He got paid more and he has more expenses. No health coverage - he'll be lucky to find a group policy with an organization or professional association. No matching 401K, no tuition reimbursement, and on and on. It's not a valid comparison. Line up the employee's benefits and income against the contractor's expenses and income and then see where you come out.

Then realize you've only looked at one piece of the equation and you can start weighing the pros and cons of continued employment, opportunities for career advancement, etc.