Job hunting advice, contract over full time?

[Ghost Econ]

So as I've posted in the random thread, I was essentially demoted so the manager's friend could have my job. I hate what I'm doing right now and I'm having work piled on me. I had 27 new claims come in the last 3 days and I literally don't have time to do them and the work I already have. I'm pulling 50+ hours each week. I'll literally be working from about 6 am this morning to about 8 tonight, with a few breaks, like now, to decompress.

I've been searching and had to turn down 3 jobs because the pay ended up not being nearly enough. I just got another offer and the pay is the same as my current job, but it's contract through an agency for 6-12 months. Chances of full hire are slim to none. Pay is the same as my current job, but without a 401k (all other benefits under my wife's job). I only put in 3% currently due to a company match, but it won't vest for about 3 more years and I know I can't take it if I somehow survived that long.

The offer is 40 hours guaranteed at least 6 months, no more no less. Obviously no vacation days. It's tangential to what I would ideally like to do, but the field is competitive so I'm not sure if have a future in that position. My current field has potential for advancement if I got a job somewhere else, but companies so far have treated me as too senior for entry level but too entry level for senior positions. But again, I don't really like what I'm doing, but I'm sure some of that is soured by where I am.

I'm at an age right now where a 401k is pretty important, and I could always do a Roth, but it's tough to determine if the few thousand dollars I'd lose (holidays, post-tax IRA) are worth the likely mental health benefits I'd gain from not being as stressed from work. Plus at best the job hunt is paused or slowed for a few months.

What say you, just looking for some thoughts from people who have had similar decisions.

[Passacaglia]

Originally Posted by Ghost Econ

I only put in 3% currently due to a company match, but it won't vest for about 3 more years and I know I can't take it if I somehow survived that long.

How long have you been with the company? Maybe I just made a poor assumption, but I thought you had been there for a long time. I feel like 2 years to vest is the norm now, so hearing it won't vest for 3 years is surprising, though I'm sure there's still many places where it's 5.

Keep in mind that most likely it's just the employer's contribution that vests, the rest you should be able to keep.

What kind of work do you do? If it's insurance (just guessing since you mentioned claims), you should hit me up.

[Ghost Econ]

Yeah, insurance currently. They didn't offer a 401k until partway through my 2nd year, just finished my 3rd year there. I don't mind working hard and proving myself, but the volume has just been insane of late and I'm at the end of my rope. Switched from a legal job to claims 3 years ago because I got as far as I could in that job for shit pay. I can't tell if I don't like claims or don't like claims where I am. And I'd like to get some certifications, but they're not overly supportive here, but I also don't have time to do it with the workload.

[Swaggs]

Probably goes without saying, but with contract work (presumably 1099), you will have to pay your side of income tax and also the employer side - so you would need to budget that in with pay. You will essentially be paying 2x the state/federal income tax and FICA tax (SS and Medicare).

It is not particularly hard to do if you are relatively budget friendly and organized, but worth acknowledging and you may want to hire an accountant, if you don't already use one. You can also write things off within reason and where applicable - like mileage, laptops, cell phones, car expenses, trainings or continuing education, etc.

You could also form an LLC and operate through it and set up your own 401K (with higher individual limits, since you can contribute from both the employee and employer side).

Also, hugely important is healthcare insurance. When you are doing contract work as a 1099, you are almost always on your own for health insurance and it can be quite a significant expense because you are again paying the employee and employer side.

All of this is to say that, if you are currently in a W2 job with benefits like health insurance, retirement, and vacation time and they are offering you a similar amount to what you are making now, you will be taking home less money as a contractor unless you supplement it with other jobs. And, if this company expects 40 hours, aka full-time, out of you, they are likely just offering contract work so they don't have to deal with all of the payroll, overhead, and benefits of having employees while treating you like an employee.

[flere-imsaho]

If the contract pay is the same as the full-time pay then once it nets out (taxes, health insurance, retirement savings) the take-home pay will be a lot less.

Mental health is a thing, though. I'd keep looking if you can, but I don't know much about your field as to how realistic it is to find another job.

[Ghost Econ]

Sorry, meant to say the contact is W2 through the agency.

[bryce]

Everyone's situation is different but here is my take:

I'm 48, married, two young kids (9 and 6). I'm a CPA in corporate accounting. Started with one of the big public firms in 2000, then bounced around in corporate departments (homebuilder, hedge fund, insurance) for a few years before going into consulting in 2012. Got laid off in 2021 and went the gig route at that point.

I'm still in consulting, so the same industry I was in, just on my own now instead of with a firm. I formed my own LLC last year to save on taxes. I opened up a SEP-IRA this year to throw money into for retirement. I'm wrapping up year four on my own, and I can't imagine ever working full time for a company again.

The Pros:
- I've never enjoyed my career, it's a means to an end, so I can't say I actually like anything about work, but I do derive some job satisfaction out of helping clients and making things better. So I still get to do that.

- Meanwhile I get to avoid doing all the crap I detested about corporate america - corporate politics, staff turnover, performance management, business development - all that shit I had to do that had nothing to do with actually doing my job. Now I can just do my job.

- Oh, and I get paid anywhere from 5%-40% more (varies by year as I'm now an hourly contractor). But my rate is much higher than it was when I was salaried (if it was converted). Which means...

- I get to take up to four months off every year and still come out ahead, which works out because it usually takes a month or two to land a new gig once one ends.

- Overall peace of mind. No longer do I live with a gun to the back of my head at all hours of the day out of fear of being fired. It is 1000% easier to find a new contract gig than a new full time job for whatever reason.

The Cons (that dupe a lot of what Swaggs said):

- The "unknown" factor just mentioned above as a pro can also be unsettling to some, but I'm used to it, and my rate adjusts for it.

- I don't have easy access to insurance. It's fucked up how tied to our jobs health insurance is in this country, but for that matter my wife's company offers such shitty insurance that we have to go on the open market for our family anyway, so there really is no difference other than my previous insurance at a firm was actually decent for our entire family.

- No year end bonus if that's your thing. I always hated that carrot that prevented you from leaving a job after six months every year anyway, though. Would much rather have had it as part of my salary all year.

- You need to be disciplined and set aside money to pay the LLC taxes (which I do only once a year). I maintain a detailed P&L forecast, and then bring in my tax guy in December to firm it up.

- Keeping meticulous timesheet records can be a bit of a hassle.

- Up front costs to set up the LLC (but legalzoom is great and pretty affordable really), and then ongoing annual costs for my tax prep guy, and my ADP payroll expense.

Good luck with whatever you decide. I'll say this: my first firm (Arthur Andersen) went caput, and leaving public accounting turned out so much better for me. I got laid off from insurance, which led me into consulting, which turned out so much better for me. I got laid off from that consulting firm, which led me to going solo, which has turned out so much better for me...