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Comment by jetblackio | Hacker News Reader

Recruiters. I had a salaried job and was contacted by recruiters. They were recruiting for a company that is about 50/50 salaried/contracting. Other than that, nothing special.

One thing that I didn't see being brought up in the thread you mentioned is the fact that a recruitment agency bills a rate different to what I get payed. For example, my agency is likely billing out at $80/hour or more, yet I only get $55/hour.

So I'm curious if others were entering amounts that agencies were billing out, rather than what they were being payed.

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> my agency is likely billing out at $80/hour or more, yet I only get $55/hour

Wait, what? Where are you? Please tell me you're a regular employee of the agency on paper, getting benefits and not paying self-employment tax?

Doesn't seem that far off what I've seen. Example would be $130/hr billed, $80/hr paid to a contractor or $50/hr paid to a FT employee. We don't have any "self-employment tax" though (beyond standard income tax).

Juniors on the other hand get pretty exploited in the name of "earning their stripes" - I've seen a few accounts over the years of billing at $80-150/hr and the employees getting $15-25/hr..

I think the local average for recruiters and agencies (usually one and the same here) is 15% of first-year wage for FT placements, or $30/hr margin for contract work.

Who is "we"? You're apparently in Australia, for example, which is of key importance to understanding the numbers in your comment, because of both its unusually high cost of living, its tax structure, and the provisioning of social services.

If jetblackio is in California, he's getting ripped off (doubly so if he's a 1099 and/or pays any substantial amount for his health plan). If he's in Wisconsin or Canada, he's probably doing OK. If he's in a country that doesn't use a currency called "dollars" but he's incorrectly using the dollar sign anyway, that throws everything completely out of whack.

This is why I asked where he is.

Right, was just providing a point of context, although clearly forgot to anchor it (Australia is correct).

Please bear with me for any misunderstandings of the situation, as I'm new to contracting, and only recently took this position.

I'm in Colorado and I do not get any benefits. The company I'm contracted to only works with this recruitment agency, so to get hired at all, I had to go through them. The agency obviously takes a cut, and from what I've gathered from some of the employees, the agency is taking around $80+/hour while my bill rate is $55/hour.

As I stated, there are no benefits, I pay my self-employment tax and have to cover my own medical expenses. There is no paid time off, holidays or otherwise.

I'm not sure if this is considered normal or not. But I don't really like the situation and have been working towards permanent employment with the company.

As a side note, this is a great company to work for, and employees have great benefits. But it does sound like contractors may be getting shafted.

That's not as bad as if you were in the bay area, but it's not good. I assume you're in the Denver area and not out in the boonies?

FTE software engineers in Denver should be $80k minimum.

4 weeks vacation/sick time + 10 paid holidays, $80,000 + $9,230 = $89,230

Medical, $89,230 + $3600 = $92,830

Self-employment tax, $92,830 * 1.0765 = $99,931

That by itself calls for almost $50/hour. Add vision/dental, retirement plan, and whatever else regular employees get, plus the fact that you spend more time on your taxes, and do it throughout the year (you're remembering to pay quarterly estimated tax, right?).

Now, where's your risk compensation? The company is hiring contractors because they're easily disposable. You could be dropped at any moment.

Where's the compensation for the value of the flexibility you're providing the company?

Contracting as a 1099 calls for a 2x multiplier over nominal FTE rates. At least. You should be getting $80+/hour just for breathing.

And would you really only be worth an $80,000 salary? Just how junior are you?

Wow, this is great information. Yes, I'm in the Denver area. As for my position, I was hired as a Senior System Administrator and definitely have the responsibilities of one. I have about 5 years experience in Linux administration, but obviously less experience in the contracting/business/taxes side of things.

You're right on the risk compensation, though this company is known for hiring contractors for long periods of time (some contractors here have been here longer than 5 years). So though it is a very real risk, I'm not as worried about it as I would be otherwise.

Ah, I was assuming you were a developer. As a sysadmin what you're getting is less surprising. Not great for a senior, by any means, but not so much of a ripoff compared to market rates, since sysadmins always get screwed. :)

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