Is It Better To Be A Full-Time Employee Or Contractor (Freelancer)?

The freedom of being a contractor is enticing

Are you deciding between being a full-time employee or contractor (freelancer)? If so, I've done both and want to share with you my perspectives.

According to a survey conducted by independent research firm Edelman Berland and commissioned by the Freelancers Union, more than one in three workers – 53 million Americans – is now freelancing.

Today, more than 40% of the American workforce, or 60 million people, will be freelancers, contractors and temp workers, according to a study done by Intuit.

Chances are high that you are currently a contractor or have thought about giving up your full-time job to be a contractor.

When I left Corporate America in the Spring of 2012, I thought I'd never return. But in November 2013, I received an opportunity to contract for 25 hours a week. I did freelance for three startups for almost three years until I decided to focus more on Financial Samurai.

The X Factor I did not anticipate about building a large personal finance blog is that other companies would be interested in hiring me for my online content knowledge and services.

In this post, I'd like to discuss the differences between a full-time employee and a contractor. Some of you have told me that you never want to be a contractor because you don't want to be treated poorly; like an outsider.

While it's true that as a contractor, you might not be treated as one of the team, there are plenty of other benefits that make the decision to contract or go full-time surprisingly difficult.


Before we talk about the positives of contracting, let's talk about the negatives.

1) You've got to make more as a contractor to stay in place.

Based on my analysis, you've got to make 60% – 100% more as a contractor to replicate the total compensation of a full-time salary. Contractors seldom get any of the important benefits, including: paid time off, health care, tuition reimbursement, ongoing educational training, short-term disability, long-term disability, life insurance, worker's compensation and sabbatical time.

2) You aren't treated with the same respect.

When you're a contractor, many people will treat you as a temporary hired gun. You don't have much authority as a full-time worker. If they think you're a temporary worker, there's a tendency for others not to bother trying to get to know you.

You might not get the invite to the team lunch, and there's probably little chance you'll be able to attend the annual holiday party if you're truly a temporary contractor. As a contractor, there are a lot of little slights that you would not experience, whether done on purpose or not, if you were a full-time employee.

3) You won't feel as safe as a full-time employee. 

Even though there are plenty of examples of long-term contract work, the default setting is for contracting work to be temporary. Given the expectations, you've got to always be on your toes to do good work in order to get your contract renewed.

At my first contractor job, my Statement of Work got renewed every three months. It was a little unsettling to know that my contracting income might end, even though I didn't need the money. When I was at my previous job, I seldom felt at risk, except for a couple years during the financial crisis.

4) It's impossible to climb the corporate ladder.

If you have aspirations to get a promotion, you're never going to get one as a contractor. Only the most committed employees get coveted promotions. Whether by choice or circumstance, being a contractor means you or the company are not willing to fully commit. Furthermore, it's more likely that you might be up for a pay cut.

The more you build out a project, the less the company will need you. For example, part of my duties for one company was to build out a team of writers. After I built out the team, my useful life just decreased by maybe 30%. Someone has to still manage the team, be the editor, drive the creative process, and work the calendar. But all the same, the better a contractor does, the less s/he will be needed.

5) Perhaps less motivation.

If you are a super go-getter, like I was the first 10 years of my career, it's hard to feel the same amount of motivation contracting, unless your ultimate goal is to try and gain full-time employment.

My motivation is to learn, help, and get to understand new people and businesses in Silicon Valley. It's also rare for contractors to get any equity. Equity is what propels full-time employees to really go the extra mile.


Now that we've got the detriments of being a contractor out of the way, let's talk about the benefits.

1) A tremendous amount of freedom.

Having the freedom to set your own schedule, collaborate with clients of your choosing, and be able to work remotely are the best benefits of being a contractor. When you're a full-time employee, you're expected to be in the office and show face time, even though your presence might not be needed.

Even if there are other awesome companies that aren't competitors, you still aren't allowed to work for any other firm. As a contractor, you're hired mainly on deliverables. So long as you deliver, it matters less where you are. It's great to be able to work with a couple different types of companies at once.

2) Potentially less stress.

You can't be a big kahuna as a contractor. There's no such thing as a contractor CFO, CMO, CEO, or COO. Contracting work focuses more on much more specific duties that can be accomplished with effort and skill. A contractor is not responsible for the overall strategy of a business unit or department.

As the CMO of a business, you better fill the top of the funnel or else your job will be at risk. There're less moving parts for a contractor to manage. Contractors are usually paid for a set number of hours.

Once you've completed your hours, you have no obligation to work more hours. When I was a full-time employee, I often worked 60-70 hours a week to the benefit of the company. I felt way more stressed as a result.

3) You might be able to make a lot more money.

Despite having to make 60%+ more money to replicate a day job total compensation package, you can make a lot more money contracting if you are willing to demonstrate your value proposition, work longer, and work more efficiently.

In America, compensation is generally based around a standard 40 hour workweek. But there are 168 hours in a week. If you're willing to work 60 hours a week, you'll make 50% more than someone earning the same rate based on a 40-hour workweek.

A 40 hour work week is totally arbitrary, and I still don't understand how there can be people who only work 40 hours a week or less and complain why they can't get ahead. Nobody successful I know works less than 40 hours a week.

4) The ability to hedge your career and finances.

I never knew it was kosher to contract for other companies until one client told me directly I could. Although I'm fortunate to be able to work with clients that I strongly believe will succeed, there may come a time when one client might fail.

If you're a full-time employee, you're essentially betting your future on the fate of one company. Imagine if that one company was Enron or Lehman Brothers? Yikes! You never fully know how your sector and company will do. Company life cycles are not forever.

When I was working at an investment bank, in order to diversify, I invested the large majority of my savings in anything other than financial companies.

5) The ability to work on personal projects not governed by an employer.

Many companies require you to disclose all your outside interests in order to make sure there are no conflicts of interest or potential legal hazards.

For example, if you're working at Google, you probably can't work on creating a competing search engine. Furthermore, all the stuff you come up with at your workplace might be owned by your employer. 

Arthur Fry, the inventor of the Post-it note, probably would have made a lot more money if he had not been working for 3M. Make sure you do your moonlighting outside of office hours!


Go the full-time employee route if:

* You're working for an amazing company you believe in that provides opportunities to grow.

* You enjoy more stability, even though no full-time job is safe anymore.

* You have a lot of dependents and really cherish your company's benefits.

* You don't have enough belief and skill to find clients on your own who will pay you a market rate.

* You want to live a more comfortable life, hiding out in a bigger organization which can't readily pinpoint your deficiencies.

I know plenty of people in middle management who never want to leave because they don't have to do much work (they just tell other people what to do), have great benefits, get OK pay, and just want to cruise. They are bored out of their minds, but because life is too comfortable, they just sit put.

Go the contracting route if:

* You tremendously value free-time over money.

* You strongly believe in your skills and abilities to provide value to your clients. There is nowhere to hide when you're a solopreneur.

* You're more of a risk-taker who thrives on constant new challenges.

* You have an “ace in the hole” that helps make you a great contractor e.g., relationships with powerful people, a company that has already gone where your client wants to go, a website you've built on your own.

* You've gone as far as you can go in a full-time roll.

* You're bored out of your mind!

* You're interested in testing new sectors/companies without fully committing. Too many people join a company they think is great, only to end up regretting their decision and leaving within a couple years.

* You've got an entrepreneurial spirit or an actual business that a full-time job would not allow.

* You've read, How To Become A Rockstar Freelancer.

How You Need To Make As A Contractor To Replicate Your Full-Time Job Income

Before you decide to become a contractor, please see the chart below. Based on my estimates, you need to earn 30% – 60% more as a contractor to earn the same amount of money from your full-time job. The benefits of a full-time job are plenty, so don't take it for granted!

How You Need To Make As A Contractor To Replicate Your Full-Time Job Income


With the creation of Universal Healthcare, fewer people should feel tethered to a job they dislike due to their benefits. Healthcare cost is still outrageously expensive here in the United States if you don't fall in the income levels that receive a subsidy. But at least everybody can affordably get disaster health insurance. A gold plan for four will cost me $2,250 a month, for example.

There are plenty of opportunities for contractors to earn their way into a full-time role if they are so inclined. Plenty of companies want to hire great contractors full-time in order to lock down a maximum amount of their time.

The irony is that a rockstar contractor will probably never want to be locked down because s/he is making way more than a full-time employee, with a lot more freedom. For a three month period when I had three clients, I was making 25% more than my base salary as a Director at an investment bank, for example.

I never thought I'd be a contractor. After building my website into sustainable income generating vehicles, I got a little bored and longed for more inter-human activity again.

Contracting is a wonderful experience that has synergistically helped my online business because I've been able to thoroughly understand the products I use and promote online.

You don't have to be afraid of transitioning into a contracting role. If you've got a skill-set in high demand, there are plenty of opportunities for you to make a lot more money than in a day job with more freedom to boot. The emergence of the sharing economy has helped popularize contracting into a viable way of life.

A Conversation With A Freelancer / Contractor Who Makes Over $10,000+/month

Learn more about freelancing, contracting with my conversation with Eric Rosenberg, who makes over $100,000 a month writing, freelance designing, and podcasting hosting.

Recommendation If You Want To Quit Your Job

If you want to leave a job you no longer enjoy, I recommend you negotiate a severance instead of quit. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.

When you get laid off, you're also eligible for up to roughly 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.

Conversely, if you quit your job you get nothing. Check out How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.

It's the only book that teaches you how to negotiate a severance. In addition, it was recently updated and expanded thanks to tremendous reader feedback and successful case studies. Use the code “saveten” to save $10

Add to Cart

Start your own business/website

If you feel you're not getting paid what you're worth and want to boost your income, start your own business online on the side! It used to cost a fortune and a lot of employees to start your business. Now you can start it for next to nothing with a hosting company like Bluehost for under $3/month and they'll give you a free domain for a year to boot.

Brand yourself online, connect with like-minded people, find new consulting gigs, and potentially make a good amount of income online one day by selling your product or recommending other great products. Not a day goes by where I'm not thankful for starting Financial Samurai in 2009.

Here's my step-by-step guide to for how to start your own website like mine in under 30 minutes.

Blogging For A Living Income Example: $300,000+
A real income statement example from a blogger. Look at all the income possibilities. CLICK the graph to learn how to start your own site in under 15 minutes.

After over nine years of doing random contractor work here and there in retirement, I've got to say freelancing is the way to go. My website has been a steady lead generator for freelance contractor if I want it. Sometimes it's too much, but I'd rather have more than less.

For more nuanced personal finance content, join 65,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience. 

55 thoughts on “Is It Better To Be A Full-Time Employee Or Contractor (Freelancer)?”

  1. Fractioncalc

    I advise all college students or recent college grads to get into the tech sector, in spite of having a career in real estate and being passionate about all things related to real estate.

    In today’s market, the tech sector presents millennials with better entry level job prospects and high starting salaries, but, most important, being in tech provides young people with many more opportunities to be an entrepreneur or work for a startup and therefore benefit financially from rapid growth of the company you own or work for.

    The only barrier to entry to building wealth in real estate is money. Real estate is not rocket science, it simply takes money to buy property and bare minimum common sense to manage it. But, no one will lend to you or invest in your deals unless your interests are aligned with the interests of your capital sources which simply means having a significant amount of one’s own capital invested and at risk as well. Also, working for a real estate company probably pays better when compared to average incomes in a given region, but its very rarely the case that the owner of that company is going to compensate you with a percentage of ownership of a property that they purchased with their money.

    So, all career paths being equal, I would advise that you become a software developer and make a lot of money that one can than you to purchase property and than start your second career as a real estate investor or developer.

  2. I recently left Corporate America due to boredom and politics. As a result I decided to try contract work. Your article was OUTSTANDING!!! It really broke down the negatives and positives in an extremely tangible way. It really comes down to what you can tolerate. And I would rather do the work in a defined manner as opposed to spinning out in “strategizing” meetings as a full timer. So I am trying contractor work and enjoying not getting emails about work I completed 5 years ago. It is a fresh start with no baggage for a limited period of time. Also – What I love about our world is that we have choices. Thank you so much for showing us both options so descriptively in your article!!! AWESOME!

  3. software contractor

    I’m a senior mid level software engineer, and haven’t had experience working as a contractor. But I’m considering as it looks like more employment is available this way. However with a child on board, FTE stability does seem better for me. Above the claim is that I should expect a 60-100% greater salary working as a contractor. However since software developers make pretty good money, I think this works out to 80-100$ an hour. Haven’t seen any offers yet, but I expect the contract roles are going to try to pay me in line with a non FTE salary. maybe 20% more.

    Any reference on how the 60-100% figure was made?Any other software developers out there? Any advice on negotiating the contractor arrangement?

  4. Thanks for this article and for all the comments. I’ve read them all. I’ve been contracting for the last 7 months with a firm and have been working 2 days a week. I wanted to up it to 3 and we had a meeting today where I let them know what I wanted to do. They were totally receptive and offered that I could be an employee for those three days a week so that I could get health insurance through them. I didn’t give them an answer yet, we agreed I should have time to think about it. We also didn’t get into any specifics, but they did say they would adjust my rate to cover the cost of the insurance. This is fine, but I also wonder about losing the freedoms I have had as a contractor. Such as taking time off whenever I want, working pretty flexible hours on the days I do work, and making the contractors rate. I suppose all these things are negotiable and they’ve said I am free to work with whatever other clients I want. I can see that it wouldn’t be any benefit to receive health insurance at the end of the year, but it could be a good thing to start at the beginning of the year. I’m just feeling really torn about the decision between contracting and becoming an employee. Three days a week is great for me, what I’ve said I wanted for the last two years and I think I’m in a good place to negotiate. I just want to be sure I’m aware of what I’m negotiating and wondering which option would hold the best earning potential. Any advice or feedback is greatly appreciated!

  5. This is a really helpful article, thanks!

    I have been FT employed as a scientist with the same government dept for >8years now and I would love to go freelance, mainly for more freedom. My concern is that I have become fairly specialized within a scientific field where most work is done by academics and government researchers, so I can’t see how there would be contract positions available to me if I carried on with the same type of work.

    That leads me to think I might have to shift to a slightly different field. I have qualifications and work experience in Engineering and Physics, writing, editing and line management experience, so I feel I have useful skills. As mentioned above by another scientist, maybe it would be in reviewing or analyzing other people’s scientific work.

    I wonder if you can advise on any way for me to identify which type of skills I (or other scientists) should concentrate on, to be more attractive as a contractor. I’m thinking online tools or skills matching? Is it worth me talking to a recruitment agent for ideas?


  6. Sam,
    Very good article! I have saved this in my To-DO list and read twice to Go-over twice understand each & every bits of it as I am currently in that boat. I think “Traveling, Flexibility” to be there at work any time,Location ” is important as a consultant/Contractor. With full-time you can still make money & have the best of both the worlds to some extent by working Part-time as a Consultant or other roles. as long as your immigration status allows that(for H-1B people working with only Employer is the restrictive clause!)

    1. Hi Suresh,

      Thanks. Please share the article!

      I’m currently in Cambodia now, crossing off a bucket list item of seeing Angkor Wat and the other temples while working as well. It is AWESOME to be able to do contractor working while traveling. The freedom and joy more than make up for lost income.


  7. Nice article listing some pros and cons of both worlds. At present, I am working at a corporate. I am lucky that I enjoy my work and am able to learn a lot (I switched company and role recently and don’t regret at all). I am leveraging now my old skills to learn some new marketing and communications skills. Lets see where it can take me.

    Next to that, It is my 5-10 year goal to become a freelancer, having my own business that can work for clients. Not sure yet how to do this. There are some options like reaching out to some others that do similar work.

    I see one condition: I want to be mortgage free. This way, I need significantly less money every month to make and meets.

  8. I think everyone want to become a freelancer, but of course if one can make more money than the salaried job. Getting financially free early is not at all easy.

  9. I’ve been switch hitting for 30 years. Contractor status leads to higher requirements for idle capital aka emergency funds and leads to reduced risk taking in investing, unless you’re more confident than I. This is partly a function of dependents. When in frequent transition phases, you will prudentlyrics stay out of the market. Instability leads to lower outcomes unless you just can’t tell the difference between being lucky and being good. In any period, there can be an advantage but managing uncertainty is a bear.

  10. Very good article.
    For me the answer is both !!
    I have worked as a contractor for more than 10 years until recently where I have accepted a full time position, with all kinds of VERY interesting benefits. But I have been able to still continue to work as a contractor on a part time position.

    For how long I will be able to do that ? I hope as long as possible :) $$

  11. I was a contractor from 2007 – 2011. I enjoyed it tremendously, except for the excessive travelling. I added working for 3 large companies, helping with their IT infrastructure, to my portfolio. Then work dried up. There wasn’t a place for my services, so I had to go back to the corporate environment.

    At that point I changed careers, becoming a MS Business Consultant, focusing on customer relationships. The work was good and rewarding, but I’ve always had a problem with making other people money, when I did the majority of the work (the perils of working for someone else). I’m happy to say that I’ve started my own consulting firm and will be contracting my consulting services and business analysis skills. I will spend more quality time with my wife, and have the ability to spend time on other financial/spiritual pursuits.

    The grass is always greener on the other side you’re on. You just have to determine which side will benefit you more.

  12. I’m what someone else termed a “contractor employee” aka a consultant. I’ve been with the same company for a long time. Immediate goals would be to reach “accredited” status in the next 2 to 4 years. If I ever do decide to leave my current company I think I’d want to get out of contracting or consulting all together. I probably would want to try and create something great and just make that my life’s work.

  13. On point #2 under the benefits of being a contractor:

    “no such thing as a contractor CFO, CMO, CEO, or COO.”

    I don’t know if you were referencing all C level positions, but from my experience that is absolutely not true. I know 2 people in temporary CIO/CTO gigs right now, one in Phoenix and the other on the east coast. Each of them are on a 6-month contract and one has been renewed as the search continues.

    Finding the right C level people can be a laborious task, so there are times that companies may temporarily appoint someone they trust to keep things steady, especially in the technical world.

  14. Sustaining the good

    This is a great comparison. As a professional consultant, I have to keep in mind the change in clients and type of work I would get (different, smaller, lower level) if I ever decided to hang my own shingle. Sometimes people can underestimate the value of organizational affiliation.

  15. Thanks for the article. Agree with the poster above who added SEP IRA to the benefits of freelancing. On the flip side, independent contractors need to pay their own FICA, I believe–not sure if you’ve baked that into your analysis.

    Glad the switch has worked for you! It’s not an easy one.

      1. Thanks for the link. That’s a good article. Unfortunately, I don’t have a side business for which I could set up a Solo 401(k), but maybe something like that will pop up in the future. Contributing more than $18,000 to my 401(k) would be nice, but then again, how much do you really need in a pre-tax account? Contributing $100,000 seems a tad excessive because you can’t use it until you’re 55/59.5. Maybe that’s just me, though!

  16. You failed to mention that you might want to work for a company if you are focused in the technical aspect of your job or have a high degree of specialization. A top physicist isn’t likely to be working on a high profile project as an independent contractor. They are likely to be hired, either via a contracting company or by the employer and in either case you are an employee even if you end up being a “contractor” employee. The point is you don’t have to worry about details of paying taxes, payroll, tracking hours, negotiating pay, etc. You show up and dive into work on the project.

    Most “technical” freelancers I know who work independently or with a small group of under five people typically provide review, oversight, and analysis work, but rarely do the design, build, or integration work because those kinds of efforts often require more than a one or two person effort.

  17. I just picked up my first work as a freelance writer several months ago and really enjoy it. It’s definitely different writing for others than for your own blog. I agree with Even Steven when he says financial stability is a big issue. Because we have no debt and our budget expenses are covered (and then some) I can afford to be selective in the jobs I select. I don’t have to scrape the bottom of the barrel jobs just to make ends meet.

  18. Adam @

    As someone in the energy industry in Houston, I was always a bit jealous of some of the pay packages our contractors get. However, with the most recent downturn, I’ve stopped feeling that way.

    While you may see headlines about layoffs of various numbers by the majors, what they don’t publish is the first thing they do is cut most or all of their contractors, substantially reducing their workforce immediately, without the mess and disclosure of public layoffs, severance packages, etc…

    So at least for the moment, I’m quite happy to be a full-time employee.

        1. Maybe! I remember when companies were firing everybody in 2009-2010. The people who were left were thankful, but overworked and pissed off b/c they had to do work of 2 or 3 people with same or less pay.

  19. If I no longer needed the security/stability as a full time employee and preferred to work on a limited term basis, contract work would definitely work for me.

    I can imagine nothing better than working for 3-9 months each year and then taking a very long and extended period of time off. I might even get excited about returning to work. :)

  20. I have struggled quite a bit with this question lately, but not as going to be a contractor full-time, but owning my own business and freelancing for many clients.

    I do this on the side right now, but my income online is still only about 30% of my total take-home income. To walk away from my full-time job, I would need to make the same plus more for benefits, as you point out.

    For the time being, I’m working hard all day, and working hard when I get home. All of the extra income has gone to savings and investments.

  21. I think financial stability is a major factor for those thinking about making the jump from full-time to contract/self-employed. If you have a mortgage, car payment, student loan, etc you are more likely to stay with full-time work. Less debt and less responsibility(no dependents) makes the transition or leap an easier prospect. With all that being said, many of the people who are successful are because of fear and the motivator to overcome the fear.

    I think contractor and self-employment/starting your own business could have different benefits and drawbacks.

    1. I completely agree. I love being a contractor at this point because of the flexibility. In my previous life, I could never take more than a few days off in a row and even then, it was awful to come back to work and have to catch up. Now, I’m taking almost a month off later this summer for travel, and it’s amazing to be able to do that. However, it would have never worked in the beginning because I had too much debt and would have never been able to take the chance of having variable income.

  22. Good article, Sam. There are a few more pros and cons to consider. A major negative that many people miss is the fact you do not get workers compensation as a contractor. This can be a big concern for many depending on the industry you are in. On the positive side, you get to write off a lot more expenses and are able to contribute much larger amounts of tax deferred income to a SEP IRA which pays of nicely over time. I will say that 20-30% seems a bit light on how much more you need to make (even with write offs). I would say its closer to 33-38%. I believe the average burdens and benefits markup for major companies is around 34% which includes maybe 0.5% markup.

      1. Sam,

        I have been contracting for a couple years and truly love it (actually the co-owner of a consulting firm). The range of how much a contractor needs to make above a W2 varies heavily on industry as you know. For our industry, there is a lot of travel/expenses on the front end of trying to win work, and we also can’t get away with not having a fairly decent office, communications infrastructure, international phone plans, expensive software etc. Like I said, this is very industry specific, but worth noting it can vary greatly.

    1. I think how much more you need to make to even things out as a contractor depends on the specifics of your previous job, as well as how generous your benefits package was. When I left my full-time job to work as a contractor several years ago, they had just ended our profit-sharing agreement and downgraded our health insurance.

      I didn’t want away from any amazing benefits to speak of, aside from four weeks of paid vacation. That’s easy to fix, though. As a self-employed person, I just work “ahead” and take as much vacation as I want. Meanwhile, I spent a lot less on business clothing and other work-related expenses now. In my situation, I definitely don’t feel as if I need to earn 30-40% more to meet my old salary.

    1. Step one is to probably tailor your resume and build a website in this day and age. Everybody should have some online footprint b/c Googling someone is the first thing someone will do before hiring.

      Second is to go to functions and network with people in the industry in which you’d like to work.

      Third is to figure out your worth and prove it.

  23. I value standing up for what’s morally right and calling your own shots way more over benefits. I have a hard time working for somebody that I know doesn’t respect other people. As you mentioned in a previous article, you care less about what other people think when you are financially independent. If I called out a boss for treating other employees with disrespect (I’ve worked many jobs like this), then I would have a target on my back. Never again do I want to be in a position where I can’t stand up for other people for fear of losing my paycheck.

    1. Ah yes, if you hate your job and don’t believe in your bosses and the company culture, then it’s probably time to go. There’s nothing more satisfying than doing work you believe in and seeing results.

  24. What a timely article! I recently left my job at a large corporation in the midwest after a decade and a half (via a voluntary separation package). While it was a good company to work for, it was the only company I had ever worked for (post-undergrad) and I was ready for some change. I’m now exploring all employment options including full time work (where my skill set would probably place me at the VP of Engineering level at a small company), starting my own business, or consulting.

    At this point, I’m leaning towards starting my own company, while consulting on the side. It probably won’t make me the most amount of money short-term, but it has the possibility of increasing my net worth the most long-term if I own something. Plus, if nothing else, it will make for a couple of interesting years!

    1. Good for you! I would definitely suggest going the route of owning your own business. My one suggestion if you are interested in increasing your net worth is think long and hard about what the “end” looks like…meaning if you are building a business to exit or sell one day, do your best to make a company that does indeed have value if you are not there playing quarterback.

    2. Congrats! Gotta love separation packages when you don’t want to work for the company no more.

      I’d set up a S-Corp, do some consulting, and see where the road takes you. Always remember to try and solve a problem. Good luck!

  25. Wow, so far only 38% vote for contracting. I’m surprised given the current market conditions and technology we have available to us. I’ve been a self employed business owner for 8 years, and was an I.T. contractor before that. One other pitfall that wasn’t mentioned is that ‘birds of a feather flock together.’ In your own industry, it’s likely everybody knows or has heard of each other. As a contractor it’s important you know your role, and know it well. A few bad short term contracts and a reputation can be ripped apart pretty quickly and work will become harder to find. As you mentioned, Sam, in a large organisation an employee can hide.

    I love making money, but I love my freedom equally. As a business owner, whilst its not perfect, and often far more stressful, I still feel like I’m having my cake and eating it! enough metaphors?

    1. The contracting vote is up to 44% now. It’s pretty interesting to see ALMOST a 50/50 split.

      I bet the tilt towards contracting will happen in 5 years if we do this poll again.

  26. i have a different perspective on the word “contractor”. My whole career, until recently was as a contractor for the US government. However, I was a full time employee of businesses that had contracted with the Air Force or NASA. We had some flexibility (comp time, for example) but not the work-any-hours-you-want kind. We got paid fairly, but not better than the government employees necessarily. We had the opportunity to climb the corporate ladder and if NASA liked you well enough, they hired you out from your company – and your company wore it like a badge of honor.

    I will say that I got paid better, had better benefits, and more flexibility than I do now, in a completely private company.

    1. Man, I had an internship with a government agency a few years ago. All the cool cars were driven by the contractors. The government employees were always complaining about how much more they got paid!

    2. Some of the richest communities in America all reside around the Capital. Langley, Falls Church, Chevy Chase, etc. There’s a reason why they are so rich. Taxpayer-provide government contracts!

  27. Nice article! While i hate the fulltime job’s politics and slow progress, promotion & raise, I wouldn’t want to take the unstable route of being a contractor.

    I took a middle path myself; act like a contractor but within a fulltime framework. I would market myself and make jumps every 1-2 years. Get a nice raise & promotion through each jump and still don’t have to worry about the fallouts of being a subcontractor.

    Once i left college and hit the job market, it was evident to me that companies have a much bigger incentive pool to acquire new talent rather than retain such talent within the company.

    1. “companies have a much bigger incentive pool to acquire new talent rather than retain such talent within the company.”

      Why is that?

      1. I feel it is part of their marketing budget! companies showoff by hiring new talent. I remember Cisco and Nortel, back in the late 90s, would brag internally about recruiting talent from the competition.

        1. Adam @

          I certainly don’t see that in the oil industry. Most of the big boys make great efforts to develop and keep people. The cost of recruiting and training is a big drain on resources.

    2. I think that’s a smart move “acting like a contractor” at a full-time job.

      The perception of stability in a full-time job is curious because I don’t think FT jobs are nearly as stable as they once were.

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