Hacker News Reader

Assuming of course that you live in the US. In the UK it's relatively difficult to get rid of people - sacking is very difficult and likely to end up in court (you need a bulletproof reason for doing it) and the redundancy process is quite complex (with guaranteed payments if you've been there more than 2 years, etc).

Looks like the blog article was written by an Australian - their level of job security falls somewhere between the UK and the US.

EDIT: Also, I believe, in the UK you can't make permanent staff redundant if you've got temporary staff - so the contractors are first out of the door.

Correct mate, I am an Australian. I would say that our job security level is closer to that of the USA than the UK, but I don't think it's exactly the same.

On the whole I've seen way too many good people let go from permy positions while other plebs are retained. In same cases there doesn't appear to be any rhyme or reason to who gets culled and when. To me that's a real sign that the "important" differences between permy and contractor are well in favour of the latter.

Cheers!

Actually, the Australian redundancy route is closer to the UK than to the US (we usually have 4 week notice period etc etc).

But Australia has such low unemployment at the moment that it doesn't really matter - forced redundancies are pretty uncommon at the moment.

I agree about the contractor thing regardless though - the difference in rates make permanent employment a pretty hard sell.

(I'm Australian if it matters)

Conditions aren't the important bit imho mate. The important bit is that you can still be got rid of fairly easily (unless you work in the public service, which seems almost impossible to be fired from). In that regard we are quite diff to the UK and more like the USA.

Forced redundancies are indeed uncommon at the moment, but I think that'll change. They weren't too uncommon just a few short years ago either.

Yeah, but an employee might get 'laid off' (and have to look for a new job) at most, say once every 3 years. It's possible it could be more often, but over the course of your career the average probably doesn't exceed once every 3 years (unless you're particularly poor).

A contractor, on the other hand, has to look for new work every few months, at least.

If I hate looking for new work, then being an employee might make sense.

The contracts I usually see are at least 6 months, and I've never, ever seen a case where it wasn't extended (not just for me, but for anyone I've worked with - including some "programmers" who simply couldn't program).

The few shorter contracts that are around pay have to pay extra to make it worthwhile - I've seen a few 3 month contracts that pay around 25% more.

Funny story: there is a large government department here that was famous for hiring people on 3 month contracts, but keeping the people there for years. It turned out that the reason for this was that the expense for a contractor for 3 months was around $50,000 (including agent fees and the 25% loading for a short term contract), and $50,000 was the limit for that the department managers could sign off on without going through a long, expensive procurement process.

My last two contracts were 1 year and 1½ years. There are short term contracts out there, and they usually pay much more per hour, so I'd actually prefer them. Most companies want you for at least 6 months.

It takes getting used to, but at least I don't have that terrible feeling of being afraid to lose my job. Many people are scared into being "loyal", and it really costs them.

Consider how much your average raise as a full time employee is. I'd say most people get 5%/yr if they are lucky.

By going from contract to contract, my salary grows much faster than that. I'd say 30%/yr for the last few years (on average).

You can get fired/laid off at will, but it's usually for a reason (poor performance of the employee or the company), and people think twice before doing it. Whereas terminating contractors is a matter of course and is no more an event than buying a printer for the office.

COBRA's not the only advantage of employment. Unemployment, too.

Contractors generally aren't eligible. Laid off employees are.

Job security is a myth, sure. But that doesn't mean that contracting carries the same risk; the risk is greater.

Meanwhile, as an FTE, you get vacation time, sick days, bonuses, and company purchasing perks. You get a much better insurance coverage than you can afford to get privately.

* As a full time employee you might get a severance package, if the company doesn't feel like dealing with you, but it's completely optional.*

I've been around for quite a few years now and have never once heard of a company not offering at least a month's severance. Technically, sure, it's optional, but it's also insurance: they don't have to worry as much about you suing them if they pay you a little on the way out.

* I'd rather be unemployed (and motivated to find a better deal) than working for less.*

That's your choice, but I have to wonder about your math. What are you paying for health benefits, and what would they be as an FTE -- and how much better would they be? I bet it would make up the difference. What about paid vacation? Sick days? Holidays? You get jack-squat for those as a contractor.

Note that the author is Australian, and health insurance works very differently.

We have a public system, but many people choose to buy private insurance as well. Depending on the level of private insurance you can pay anything from $2000-$10000/year (for one person).

It's very rare for a company to pay for a person's insurance, though.

In my particular case I get paid around $90/hr ($135/hr for overtime, plus paid major holidays). Which comes to around $180K/yr. The full time position I was offered is $130K/yr. There's no way in the world vacation + health insurance is worth $50K.

So if I take a month off, I lose $14.4K ($90 * 160 hours). A decent insurance PPO plan is $1100/month for me any my wife. So that's another $13.2K. So the total is $27.6K. And I don't think that many FTEs have a month of paid vacation.

Plus another what, $13k, for self-employment taxes?

What's a self-employment tax?

The way it works here (Australia) is a contractor charges GST (basically a value-added tax) to the employer of 10%. The 10% is standard, so people don't usually include it in discussions of their rates (ie, if he is getting $90/hour, then the company is paying $99/hour).

After that you can handle the money how you like - if you are smart you can setup a company or trust so you only pay the company tax rate on most of your income. At worst you just pay yourself the income, and so you are taxed as though you have the $180K income.

The company thing still comes with a caveat in that you have to prove that you're not just using it as an umbrella to reduce your tax. There are a set of tests that a company goes through at tax time, and they have to pass them in order to be considered a proper company (the 80/20 rule is one of those tests).

In the US, employers pay a medicare and a social security tax. If you are self-employed, you have to pay those taxes in addition to your regular taxes, because you are the employer too.

My current contract is W2-hourly. I'm pretty sure I get taxed just as a regular employee.