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  1. #1
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    Unanswered: Is there a contracting premium?

    Chit Chat is broke and I have a serious question.

    For the last couple of years I have been contracting on a W2 with benefits as part of a larger firm.

    With the economy being what it is and the negative feelings I have developed towards contracting, I am thinking I should settle down and take a permanent position. The gist I am getting from some recruiters is that I should discount my contracting rate to take a permanent position. I could argue this case either way in my head and not come to a resolution on the matter.

    If I do let the greedy money grubbing side of myself lose this argument, I am still at a loss as to what percentage I should be willing to come down before I am shorting myself.

    Should I? and if I should, by what amount or percentage?
    “If one brings so much courage to this world the world has to kill them or break them, so of course it kills them. The world breaks every one and afterward many are strong at the broken places. But those that will not break it kills. It kills the very good and the very gentle and the very brave impartially. If you are none of these you can be sure it will kill you too but there will be no special hurry.” Earnest Hemingway, A Farewell To Arms.

  2. #2
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    Your total benefit package, including insurance coverage, vacation time, and other perks, should be about equal to your contract rate. Though expect a little less in return for job security and not having to spend time drumming up new clients.
    If it's not practically useful, then it's practically useless.

    blindman
    www.chess.com: "sqlblindman"
    www.LobsterShot.blogspot.com

  3. #3
    Join Date
    Jun 2004
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    Long Island
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    Quote Originally Posted by Thrasymachus
    Chit Chat is broke and I have a serious question.

    For the last couple of years I have been contracting on a W2 with benefits as part of a larger firm.

    With the economy being what it is and the negative feelings I have developed towards contracting, I am thinking I should settle down and take a permanent position. The gist I am getting from some recruiters is that I should discount my contracting rate to take a permanent position. I could argue this case either way in my head and not come to a resolution on the matter.

    If I do let the greedy money grubbing side of myself lose this argument, I am still at a loss as to what percentage I should be willing to come down before I am shorting myself.

    Should I? and if I should, by what amount or percentage?
    I agree with BLindman. I used to earn $76/hr W2 it is roughly equivalent to 120-125K a year when you factor in benefits (family, which can run upwards $1500/month for a shitty HMO). Security, what's that ? sometimes I think consultants are more secure than perms.

  4. #4
    Join Date
    Jun 2004
    Location
    Long Island
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    How is everyone holding up out there ?

    Some layoffs where I am, but since I'm the only DBA, not really any redundancy with my position, unless they split it between a developer and an infrastructure person, you never know.

  5. #5
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    my team shed 8 developers in layoffs this month. major telecom.
    “If one brings so much courage to this world the world has to kill them or break them, so of course it kills them. The world breaks every one and afterward many are strong at the broken places. But those that will not break it kills. It kills the very good and the very gentle and the very brave impartially. If you are none of these you can be sure it will kill you too but there will be no special hurry.” Earnest Hemingway, A Farewell To Arms.

  6. #6
    Join Date
    Dec 2002
    Posts
    1,245
    The assumption is generally that as a contractor you're on your own hook for benefits (medical, retirement, bonus etc). Rule of thumb is that benefits go for about 30-40% (closer to 40%) of your "base" pay. Therefore the hiring company feels justified in cutting your base rate by an equivalent amount (if you're coming off a pure contracting gig).

    If you're contracting through an agency (ie, you're a W-2 but a "contractor" to the hiring org) there's less of a discount involved.

    Last year I made the switch from a "contracting" (I was W-2) position to a FT position at another company. I didn't take too much of a pay hit, but the job was significantly bigger with significantly more responsibilities. My first performance review (and resultant pay increase) more than made up for the slight hit I took on the change.

    Did that make any sense? It's late on a Friday and it's not been the best Friday I have ever had. Hope it made some sense at least.

    Regards,

    hmscott
    Have you hugged your backup today?

  7. #7
    Join Date
    Dec 2002
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    nevermind...i must be really brain dead today...

    hmscott
    Have you hugged your backup today?

  8. #8
    Join Date
    Feb 2004
    Posts
    193
    I used to be a tech recruiter from 2000 - 2002, an absolutely horrible job. We would have database contractors making about 60-65/hour W2. I would say the conversion rate for that hourly to perm (if there is such a thing) is about 90k/year.

    ddave

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