It’s interesting how even within companies a hard set social hierarchy has taken place between employees and contractors. The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects (companies tend to like to hire from full time to full time), worse benefits and generally don’t get most of the perks of being an employee.
For coders, is this because they’re objectively somehow worse programmers? Given all the emphasis in hiring on avoiding “bad” hires at all costs, it seems like there’s a conflict between paying for people who are “worse” than a FTE but still accepting their contributions. I realize it’s a strategy that gives the companies more leeway to expand and retract their workforce, but then stigma that is attached throughout the industry around contract workers shouldn’t exist, right?
I'm not sure this is a very good read, especially in the startup scene.
I have been in a position (for which I'm super grateful) in which young startups didn't have the funds to pay me my full-time rate, and so instead chose to pay me a weekly rate to work one week out of the month. I like to believe that I provided substantial value in that configuration - usually landing to review code, mentor newer programmers, and help chart direction for the subsequent three weeks (during which I'd be absent).
In this case, I was being paid quite a bit more than the full-timers, not less.
In time, they grew to be able to afford a more complete full-time cadre, and they people I worked with weren't so junior anymore.
I did this... I think half a dozen times. It was a great work config for everybody. If you can afford to travel to the work and you can really bring the fight for 5-8 straight days, I highly suggest it.
That's a very solid case for contractors and almost nobody will have a meaningful problem with it. I've done similar things in the CAD / data management space.
A person with outside perspective, rare skills, experience, and most importantly, is the outside voice able to bring real options to the table along with production proven, time tested ways and means, is worth every penny.
The full time peeps should be taking you out for a lunch or two to network and gain some easy, high value mentoring, contacts...
I would in a second, and have had others invite me for this kind of thing. Some have remained in touch for years, and as they grew, have helped me as I did them.
If we had more of that going on, it would benefit nearly everyone.
But we don't.
The majority case boils down to head count quotas, and cost of labor factors. Often, these are both under specified, leaving managers to find contractors to fill gaps. The larger companies do this and it's chronic.
> A person with outside perspective, rare skills, experience, and most importantly, is the outside voice able to bring real options to the table along with production proven, time tested ways and means, is worth every penny.
Such a contractor would likely meet the new "ABC" standard in the linked article, though. Those aren't the positions that are in danger of being eliminated, it's the "grunt contractor" folks who are contractors only because the employer wants to keep a buffer of positions that are active but can be terminated easily.
My thoughts exactly. Some people seem to be reading this ruling as though no "tech company" could hire any "tech contractor". However, I read it: if a hypothetical company doesn't for example design databases as their bread and butter they could hire someone else to.
In the UK contractors tend to get hired as temporary stop gaps at a much higher rate than perms (like double).
Either to cover a need for a project that won't last long term or to fill the demand for more fingers on keyboards right now.
Is that not how the US uses them? Then again UK programmers seem to earn much less than US programmers. Outside London it's like £50k for a senior dev ($70k?).
Not these days, I'm constantly getting emails offering £45-50k for East Midlands jobs, up from £40-45k the year or two before. 4 years ago I got offered 3 jobs in the East Midlands at or close enough to £40k, with one having bonuses too.
You can go check on any job site, indeed, cwjobs, whatever. CWJobs claim the average is up to £62k for London now, and that's of all dev jobs, not just senior ones:
How so? if you sign a contract for several month's as a plc your better off than a regular employee with only 2 weeks notice is easier to hire as they have no contract.
Legally, but not socially. If a company eliminates contractors well the contract was over. If they eliminate employees that is bad for moral. (except for the rare employee who could be gotten rid of "for cause" in even the strictest system)
Hahaha, I saw someone in the hallway wearing a contractor badge and a MIT hoodies. I am an alum so I asked about their time there. They said they graduated in 2003 but started in 91. I said, "Woah that's one helluva of a PHD." Turns out, they took a 10 year gap to play blackjack. Now they just work for fun every couple of years because they otherwise get bored.
Sounds like "casuals" vs. "contractors". Casual staff are often on very similar terms to contractors, apart from the rates of pay, but are seen as interchangeable rent-a-crowd rather than outside expertise.
There were casual workers at the last place I worked some had been there 20 year or more. One day (literally on one day) they were all told they were not needed, no severance, no thanks just let go. Disposable human workers.
The former are typically a group of second-class employees companies use as a way to "trial" someone before hiring them for real, or simply to skirt the requirements of employing someone full-time. They also tend to work for some shell company you've never heard of, at least on paper.
The latter tend to be older folks, and often experts in various fields. They also have little trouble finding another "gig" almost immediately after their current one dries up. These people are usually self-employed.
Contractor are paid more, since they have to factor in the health insurance, taxes, unpaid vacation, perks, their own laptops, no need for office space, no 401k match. There is no reason they would ever get paid less. Maybe those with H1B visas who can get taken advantage of or outsourced contractors in Ukraine? Those contractors definitely get paid a fraction of US salary.
Contractors are almost always paid less in my experience after taking into effect stock grants and bonuses. The contracting agency probably gets a nice portion of the takehome though (for having the political capital of being on a preferred vendors list), so to the company they probably pay more than salary.
You also have to factor in the amount of responsibility for pay. A contractor with decent negotiation skils may net out slightly less than a FT senior dev at a company, but they often have less responsibility than even the FT junior and mid-level devs. Not to mention that they never get dragged into internal company politics or loyalty games.
Factor in overtime, or the lack thereof, and you can make more or have far more work/life balance than FTs. That weekend app release? There's an extra $500-$1k that the FTs aren't getting. Company doesn't allow contractors to work over 40 hours for budgeting purposes? Leave at 5 everyday without anyone complaining.
It's way more than 1k. I did a contract with a company once and looked to move to FTE. My rate was about $70/hr with an informally enforced cap at a bit over 40hr per week.
They submitted a total cost of employee as part of their employment request to HR. Their bog standard expenditure for an employee sitting right next to me was 50k/yr higher than I was making (my 1099 rate was the official standard for the position and not negotiated). $15/hr less (given unofficial hour cap), but with good insurance (group rates are also lower for the same insurance compared to individual), bonuses, vacation, 401k, etc.
Most companies simply refuse to pay out the same for a contractor as they would for an employee.
A large programmer union could do wonders for the industry.
Let's say the average developer works 45 hours a week at a company and makes $15/hr more than a FT senior dev (with salary calculated at 40 hours). That's $2500 more a year, which sounds bad when you factor in all the FT benefits.
But, the FT senior developer spends a quarter of his/her time in meetings, is expected to be a "team player" in regards to internal politics, and can't do any side projects without running it by the business.
Both sides working 45 figure is kind of a fairy tale too. Having been on both sides, usually either FT or contractors are working all the extra hours. If it's open-ended contracts, then the FT are working many extra, unpaid hours and the contractors get a work/life balance (worth multiple $10k, IMHO). If it's short term contract, the contractors work 50+ hours a week, within the project window, make out like bandits, and go on to the next gig.
It's all preference. Neither side is objectively better.
That's not a self employed contractor is (which is the focus of the question) just some one working through an agency - just ban w2 status or force them to convert to cheap umbrella companies as is the case in the UK.
I think you're using a very overspecific definition of "contractor". At least half of my contract work has been doing the same job in the same office as the full-time employees, just for less pay and less job security. (And I did get health insurance, through the contracting agency.) A couple of those gigs even came with a company laptop.
Well if you consider that the actual tax rate that contractor
in Ukraine pays is like 4% and cost of living is 1/10th of Bay area also it's pretty hard to take advantage of people in a country were it takes about 1 week from starting to look for a job to getting one with good $ and decent perks. To put things in perspective a decent Senior java dev will make 55K-75K after tax in USD and pretty much 70-80% of that will be dsiposable income.
Back when I worked at Boeing, contractors got paid about double what the full time employees did. But, they received no employee benefits (worth about 40% of the employees' salary, if I recall correctly) and could be let go at a moment's notice.
So in the end it worked out about the same.
If the law requires contractors to get the same benefits, etc., the result will be the contractors will get paid less. The ones I knew wanted the higher pay / no benefits circumstance, and they'd lose that option.
> The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects ...
There was a very interesting NY Times article last fall about that issue. They contrasted janitors at Apple, who work for a contractor and have no prospects for advancement in Apple, and Xerox's janitors in the 1980s who were employees, and one of whom is now Xerox's CTO:
To veer off on a tangent, I suspect it's connected with a new elitism in the U.S. What used to be the celebrated 'Land of Opportunity' where anyone could live the "American Dream' through hard work, regardless of where they started (even if very poor immigrants), is now a place where the children of the wealthy go to college, those of the working class are encouraged to go to trade school, and immigrants are more commonly discouraged.
You are so wrong I don't know where to start. The percentage of Americans with college degrees has never been higher. For decades, the message from authorities has consistently been to encourage youths to go to college as much as possible, and the number of students has kept increasing beyond all reason. We are well past the point of diminishing returns, and into pure and simple harm, where millions of Americans go into debt to get pointless degree just so they'll be considered for jobs that shouldn't need a degree in the first place. It's a disaster.
Those claims are trendy, but the parent provides no basis for them and I've never seen one. There's plenty of reason to believe otherwise:
The 'youths' want to go to college, and in a free country and a free market, it's believed that they know and decide their own best interests.
Businesses in fact highly value college education; they pay people with college degrees much more than people without them. The incomes of people without degrees has been stagnant for decades, and there's concern among economists that their job prospects will become more difficult due to automation. If it had reached a point of diminishing returns (really, small marginal benefit), then the wage differential would be small.
As I pointed out above, it's really economic discrimination: Education depends, more than anything, on family wealth. So the outcome of what the parent advocates is that the wealthy classes go to college and the lower classes don't get that opportunity. Usually it's wealthy people with college degrees that say college isn't needed; but tell them that their kids shouldn't go to college and you'll get a much different response.
> The percentage of Americans with college degrees has never been higher.
That's great. We want people to be better educated, more productive, and live better lives. That's the 'American Dream'. We don't want the economy stuck in the 1980s, but to move forward.
It also makes the economy more productive. For example, Silicon Valley can't get enough talented developers, yet the United States (and world) is filled with kids with no access to education, many of whom probably could fill that talent gap. We need more education. High skill, high-paying jobs will go where there are more highly educated workers; if the U.S. cuts college education, it will go elsewhere. New businesses and industries that we haven't yet imagined will arise when they have that resource of educated people.
Education also makes people healthier, better citizens, better parents, etc. HN celebrates knowledge; it's hard to suddenly discount it in this case.
> It's a disaster.
By what measure? The only disaster is that education is too expensive and not available to people without money.
Given all the emphasis in hiring on avoiding “bad” hires at all costs ...
I suspect that a small portion of companies use grueling interviews as more of a hazing ritual, and many of the rest follow because, well, that’s just what everyone else seems to do.
Make that no benefits. In my 35 years in the tech industry I've never seen a contractor that got benefits, since it's the primary reason contractors exist.
I think this can vary a lot. Contractors often charge very high rates, but then they're called a consultant even if theyre there to do/create rather than consult.
That would seem NOT to be to whom this ABC criteria applies, specifically on the "independently established role." This seems to most address those who have less power in the employer-contractor relationship.
Do companies whose primary employees are programmers also employ contractual programmers? According to my observation, computer technology companies may have contractual workers, but only for other roles.
From personal experience (and admittedly stale by some 8 years), IBM had lots of contractors doing software development alongside full-timers. It was a pretty insecure position to be in because they would take the brunt of layoffs, and many I knew were gone by the time I left, with a couple of exceptions. Many were ex-employess who had been previously let go or were retired. Some were not, and all were basically indistinguishable from regular developers... they just happened to fill a req that merely funded a contractor instead of a full-time employee, depending on how the money was handed out to departments.
Yes, absolutely. I've had several clients like that. Usually, the work centers around something that isn't their core business or a technology that their full-time programmers aren't very experienced with. Sometimes it's just a matter of fluctuating workload where hiring another person full-time wouldn't make sense.
Most companies that I've worked for have had them, usually for specific purposes (billing system related) but they've also had them as more general cases, for less than full time work usually (the people also contracted out to multiple companies). I don't know how common this is though since it's only a few companies and the people involved are all semi-related (Perl programming community).
> Do companies whose primary employees are programmers also employ contractual programmers?
Yes, e.g., firms whose main line of business is contracting out employees who are programmers hire programmers as subcontractors in addition to regular employees to round out special skills needed in contracts.
Yes, all the time. Often in key positions or on strategic initiatives where expertise or specialist skills are needed. I've also seen short contracts used while a company ramps up hiring FTE as a velocity optimization to get the ball rolling on something new.
I couldn't tell you the reasoning, but I've worked at a couple of places where there were contract programmers alongside FTE programmers. In one case, that contract programmer became a FTE, but in either situation, most of the programmers were FTEs.
In my experience, contractors are almost without exception worse than full-time employees in terms of the quality of their work. The contractors who stand out get selected for full-time work relatively quickly and consistently.
For coders, is this because they’re objectively somehow worse programmers? Given all the emphasis in hiring on avoiding “bad” hires at all costs, it seems like there’s a conflict between paying for people who are “worse” than a FTE but still accepting their contributions. I realize it’s a strategy that gives the companies more leeway to expand and retract their workforce, but then stigma that is attached throughout the industry around contract workers shouldn’t exist, right?