Being a Contractor Isn’t Always Such a Good Deal
I want to be clear that I am not going to speak about employee consultants, but self-employed independent professionals
There are times in a person’s career where I believe it makes sense to be a contractor or temp. In some industries, being a contractor or temp early on affords increased wages, tax deductions and retirement planning opportunities than a person might have if they remained an employee.
For example, the junior person earning $40000, offered $35 – $40 per hour or $70000 – $80000 per year is now able to deduct their commutation to and from work, their lunch while on the job (if it is business related) and probably save more for retirement if they were an incorporated consultant than if they were an employee.
For the very skilled worker with highly sophisticated experience, they might be able to earn far more than if they were an employee. For example, the 28 – 32 year old technical professional with highly sophisticated experiences earning $70 – $200 per hour might only earn $120000 per year as an employee vs. $140000 – $400000 they might as a contractor.
But what about the average Jane or Joe? What happens when they reach their mid 30’s and have been doing the same thing over and over for 10 -15 years. What happens when their work peers are now 26 and Joe and Jane are temps. Can they return to the employee ranks easily?
Experience says that companies are distrustful of them and, if they hire them, will park them in staff level positions at “average salaries,” rather than at manager levels where wages are higher. After all, for many Janes and Joes, they have not led people or handled a budget process. They have avoided the politics of decision-making by being outsiders who were only at the client for a few months or a year.
So, I want to encourage contractors or temps to keep networking and to keep an eye out for opportunities to return to the employee ranks, before you get stuck as a 55 year old consultant.
The waters are often extremely treacherous then.
Ⓒ The Big Game Hunter, Inc., Asheville, NC 2014, 2018, 2024
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