View Full Version : contract vs full time
05-07-2004, 01:46 AM
Assuming benefits at 20% of gross, and assuming no vacations, no sick days, and an average 8 hour day (most of my clients stop me at seven), your rate should be appx $53.40 Dave
05-07-2004, 04:15 AM
Much depends on the benefits and what they are worth to you. For example, if you've got a family and pay $1200/month now for your Health Insurance, thats over $14,000/year. An employer might offer equivalent or better coverage with your contribution being only $200/mo. In that scenario, you'd save $12,000/year just on the insurance. If you're in a situation where your Health benefits are already covered (ex-military, etc.) then there's really no savings. As a contractor you also pay both halves of your Social Security. But you might get a small tax break for what you pay on the "Employer" half. Figure out what that savings would be there. Many employers also offer matching contributions on 401Ks, stock options and a few still have a bona fide retirement plan. These are usually a benefit only if you intend to stay with the company for the long-haul. They almost always require a vesting period. But if that's the case, then add them up as well. For example, if you're making 70K/yr and contributing 6% to your 401K, a 50% company match would amount to $2,100/yr. And let's say that the company has a retirement plan that with 15 years of service would pay you $20,000/yr from the time you're 65. Assuming you live to 75, the company pays out $200,000. Figure out how much per year you would need to invest to have that kind of retirement income. And don't forget that you might be deducting business expenses now that you might not be able to deduct as an FTE. Since employer's benefits differ widely, I don't think there's any set formula. When you interview, find out all you can about the salary and perks. Keep in mind that the benefits offered won't always be the benefits you need or might not represent a savings to you. Then sit down and run it all through a spreadsheet.
05-07-2004, 05:43 AM
Your health insurance estimate sounds too high. I'd say more like $400 per month for a healthy family of 4, with a higher deductible. $500, if including dental, vision. And it's 100% deductible "above the AGI line" for the self-employed. It's not cheap, but certainly not $14,000 per year. See www.ehealthinsurance.com And the self-employed also need disability insurance, life insurance and maybe professional liability insurance. See www.techinsurance.com Some companies like Starbucks provide benefits for part time workers, so if you have a spouse that would work 20 hours per week, you could save a lot of insurance money that way. Chris
05-07-2004, 06:39 AM
Are you an independent contractor or an employee of a contracting company? If you're an independent contractor then, of course, you are paying the "employer" taxes such as the employer's portion of FICA, and higher income tax. On top of that you must be paying for your own benefits such as vacation, sick days, medical insurance, disability insurance and workman's comp insurance. As an independent contractor you're probably buying malpractice liability insurance also. You must also pay any travel related expenses, although they're deductible. Many of those costs go away when you become an employee. As an employee, I've always done mental calculations to determine what hourly rate I'd need to receive to be lured away. My general rule of thumb was that I'd have to earn about 80% more per hour just to break even. So, you could "reverse" my rule of thumb and take your current salary and divide it by 1.8 and determine what you need to earn to break even. Obviously, if you don't currently have such expenses as workman's comp (taking a risk if you don't) or medical insurance (an even bigger risk) then you won't have a direct dollar savings, but will enjoy better benefits as a result of being an employee. BTW, finding a job as a senior P/A in my neck of the woods for around $90 shouldn't be too hard. If you were to do that then you'd be way ahead of the game. Good luck, chuck Opinions expressed are not necessarily those of my employer. "steved103" <firstname.lastname@example.org> wrote in message news:6aeadae5.-1@WebX.WawyahGHajS... > I am on a contract at 45.00 per hour. What would I have to earn full time with benefits to equal about the 90k per year.
05-07-2004, 06:44 AM
Chris said: "Your health insurance estimate sounds too high. I'd say more like $400 per month for a healthy family of 4," My employer pays for my medical insurance, but I pay $790 per month for my family's medical with a $500 deductible. It's Blue Cross PPO where I pay 10% over deductible. chuck Opinions expressed are not necessarily those of my employer.
05-07-2004, 07:43 AM
Chuck, How many family members are listed and are not listed on your employers medical plan? And you have an additional $790 deducted from your paycheck each month? I guess www.eHealthInsurance.com is a bargain. Chris
05-07-2004, 08:31 AM
Chris asked: "How many family members are listed and are not listed on your employers medical plan? " I'm not sure what you are asking for. Chris said: "And you have an additional $790 deducted from your paycheck each month?" Pre-tax dollars, yes. Chris concluded: "I guess www.eHealthInsurance.com is a bargain." I don't know, I've never looked. However, here are my MINIMUM requirements. PPO. I won't touch an HMO with a 10 foot pole! $500 Deductible. My obligation after deductible is 10%. Also, I very much like Blue Cross. They drive hard bargains with doctors. My daughter just had an operation on her ankle. Had I not had insurance his fee alone (not counting hospital, anesthesiologist, etc.) would have been $10,200. Blue Cross only allowed him to charge $2,200. My fee was only $220 since my daughter had met her deductible. chuck Opinions expressed are not necessarily those of my employer.
05-07-2004, 08:34 AM
I'm just wondering why your insurance is so expensive. If you have 10 family members on your employers medical plan, that would explain it. Maybe this has something to do with California. You seem to have 2 medical plans, your employer and then Blue Cross. Well, I guess you have your reasons. I don't need to know them. I traded in my Blue Cross because it was too expensive. I have a good friend who works there. He just received a bonus based on 80% of his annual salary. 80%. I was tired of being gouged. Chris
05-07-2004, 09:54 AM
Chris, We have about 1200 total employees. Only 13 of us are on PPO, the rest are HMO. That can probably explain the high cost of our PPO program. Chris said: "I traded in my Blue Cross because it was too expensive." I've had about 5 different insurance companies over the last 25 years. Blue Cross, IMO, is heads and heels above the rest. They have contracted the most doctors and clearly keep the doctors and medical facilities to a low charge. chuck Opinions expressed are not necessarily those of my employer. "Chris Ringer" <Chris_Ringer@mcpressonline.com> wrote in message news:6aeadae5.7@WebX.WawyahGHajS... > I'm just wondering why your insurance is so expensive. If you have 10 family members on your employers medical plan, that would explain it. Maybe this has something to do with California. > > You seem to have 2 medical plans, your employer and then Blue Cross. Well, I guess you have your reasons. I don't need to know them. > > I traded in my Blue Cross because it was too expensive. I have a good friend who works there. He just received a bonus based on 80% of his annual salary. 80%. I was tired of being gouged. > > Chris
05-07-2004, 11:13 AM
Blue Cross makes most of their money on individual health plans. So it's a different perspective when you are self-employed. They look for any reason to raise your rates and/or leave you in an older health plan while moving nice healthy people into "new" health plan periodically. Then they raise the rates in the old health plans to squeeze the insured out. This hardly leaves me with a warm and fuzzy feeling. Chris
05-07-2004, 06:28 PM
Yes, I am employed by a consulting firm to an employer who wants me to go full time at a much lesser rate. As a contractor, I'm at 45 per hour (avg 90k year). but the employer wants me in at 65,000 per yr. I agree, I too was at 90.00 per hour. but the last feew years have taken their toll, so I'm happy to be at 45.00. but the 65,000 per yr seems very low. What does everyone think?
05-08-2004, 02:02 AM
My first contracting spot was over twenty years ago, and I was getting $40.00 an hour back then, , , ,but, , , ,that was in New York City. I point that out, because the scale in different parts of the country is remarkable. What is appropriate in one area, may not be considered worthwhile 200 miles away. It is also important to point out that over the last four years, rates have dropped precipitously. The market has gone to hell in a handbasket, and it doesn't matter where you are. I am currently billing at appx 30% less than I was a few years ago, and understanding the market, I am fortunate to be getting what I am getting. More bad news: I don't see the market improving on the horizon. In fact I am having trouble seeing the horizon! Dave
05-08-2004, 10:03 AM
I agree with whoever said location plays a significant role in either salary or hourly rate considerations. I'm upstate in Central New York. David Abramowitz is downstate from the New York City area. When it comes to either salary or hourly rates, these two areas might as well be 2 different planets. My niche market of contract RPG programming dried up in the late '90s. As a result I went back to being an employee in I.T. management after over 20 years of self employment as an independent contractor. Here's something else to consider. How much help will your employer be when it comes to keeping technically up to date? Who pays? Whose time does it take place on? Remember the rate of change will continue to increase along with your need to stay technically current.
05-10-2004, 06:22 AM
Steve, You are currently NOT an independent contractor, you're an employee. So, now you can compare apples to apples. If you move to another company as an employee for a lesser rate then you'd better be getting much better benefits to make up for the loss. chuck Opinions expressed are not necessarily those of my employer. "steved103" <email@example.com> wrote in message news:6aeadae5.10@WebX.WawyahGHajS... > Yes, I am employed by a consulting firm to an employer who wants me to go full time at a much lesser rate. As a contractor, I'm at 45 per hour (avg 90k year). but the employer wants me in at 65,000 per yr. I agree, I too was at 90.00 per hour. but the last feew years have taken their toll, so I'm happy to be at 45.00. but the 65,000 per yr seems very low. What does everyone think?
05-10-2004, 06:25 AM
Steve asked: "but the 65,000 per yr seems very low. What does everyone think?" IMO, $65k per year is low for someone accustomed to making $90k per year. I'm surprised that the employer wants you to come on full time for that amount. It's unusual to ask someone to take a significant cut in pay to move them from contract to full time. chuck Opinions expressed are not necessarily those of my employer.
05-10-2004, 06:32 AM
David said: "It is also important to point out that over the last four years, rates have dropped precipitously." Yes, that's true for contractors, but not for employees. Pay scales for full time programmers have not dropped anytime in the last 28 years. David said: "The market has gone to hell in a handbasket, and it doesn't matter where you are." Again, for contractors. I am not fond of employing contractors in a "full time" environment. When I started with my current company 3 years ago we had 4 full time contract programmers. Some had been on contract here more than 5 years! Within a year I hired them. It's a whole different feeling toward them from their peers and their feeling toward the company is much better when they're employees. BTW, they all worked for a contracting company and they received raises to come on board. David said: "More bad news: I don't see the market improving on the horizon. In fact I am having trouble seeing the horizon!" It's because of that risk that I never went into independent contracting. There were times over the last decade that I could have probably doubled my salary but the worry over the future was more than I could handle. chuck Opinions expressed are not necessarily those of my employer.
05-10-2004, 07:49 AM
Dave, Are you currently located in New York City? Thanks, Doug.
05-10-2004, 09:01 AM
Chuck, I was only referring to contractors. Not to employees. I apologize if I left any other impression. Dave
05-10-2004, 09:07 AM
I was born and raised in NYC, but I currently reside in the 'burbs. I cover what is generally referred to as the "Tri-State Area" encompassing NY, NJ, and CT. In actuality only small portions of each state are in the area, but NYC is a part of it. Many of my clients have been located in NYC. I do not have any current clients there. Dave
05-10-2004, 10:54 AM
Steve, Take it from someone who resembles your situation. Those figures work in Louisiana. But, they won't work wherever Chuck is from. Every other employer out there is not Chuck. Since employers like Chuck don't seed new programmers in house and don't raise salaries more than ~3%, and don't drop salaries more than ~3%, you probably can plug your numbers anywhere except California.
05-10-2004, 11:24 AM
I am on a contract at 45.00 per hour. What would I have to earn full time with benefits to equal about the 90k per year.
05-10-2004, 11:24 AM
I have to disagree with Chris. I was paying $600 a month for a family of 3. When I looked at other insurances Blue Cross was in the range of 575 to 1,000 depending on what I wanted. If you are not on a group plan you have to pay for every little option (i.e E/R coverage, Inpatient, Outpatient Services, Rx, etc). One offer came in at approximately 1,500 per month with a 1,000 deductable. So, the estimate in my opinion is a little low. I would estimate 700 for insurance coverage.
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