Contractor jobs = little benefits

[Krusher]

Exscuse my rambling rant...

  We have hired many people in the last year and now our 16 member staff is composed of about 75 percent contractors and 25 percent full timers.  I was talking to a friend of mine who works for a large competitor of ours and he tells me that they have about the same ratio of contractors to full timers in his department.

  You hear all this talk about out-sourcing, but almost nothing about contractors.  It may be my imagination, but it seems like over the last decade we have moved more jobs into the contractor/temp area then we have out-sourced.

  To be honest this is the ONLY reason I can think of that I would support some type of national health care program.  Contractors normaly have little if any insurance/vacation time or retirement plan to speak of.  

Anyhow,  I just was wondering if the employment stats cover contractors and temps? And how many of you guys are working as contractors right now?

[fd ski]

I'm not sure what industry you're in, but in IT contractor is likely to have 30%+ higher take then an employee. It's a preferable method for young and single people to rake in cash fast.

Contractors are easy to hire and fire, however they generally come at price. While you hear lot of screaming about costs of hiring an employee, contractor needs to be trained just as well.

[gofaster]

When I was a contractor, it was cheaper for me to buy my own coverage compared to the rates the regular employees were paying.  Since I had no allergies, didn't smoke, didn't drink, had a safe driver record, no criminal convictions, was within "normal" weight and size, and had excellent cholesterol levels (and was below the age of 35) I had some excellent rates.  Meanwhile, the regular employees were older, carrying extra weight, smoked, pregnant, or on medication for one thing or another.

Also, as a contractor, I really didn't care if the company did well or not.  I came in, did my job, went home.  Quarterly results just meant the company might be able to keep me around until the end of my term.   I didn't have to deal with the "personal business career objectives" crap that I have to deal with now.  You know, where I tell my boss how I'm going to work hard and increase productivity and climb up the corporate ladder twice a year.

[Saintaw]

No retirement plant except for the private ones over here, but we DO pay a lot in social security. Nothing like Sweden or Denmark I heard

As fas a social security now, you have the high/low risk system... low risk probably usefull to people who have childern... so yeah, it can get pretty costy to be contractor.

[lazs2]

tort reform and malpractice reform would do a lot more toward affordable healthcare than any national system.

Name one thing the government does efficiently.

lazs

[Gunslinger]

Originally posted by lazs2
tort reform and malpractice reform would do a lot more toward affordable healthcare than any national system.

Name one thing the government does efficiently.

lazs

As a govt employee for the last ten years (both military and civil service) I can honestly say this....when the govt does somthing it costs them usually three times as much than if the same thing were done in the private sector.  This includes ANYTHING they buy and...ANY SERVICES rendered

[LePaul]

Originally posted by lazs2
tort reform and malpractice reform would do a lot more toward affordable healthcare than any national system.

Name one thing the government does efficiently.

lazs

Spending

[Bodhi]

I hire contractors almost exclusively, reasons being, is that:

a: workmans comp premiums are sky high

b: No need to pay an accountant to do all the taxes.  All I do is issue a 1099 form end of the year.

c: No need for unemployment insurance.

d: Can terminate, and not be sued when it is necessary

Contractors are the way to go in my business, because the employees have forced owners hands....

[chance-airwolf]

"Also, as a contractor, I really didn't care if the company did well or not. I came in, did my job, went home. "

Alas... the downside for the directs who do care if the company does well.  Sometimes, you get what you pay for and continue to pay after they're gone.

Chance

[bigsky]

all good reasons bodhi, but i dont know what business your in but its not that hard to fire people. put them on salary an give them stuff to do that is going to take way more than 40 hours a week. write them up when they dont get it done. when i was in the army i learned that somebodys tone of voice can be disrespectful, more writeups. somebody wants to invoke family leave that is inconvenient and unreasonable, delete the job. just switch titles and get someone else who wants to work. laid off/ lack of work is a BIG net where im from that malcontents are easly throw in with little legale recourse.

[dfl8rms]

As a person in the IT field, I worked as a FTE for 6+ years after college and then switched to contract work for 3.  I can say that the premiums I made as a contractor more than paid for any health care / 401k incentives provided by employers.  

The downside was the market slide in 2002 caused me to have to take an FTE position.  

Rough numbers: as a consultant 2001 vs FTE 2003 I made roughly 60k+ more in 2001 as a consultant.  My health benefits for family coverage was roughly 500/mo in 2001.  My FTE benefits cost me 270/mo in 2003.  Company matches dollar for dollar up to 4% in 401k.   (I use 2001 & 2003 as they were complete years as consultant vs FTE).

So financially consulting/contracting was way more beneficial.  However FTE life has allowed me to enjoy 5 weeks vacation each year plus the unofficial comp time my bosses allow me.


As for ratio of contractors, as my current company has downsized, we haven't seen any contractors in the IT operations area and only a couple in the IT development side.  (Our operations team is 60 members or so).

Just my take on the original post.

[Pei]

I was an IT contractor in the US for nearly 4 years. We were well payed but it was definitely work-hard/play-hard. We got a lot of business because a large number of people in the IT business are complete and utter muppets. Companies in general didn't even have the basic skills to determine who was good from who was bad and consequently tended to hire a lot of bad people. If you needed someone with skills who could get something done you went to the contractor and were perpared to be pay the premium. The average age of the company was 25 and 95% of us were male. The average working week in 2002 was 56 hours.

[beet1e]

Looking over these posts rang quite a few bells! I was an IT contractor in the years 1977-2001. One difference that no-one has pointed out yet is paid overtime. In my last FTE position in England, I was expected to do quite a few extra hours but didn’t get paid for it. Basic income tax at that time (under Labour) was 35% I was getting deeper and deeper into debt, and went freelance to ease my debt burden. Doubled my income overnight. Yep, that was the ratio in IT at that time – not just 30% more. The contractors got double. And in those early days there were still lots of tax loopholes, and I didn’t have to settle my tax bill for a long time. From living hand to mouth and paying shed loads of tax, I was able to put in a load of overtime, get paid for it, and bought a newish car at the end of my first contract out of the proceeds. My financial woes had left me overnight, never to return!

I worked in the US 1979-82 and for that period had to be a FTE of the consulting firm that hired me. Along with all the other foreigners, I got an H2 work visa. But that was only valid if working for that particular company, and they knew it and milked it. So most of the foreigners got the crappy jobs.

Back in the UK from ’82 I carried on from where I had left off, but gradually the tax loopholes were being closed. And the tax deductible allowances were being whittled away at the same time. And the red tape was getting worse and worse. But at least we had a Conservative government which recognised the need to abolish punitive icome taxes. I had had to pay some 60% tax in the mid 80s, but this soon came down to 40% max.

Then Labour got back in under Blair. And one of the first things they did was to penalise self employed consultants – contractors. They went about this by redefining what constitutes the “normal place of work”. They claimed that as people like me were going to the same client office, month in month out, that we weren’t consultants at all! We were really employees, and should therefore be paying all our income out as salary (no allowable business expenses) and this meant paying both Employer’s and Employee’s National Insurance on all income. (They conveniently overlooked the fact that as a contractor, I got no employee benefits, no paid absences, and no pension) It was like an overnight tax increase of about 20% as far as I was concerned. I had already been paying 40% + Corporation Tax. I would have ended up paying about 60%, not forgetting my £300 monthly petrol bill. (Blair’s government has seen to it that 77% of the pump price is tax) Plus all the usual red tape/accountancy expenses.

I was not prepared to be subject to punitive taxation, so I retired! I’d had enough of IT by then anyway.

So whereas the government used to get quite a good whack (40%) out of my earned income, now they get… nothing.

Sorry about the wall-o-text/party political broadcast!

[Eagler]

so you want to pay the guy 25% to 50% more than than the inhouse person AND give him medical benefits paid in part by the taxes of the lower paid inhouse person?

lets all cry a river for the POOR zero loyalty overpaid contractor

I do agree subs are as bad in many ways as overseas outsourcing

[Krusher]

Interesting points, a few that I had not know about.

Contractors that I know are not "consultants" but they do get paid 2 or 3 dollars per hour more than full timers.  It dosn't seem like the pay differential would compensate for the loss of benifits when you factor in the Paid time off, Vacation and Insurance.