contract to hire rates

Workday ofEk52
Aug 2, 2017 5 Comments

To any recruiters or informed folks, I am curious to learn what the general difference in pay is from hourly contractor (through a 3rd party, not independent) to being brought on as a full time employee. I know this varies from company to company, but I'm curious to get some insights. At my last company, when I was converted, my rate was significantly decreased and they justified it with benefits, but is this always the case?

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TOP 5 Comments
  • Credit Karma Parmenides
    i dunno if its a matter of risk as much as it is the argument of benefits, stock etc. I personally think its bullshit, especially if you're contracting through an agency, cause whatever theyre paying you, you can add another 25-40% on top of that. so if youre making 50 an hour, the company is likely paying 80-90 an hour, which in a year is 160-180K. I cant see benefits costing more than 60-80k a year for one person, that seems ridiculous to me. I think the only risk is for FTE they cant just end your employment anytime they want for any reason. in that sense i guess theres risk.
    Aug 2, 2017 0
  • Neal Analytics / Sales shellykam
    Salary range varies but is lower from contracting as there is less risk to the employer as a contractor. So for example if you make the equivalent of 100k a year as a contractor. Salary wise with benefits and options or whatever comes in your full time package - your salary would be around 75-85k plus all the benefits etc which would be about equal to your 100k as a contractor, IMHO
    Aug 2, 2017 2
    • Workday ofEk52
      OP
      But shouldn't they be throwing into the pot all that money they were giving the 3rd party to manage you as a contingent worker? it seems a rip off to me to offer less money and justify it because now you have some pto and perks.
      Aug 2, 2017
    • Neal Analytics / Sales shellykam
      No that's what they pay the agency to find you so those rates are set. I get what you mean. It could be they could get closer to what you make plus all the benefits. Note employer wants you for as cheap as possible and you want the highest possible. If parties meet in the middle or as close as possible to each other's wants it can be a true win. I do say get as much as you can if you are converting over to fte. You only get to negotiate your initial pay or coming on once until the next promo so could be up to 2 years later
      Aug 2, 2017
  • Mirantis hotcheeto
    It's not just benefits and stock the employer is saving on, but it's also tax liability. There's social security, medicare, federal and state unemployment taxes. Another reason could be headcount. Especially if budget is tight for start ups or public companies, employers need to prove to investors that they are able to produce with the least amount of employees.
    Aug 3, 2017 0