Are you considering a career shift from a full-time salaried position to a contract role in technology? Understanding the financial implications is crucial to making a well-informed decision. While contract roles offer an appealing level of freedom and flexibility, how does it stack up against the stability and benefits of a full-time salaried position? Let’s dive into the financial nuances of each option to help you make an informed decision.
Understanding the Permanent Role Package
Imagine you’re a Software Engineer eyeing a $150K base salary in a full-time role. This package typically includes a 5% bonus, comprehensive health benefits, 3 weeks of paid vacation, and 8 paid holidays, bringing your total earnings to approximately $157,500. After deducting an average of $1,404 for employer-sponsored single person benefits, your net income is $156,096. When you break it down, that’s about $75 per hour, considering a standard 40-hour work week over 52 weeks.
Breaking Down Contract Role Compensation
Now, let’s analyze the same role in a contract setting. If you did the same job on a one-year contract, an equivalent role would be offered at $85 p/hour. Typically, contract roles don’t offer annual bonuses or employer-sponsored benefits. However, firms like BridgeView often provide subsidized benefits, which would cost $2,820 annually for a single person. As a contractor, your earnings are directly tied to your work hours. Assuming the standard 2080 working hours a year, minus the 23 paid days off a full-time salaried employee gets (184 hours), you’d work about 1896 hours a year. At an $85 per hour rate, this equals $161,160. Subtracting the cost of benefits, your take-home pay would be around $158,340.
The Overlooked Factor: Overtime
Here’s where it gets interesting. Contractors often have the advantage of earning overtime, which can significantly boost a contractor’s income. While full-time employees might often work over 50 hours a week without extra compensation, contractors get paid for every hour worked. On average, technology contractors work 43.5 hours a week. An additional 3.5 hours per week can add about $14,130 to a contractor’s annual income.
The Final Tally
When comparing salaries, the full-time employee earns approximately $156K, whereas the contract employee might take home about $172K. That’s over $16K more that many contractors enjoy and sometimes use to allow extra time off in between contract engagements.
Beyond the Numbers
Remember, while the financial aspect is crucial, it’s important to consider other factors such as work-life balance, job security, and career progression opportunities. Contract roles might offer greater flexibility and the chance to work on diverse projects, but full-time positions often provide more stability and predictable career growth.
Your decision between a contract and a full-time role in technology shouldn’t be based solely on money. Here are 10 Reasons Why Contracting Is Better Than Perm, that cites some excellent points.
Seek Personalized Advice
If you’re still weighing your options, feel free to reach out for personalized advice or explore current opportunities that align with your career objectives here.