79% of contractors prefer that type of work, in the most comprehensive research conducted by the Bureau of Labor Statistics. Why?
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Why 79% of contractors don’t want to be full-time employees?
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the most obvious reason is that working as contractors grants ones the flexibility to work for several companies. If one is full-time employed, it would be hard to work for another company when you are already working for one.
Good point Tony. As a Full-Time employee one cannot work for another company due to timing and contractual issues.
There is much more flexibility when working as a contract employee: Despite the fact that wages are typically higher, contract employees create their own schedules and have control over the work they are completing on the day-to-day basis. In addition, contract employees have the opportunity to work for many different companies and/or people, to find their niche.
When you are a full-time employee, you are bounded to their rules and regulations, meaning you would not be able to work with another company due to conflict of interest. If you are a contractor, you are not strung into one brand or company, but you can represent your own while also constituting as a stakeholder apart of each company they work for.
Good point Noor. A case can also be made that working from different clients you will be exposed to different clients and identify best practices for the benefit of your clients.
Has the value of being a full-time employee depreciated? Benefits can be fully accounted for in the rate contractors are paid. The satisfaction of working FT for a company one is fully aligned with cannot.
One point also could be made about the financial security aspect of being a contractor. As a contractor, if the company has a bad year and your income is partly fixed/partly variable (i.e: bonus, profit sharing from the company, etc) your yearly income takes a hit. But being a contractor takes that pressure away.
Also on a more personal level, you get the chance to work in different companies, at different stages and challenges, and with different people. You improve your networking, your mastery and get to have a more all-around experience. On another hand, if you just enjoy one side of a job, you could just focus on that and move through different companies, making the work experience much more pleasant.
Finally, and I don’t know if this is accurate, I have the sense that as a contractor there is much more salary transparency than working in a big corporate company, where talk about money is seeing as tabu.
Great points Maria Alejandra.
Yes, I agree that working as a contractor you diversify risk. If the economy is not doing well, you have several sources of income. On the other hand, usually, companies cut contractors first in bad times.
Yes, contractor jobs make it easier to work on assignments that you like.
The transparency argument is interesting. Is it good or bad to know what everyone else is making? Sweden is extremely transparent about how much everyone makes, also at private companies. They are also one of the top 10 happiest countries in the world. On the other hand, research shows that salary transparency does not make employees happier. What do you think? Is it good or bad to know what everyone else is making?
I personally think that it does help, of course, salary transparency is never going to be enough to placate a bad work environment, but in many ways, it can help with commitment and motivation in the company and minimize rotation. It gives you a more clear knowledge on what to spect financially in the company that you are currently at and makes it easier to move on if necessary instead of waiting around for a raise that maybe is out of the companies salary band.
In my perspective, the main reason people choose to be a contractor is because of the higher salaries. I read the article claiming that according to the Dice Salary Survey, the average salary of full-time employees is $93,013. While the average salary of contractors employed by staffing agencies is $98,079. Compared to full-time employees, contractors also have more flexible working hours. Contractors working with staffing agencies may also enjoy benefits such as health plans, paid vacations, and retirement benefits.
Yes, the salaries of contractors should be higher. They need to compensate for all benefits, worth close to 70% of salary. Those working independently must pay taxes both as an employer and as an employee. These are the benefits and costs to consider:
Bonus
Health care
401K contribution
Paid vacation
paid public holidays
Corporate discounts
Phone, and other benefits*
Employer taxes**
*Employer taxes include Social Security Taxes, Medicare Taxes, Federal Unemployment Taxes (FUTA Tax), State Unemployment Taxes (SUTA Tax), Disability Taxes, WorkForce Development Taxes, Family Leave Insurance, Worker Compensation Tax, Health Care Tax (MA).
**Corporate discounts include Gym subsidized fee, Day Care, Hotel & Car discounts, the turkey you get at Thanksgiving, etc.
Contractors working with staffing agencies providing all those benefits would not have to worry about that.
In my opinion, part-time contractors have the following benefits.
1. They are able to seek more opportunities. They have extra time to contact more job opportunities and get higher offers. Part-time contractors can give them more flexible options.
2. Part-time contractors have more time allotted. Part-time contractors will need to work fewer hours than full-time workers. This means they have more time at their disposal. They can use this free time to spend time with their families and learn.
3. Part-time contractors feel independent. Part-time contractors keep themselves free. They are not tied to one company. There is no need to worry about the company’s performance. They are less stressed than full-time employees.
You right. “Part-time contractors will need to work fewer hours than full-time workers.”
A colleague of mine, who worked her entire career at one of the Big 5 Accounting Firms, and now works as a contractor confirmed that.
At 5:00 PM, she stops. When she was working as an FT employee, she continued working well beyond 11 PM.
Let’s look at it from an employer’s point of view. Historically, as a CFO, I have been told by managers who wanted to employ team members as full-time employees that they will be more engaged. Then, for employers, it’s better to hire FTE, isn’t it?
Based on our discussion from our last class I believe 79% of contractors don’t want to be full-time employees because they have the option to work for multiple companies, have a better work/life balance, and the opportunity to enjoy multiple benefits (depending on the company’s offerings to contractors.)
Ok. I don’t want to put you on the spot, so let’s make it about all students in the class, in general. Wouldn’t most of them love to work at L’Oreal, Disney, Nike, or 3M, rather than being a contractor? I know I couldn’t work for Hershey because I would eat all their chocolates (at the office you get them fresh, all you can eat, free) 😊
I agree with you on the Hershey comment because i would do the same! 🙂
I think in the last two years we have seen a shift in the workforce, the new generation (younger millennials and gen z) are really considering their place of employment extremely careful because they don’t want or have the same believes as the other generations about working for larger companies. In my opinion, we are looking to have more free time to enjoy our hobbies and give back (do the things we really love) vs working 40+ hours a week at a large company. I have also seen how people are more interested now than ever to become entrepreneurs, have you seen/hear that? what do you think?
Compared to traditional work, independent contractor has a very flexible work arrangement. They can decide when and where to work as they want and maintain a good work and life balance. Besides, they would have fewer issues or conflicts in the workforce.
Even though there are many benefits to being a contractor, I think it is difficult for contractors to get the same sense of corporate honor as regular employees. For example, if you are a regular employee of Apple, you can proudly say that you work for Apple and dedicate yourself to being a part of the company. Contractors, of course, can take pride in its accomplishments, but perhaps something is missing. Well, It Depends.
As a result, it may be difficult for contractors to help companies build a better corporate culture than they do for regular employees.
While I, personally, would not work as a contractor, I believe it does have its pros and cons. The pros being that one can have flexible work hours while also working on multiple companies simultaneously and not being restricted to one kind of job. The cons, however, for me outweigh the pros due to the lack of stability the nature of the work brings. The work hours, while being flexible, do not always allow one to work a full 40-hour week which could lead to a pay that fluctuates monthly
As a independent worker, contractor is apparently having more autonomy and flexibility than traditional worker.
eg 1. For traditional workers, company can cover their health insurance and other benefits. However, being an employee means having a boss. The relationship between employers and workers can be quite terrible sometime.
eg 2. Contractors can work for multiple clients which means more profitable and more opportunities
eg3. better work life balance–working hard is for having better life!
Well, my most recent job is contract-based, while I work full-time for another company. I think there are 3 reasons that I value a contract position over full-time employment.
1. For those who just started their career, the contract job allows them to try out different kinds of roles in other fields, while still maintaining their current full-time job. Let’s say someone wants to switch his/her career to another industry/position, contract position would be a great place to start exploring new career possibilities.
2. Being a Contractor also can build many different skill sets that may not possible with a full-time job.
3. Contract roles also help people expand their professional network which might help their next promotion or better job offer.
From my perspective, contractors have more flexible time and they could work for different companies during the same time period. Also, as contractors, they are not required to stay in the office nor work with assigned working hours, so they might have more personal time after completing projects on time. At the same time, the network development is very fast and mature, home office and online working are more and more common during Covid, which is more convenient for contractors to work.
Cultural/societal elements may explain this phenomenon.
People who welcome flexibility and changes in life may prefer working as a contractor to have more freedom and time for other things simultaneously, either personal or work-related. It does not matter if they change their jobs frequently. However, others may prefer stability and a sense of belongingness, and thus do not as a contractor.
One point comes up in my mind is that contractors are receiving more resources which are hardly to count, such as the chances of learning different skills while dueling with different jobs, the opportunities about networking with HR in each companies. Furthermore, with all those resources, contractors can much easier to get a new job, either part-time or full-time, than the original full-time employees.
In my opinion, if I choose to work as a contractor, I will be considering the advantages of the free time I will have and the simple processes of working in big-name companies. It will cost a lot of time to finish interview, salary negotiation, specific job position for a full-time workers. For a contractor, I can join the big-name company the other day, and in this way, I can save more time to gain more experience working in big name companies instead of wasting time of waiting for the administrative process.
Also, as a contractor, if the relationships among co-workers are stressful, I can choose to leave the company as soon as the project is finished. I think it is also important for me to work in a professional environment instead of working in intensive and stressful environment. Contractors can skip the relationship management parts, and it will also help save up energies to work efficiently for the projects.
In my view, contractors prefer not to be full-time employees so that they have the flexibility and work on a project basis. This allows them to quote their pricing basis a project brief thereby having the ability to earn more than they would as full-time employees.
– Seeking a more work-life balance lifestyle. Contractors could have fewer meetings, commuting, hours, policies, etc., which best suit their needs and lifestyle.
– Security. Contractors work for more than one company and knowing that their certain skillsets are in demand for different companies (higher income) makes them feel more secure.
– Flexibility. Hours basis job meets various needs of every group of people. Being in a contract job could help to test out a company or just to test out a new field and expertise as well.
It has become more apparent after the pandemic that most people:
– Prefer the flexible working arrangement that suits each individual lifestyle
– Suffer less commuting time between home and work office
– Ability to focus and cater towards other important aspects in their lives (ex. family, friends, passion projects ), while not hindering their work productivity
Some of the contractors have an entrepreneurial spirit which allows them to enjoy running their own businesses, seeking customers and setting their rates. They will have more flexibility.
Well, I think the most obvious reason is that contractors have the freedom and energy to work in the area they are good at and interested. For example, for people who love networking, it’s a good choice for them to work as a HR contractor as they know a great deal of operators, marketers, lawers, doctors, etc.
Secondly, as some classmates mentioned before, contractors have the ability to split the risk. As the old saying goes, don’t put all your eggs into one basket. Contractors can be very flexible and not just rely on one single income.
Thirdly, from my personal perspective, contractor is kind like intermediary agent. Their costs can be very small, just need to schedule and organize well, use the company’s money to pay for the salaries and costs. So for someone has the ability and courage, contractor is a fantastic choice.
Contractors can be more flexible schedule, and they can choose the business they would like to take on. Moreover, the contractor is only responsible for the contracted project and is not affected by other factors of the company.
Contractors are more flexible than the full-time employees. Contractors are less controlled by the company than full-time employees. They often earn more per hour than full-time employees, and their hours are flexible. Their working hours are determined by themselves, not by the company. Moreover, contractors They have more career choices because most of them are on short-term contracts which means their jobs can be unstable and they can often try different jobs. Instead, full-time employees cannot change jobs frequently in terms of career development and promotion opportunities.
Contractors have more flexibility in terms of work schedule, but also in terms of notice period when quitting. But also be able to get into the company and gain experience and can be added to their resume of the contractor. But also you have the opportunity to having an addition job next to the contractor.
Because they can take on assignments from different companies, they can increase their earnings. Typically, a contractor can complete tasks for multiple companies simultaneously, and their profits are entirely determined by their own work efficiency. On the other hand, if they become full-time employees, they can only receive a fixed salary. Additionally, independent contractors have more flexibility in managing their finances.
In this day and age flexibility is one of the most important factors for an employee when choosing a job or career. Especially in a post pandemic world where most companies are closing down physical offices and the hybrid work style has become the work week standard. The flexibility that contractors have is the biggest attraction to the position.
Tax incentives can be a significant factor influencing individuals to choose contractor work over traditional employment. For contractors, certain tax benefits and deductions can offset the self-employment taxes they are responsible for, leading to potential tax savings.
I think it’s a win win for both sides. For the point of view of the contractor, I think being one offers more flexibility and allows you for work for many different companies in different projects at once.
For the point of view of the company it makes sense because it’s much faster to get trained people ready to go when you you need them without having to wait long for HR to find the right person. It doesn’t count on headcount. It’s also much cheaper
While full-time employees get benefits and paid vacation days, contractors often get to work on their own schedules, sometimes remotely, and take on multiple projects at once – which allows them to increase their income, as well as have a better work-life balance. Because contracts have the freedom to choose the types of projects and clients they work with, they can focus on developing specific skills that may not be possible in a full-time role.
Because these people are used to flexibility, and they don’t feel the security full-time employees feel, conversely they aren’t used to the steady but predictable work every day .