Jobfilter: From contract (via agency) to full time. How much to accept?
April 13, 2013 1:37 PM   Subscribe

I am an contractor through an agency (W2 employee). The company I am working at wants me to go full time. The pay rate is around 33% lower. I've gone through all the benefits that contractors don't get and the full time pay is still around 16% higher.

Is this reasonable, or should I ask for more?

Here is the list of benefits that full-time employees get, am I missing anything?

- Paid Vacation, Sick days/Personal days
- Paid Holidays
- Less expensive medical/dental/vision/etc premiums
- 401k match
posted by wongcorgi to Work & Money (13 answers total) 3 users marked this as a favorite
7.15% FICA. If you are a W2 employee, your employer (agency?) may pay this. In one company I worked for, contracted staff got paid more because their jobs were expected to have an end date, part of the reduced pay may be because the position is genuinely permanent.

There may be some life and disability insurance.

If you are in a position to ask for more, ask for more. A. You may get it. B. In my experience, employers respect you more if you ask for more.
posted by theora55 at 1:48 PM on April 13, 2013

Well, and pardon me if I'm being Captain Obvious here, but full-time employees get to work there "forever" while contractors are temporary.

Having lived it, I am well aware that many-to-most "permanent" jobs these days end in a layoff within a few years anyway, and that being a contractor may paradoxically make you *more* likely to survive layoffs. However, depending on the company, they may have a maximum length for which you can be a contractor, whereas you can in theory be full-time forever.

The other intangible is just respect. Put bluntly, depending on the culture, a lot of places treat contractors as "temps" regardless of their skill level, which is to say treat them like utter dogshit.

It probably can't hurt to ask for more, as long as you are prepared for the worst, which is having the offer retracted and losing the contract position as well. That may sound unlikely, but if they're ready, budget-wise, to make this a FT position, they may be considering outside candidates too.
posted by drjimmy11 at 1:50 PM on April 13, 2013

Another likely benefit is severance pay if you are laid off. I have never heard of a contractor getting severance pay- there is usually not even a single day's notice of the job ending.
posted by drjimmy11 at 1:51 PM on April 13, 2013 [1 favorite]

Depending on your company, you may get discounts on your cell phone, gym membership, concerts, etc.

There are more nebulous benefits - opportunities for growth, increased stability. It's possible, though not guaranteed, that once you are full time your supervisor will have more of an interest in providing you with growth opportunities.

But it does not hurt to ask for more. They can say yes or no.
posted by bunderful at 1:53 PM on April 13, 2013

There may be others. Will the new employer pay for some training? Attendance at professional conferences? Membership in professional orgs? Books? Subs to print & online industry publications? Parking subsidies? Do they partner with any merchants to offer discounts (e.g. cell phones, health clubs ... I get every new Microsoft Office product for $10)?

And yes, depending on the place, the intangibles are worth something too. One intangible may be a little more flexibility in your schedule -- I can work for home whenever I need to, but my company doesn't let contractors do that.

The 7.15% FICA isn't an additional benefit, since the OP is already a W2 employee.

Good luck!
posted by LonnieK at 2:21 PM on April 13, 2013

Show them the stats. Ask for more.
posted by Ironmouth at 2:22 PM on April 13, 2013

There is *some* value in having the stability of a full time job and your paychecks not being tied to what hours you worked that week. I'm not sure what that number is, but I guess it depends on how variable the work is. You theoretically don't have to keep as much of a money buffer if you know you are going to get the same amount every month than if that amount could vary.

Also, I'm not sure if I understand this correctly or not- does the new job include health insurance, where the old one didn't? Then 16% is probably actually a raise compared to the cost of comparable health insurance.

But the other end is to look at your compensation- will you have less money at the end of a month or more? It should be about the same, or at least come close, and the added benefits would be the incentive to take the job.
posted by gjc at 2:34 PM on April 13, 2013

It's also possible that your pay is lower because your company has to pay a fee to the agency for hiring you away.

It's kind of hard to say whether what they are offering is reasonable or not, but if your offer is comparable to what they pay full time employees it seems somewhat unlikely, in my opinion, that they'd agree to pay you at the contracted rate or more than what others are making, in the absence of some reasons you haven't given.
posted by sm1tten at 2:37 PM on April 13, 2013

+16% with your napkin benefit calcs? Ask for your current number. Ask for your current number + 20%. Don't let them anchor you at -33%, anchor them higher! Everybody's describing ways in which getting paid less is logical, but salary doesn't have to be logical, because there are intangibles on their side, too: THEY WANT YOU PERMANENT.

It's expensive for them to train someone new to the level that they want to make them permanent, and you leaving them for being cheapskates is going to put them right back at square one. Don't short-sell yourself, and keep in mind the company gets huge discounts on benefits compared to what you find on the open market as a solo buyer.

Depending on your company, you may get discounts on your cell phone, gym membership, concerts, etc.

Gravy is not a salary substitute.
posted by rhizome at 2:47 PM on April 13, 2013 [2 favorites]

Nthing the advice to ask for more. Even if they say no you can think it over and decide to take the original offer, and quite possibly it will be the easiest 6K/year (or whatever) you ever made.

Looking at market rates for comparable full time positions is probably a better guide to what your salary "should be" than working off your old contractor rate.
posted by mattu at 3:56 PM on April 13, 2013

One financial benefit that hasn't been mentioned is a yearly bonus. At my company this is somewhat tied to performance (individual, work unit, and department) and can be upwards of a month's salary. I can also count on a raise every year. Between these and the insurance and 401k match that would be at least parity, I would think.

At my place of employment, professional development is a big part of being an FTE. That might be true if you're an FTC with an especially progressive manager but its certainly not guaranteed. This isn't necessarily reflected in your paycheck but better believe it can make a big impact on ones career trajectory and ultimate bottom line.
posted by Sublimity at 5:26 PM on April 13, 2013

Gravy is not a salary substitute.

Actually, it is -- in the world we live in. Sure, if all wages were reduced to pay per actual hour worked, they would be transparent, and that would be a better situation for employees. But sadly, in the real world, that is not the case.

So while a parking pass is not a substitute for $30k a year, it MAY WELL BE a substitute for the $2k that an employee would otherwise have to pay out of pocket. (Like many contractors do.)

The only way to compare compensation is concretely; that's what employers do. They pay an agency a rate (always higher than the contractor's rate, obviously) as a better option than taking on W2 headcount. In doing so, they save money.

The idea that an employer would INCREASE base salary over a contractor's hourly rate is not a realistic scenario. I can't say it has never happened in history, but no. Employers reckon compensation carefully. Their spreadsheets are much bigger and better than yours. Of course, you ignore an employer's figure for total compensation -- who cares? -- but you MUST calculate your own total compensation.

And that's a wongcorgi snowflake. E.g, a parking pass could save one corgi $2k a year, and a gym membership could save another $k. But for the corgi who bikes to work and needs no gym, that 'gravy' is worth zero. All benefits must be considered in the same light. There's no way around the hard work of comparing real offers.

All of it, including the gravy, can be monetized. The employers do it. You can do it.
posted by LonnieK at 5:31 PM on April 13, 2013

BTW, the hire offer at issue here must be compared to 2 distinct things:
-- the contractor's rate for doing the same job
-- the prevailing wage for regular employees in the field.
These are entirely different comparisons.
posted by LonnieK at 5:38 PM on April 13, 2013 [1 favorite]

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