold the FICA, medicare and other taxes from the contractor's paychecks. But still it's the contractor's own money. The difference is that if you work for the company as an employee, your employer will pay for half of the FICA and the medicare. I think it's something the OP needs to consider.
I guess it really depends on the situation and length of the contract. My wife gets us both full health care coverage so that is not a concern of mine. J
You're talking about 1099 contractors. People that go through headhunters usually aren't 1099 and the headhunting agency does all the taxes like any other employer would do. The key here is that your hourly rate needs to cover for things like the 401k you no longer have and the medical insurance you'll either have to get on your own or from the headhunting company. Another common way to look at it is your yearly salary as a contractor comes out to be roughly 2080 * your hourly rate. Keep in mind your contract may not last a year, of course. The best thing about contracting is you don't have to deal with a company for more than 3-9 months unless you want to. You also don't have to worry as much about being drawn into company politics. Consider other variations on this : for example, there are contract-to-hire positions where you're paid as a contractor and the company you work for pays the headhunting company at the end of your contract should you decide to become a permanent employee with the client company. This is a "try before you buy" plan for both the client company and you.
I didn't know the headhunter agency works in that way. When the OP talked about being a contractor, I assumed that he meant a 1099 independent contractor. Anyway, thanks for the info.
