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Posted on 9/22/14 at 10:50 pm to eng08
quote:
Don't you pay them more to leave than for anything else?
No. I pay them whatever and taxes are on them. Also no retirement or insurance. Between benefits and payroll taxes an employee costs a hell of a lot more than a contract laborer.
Posted on 9/22/14 at 11:38 pm to Croacka
quote:
Even though indirectly, the F500 company was always paying for his benefits, contract or not
My wife works as a contractor, in a very similar situation as the OP (with 2 middle layers) and she gets no benefits - 401(K)/health insurance/dental. But she makes more than she ever would as a full-time employee. Since I get insurance from my full-time job, we have decided for economic reasons it is better if she stayed on as a contractor. So I am just going by my our own experience. However, there will always be exceptions. No doubt, the OP should do some digging to see what the reservation price of the employer is (channeling my Negotiations class here) and go from there.
Posted on 9/23/14 at 6:13 am to saintforlife1
It really depends on the benefits the direct hire company will pay compared to the contractor.
I work for a contractor now and their markup is $20/hr over my pay. This $20/hr must pay for all my benefits/PTO/medical insurance/401K plus the markup for the contractor to make money.
If the direct hire company has better benefits, then it will raise their cost of the employee versus the contractor.
In my case, the direct hire company has better benefits, so it will raise the cost of the employee if they hire them. That is why many use contractors. That plus they don't have to handle the paperwork, payroll, and screening of the employees.
I work for a contractor now and their markup is $20/hr over my pay. This $20/hr must pay for all my benefits/PTO/medical insurance/401K plus the markup for the contractor to make money.
If the direct hire company has better benefits, then it will raise their cost of the employee versus the contractor.
In my case, the direct hire company has better benefits, so it will raise the cost of the employee if they hire them. That is why many use contractors. That plus they don't have to handle the paperwork, payroll, and screening of the employees.
This post was edited on 9/23/14 at 6:14 am
Posted on 9/23/14 at 9:17 am to saintforlife1
quote:
Let's use the numbers the OP used. He said the end client (the Fortune 500 company) is paying $190K for his postion, which turns out to be: $190,000/(40*52) = ~$91 per hour. But if they hire him full time, do you think they will offer him an annual salary of $190K? I think not. Because they still have to pay for his vacation days, health/dental/life insurance, 401(K) etc now that he is a full-time employee. If they offer him a salary of $190K, all his benefits will be on top of that making him much to expensive to hire as a full-time employee than as a contractor.
I don't believe he wants what the company is paying for him, he just wants more than what his current hourly wage is (which is substantially less than what the company is currently paying for him). As I said, if he were going from contracting to the company to salary, your premise would be correct, but that isn't the case. He's essentially eliminating two middle men, which were raising his cost to the company dramatically (I'd assume).
Posted on 9/23/14 at 10:15 am to Epic Cajun
quote:
I don't believe he wants what the company is paying for him, he just wants more than what his current hourly wage is (which is substantially less than what the company is currently paying for him). As I said, if he were going from contracting to the company to salary, your premise would be correct, but that isn't the case. He's essentially eliminating two middle men, which were raising his cost to the company dramatically (I'd assume).
This. I am eliminating 2 middlemen. I assume total they are doing around a 30 to 45% markup on my hourly. By eliminating those two middlemen, I am curious what is reasonable to ask for since the hiring company wants to know.
I was thinking about padding my current rate by 12% so it's not to scary for the hiring company.
Let's say I make 150k now, market rate is 162k, I'm gonna ask for 170k. That gives me a little wiggle room.
I am assuming markup for these two middlemen is around 30% total. That would put my cost at around $195k for the company paying for me. Even with the typical 20k for benefits plus my increase ask, I am still under what they are paying these two guys at $190k.
This post was edited on 9/23/14 at 10:25 am
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