RE: Pay rate for contractor with no experience

["McFerren, Sean" <sean -dot- mcferren -at- et -dot- pge -dot- com>]

Correct me if I'm wrong, but I read somewhere that
20%-30% of a permanent employee's compensation is
derived from non-salary benefits (401k matching,
health, dental, etc.). Contractors, both independent
(1099) and W-2, almost never receive these benefits.

You also have to consider that contractors have
down-time. Your calculation of an hourly rate into
an annual salary assumes the contractor will be
employed for 50 weeks out of the year. It's very
unlikely that will be the case.

An employer obtains staffing flexibility when hiring
a contractor. This flexibility is a benefit for which
the employer must pay, since it's a liability for the
contractor.

You're comparing apples to oranges when you simply
annualize a contractors hourly rate, then compare it to
a permanent staff position salary. The contractor isn't
earning an *annual* salary, and doesn't receive another
20%-30% in benefits.

Sean McFerren       

--- Anthony Markatos <tonymar -at- hotmail -dot- com> wrote:
> 
> The last I remember, $40/hr as a 1099 contractor is
> equal to (after considering taxes, paid medicial, 
> paid holiday, etc) about $25/hour as a W-2 
> contractor.  


--- Jill Shindelman wrote:

I think that difference is a little steep.  The
contractor has to pay income taxes in either case, and
very few companies offer fully paid medical insurance.
 As Jo Byrd said, her rate goes up by $5 an hour when
working on a 1099 basis rather than a W-2 basis.

Also, the rates quoted in this discussion of "pay rate
for contractors with no experience" seem a little high
to me after doing the arithmetic.  $20 per hour works
out to about $40,000 annually; $25 per hour to about
$50,000.  Someone with no experience would be doing
really well to land a job at this salary!

Jill Shindelman 


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