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I am returning to contract programming after a long time. Forgive my ignorance in this matter.
Trying to Google the answer really confused me further.
Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary?
For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year.
I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too.
Could one of the contractor folks point me in the right direction? I would really appreciate the input.
Sincerely
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There is no rule of thumb answer to this question. You need to work that out for yourself. In my decades of contracting I have been asked variations of this question a number of times. I don't know about you specifically but it usually indicates the questioner is not cut out for contracting.
Peter Wasser
"The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts." - Bertrand Russell
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pwasser wrote: I don't know about you specifically but it usually indicates the questioner is not cut out for contracting.
Or is new to it, and smart enough to ask questions in a place where there are thousands of people with the knowledge to answer them.
I wanna be a eunuchs developer! Pass me a bread knife!
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Agreed. Quite derogatory.
Same job, different way of getting paid. Although one tends to move around a bit more.
Regards,
Rob Philpott.
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Rude.
I would bet you were lucky enough to find a special niche, decades ago.
For a lot of us, it's hard to be a marketer, salesperson and expert software developer all at the same time. But we try.
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How is stating a fact being rude?
No I never found that niche and I saw many enter the contracting world and leave again for secure jobs.
I can speak as someone who worked their whole working life without that secure job. You have touched on some of the issues a contractor needs to address but as I said in my reply it is pretty easy to pick those who are cut out for it.
Peter Wasser
"The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts." - Bertrand Russell
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This is not my original work, I can't remember which CPian gave it to me, but:
Quote: Start with the number of hours you work in a year -
2080 hours in a year
1960 working hours in a year (10 federal holidays)
1920 working hours if you take two weeks vacation
For multi-year contract (3+ assume no risk) for all others risk = 1 month + 40 hours for every month under 6 months. (Time to look)
1760 working hours available for 6 month contract
Find annual salary you want:
$50k
Find cost of health insurance, etc
$5k (just for giggles)
$55k/1760 = $31.25
Now that is gross, so you need to take into account taxes, etc, etc, etc
veni bibi saltavi
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Nagy Vilmos wrote: 2080 hours in a year
1960 working hours in a year (10 federal holidays)
1920 working hours if you take two weeks vacation
So 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week
And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr week. 
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cut and paste are hard!
veni bibi saltavi
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P0mpey3 wrote: So 10 days federal holiday equals = -120 hrs - Which suggests a 60 hr week
And then 2 week vacation (10 days) = -40 hrs - Which suggests a 20 hr
week.
You math is seriously whacked.
Holidays: 10 * 8 = 80, NOT 120.
Vacation: 2 weeks of vacation is 10 days. Again 10 * 8 = 80.
Most companies (in the US) allow 15 days of "PTO" (personal time off) to use as you wish (vacation and sick time). This means the "Vacation" category should actually be 15 * 8 (which is 120 hours).
so when you take the 2080 value, and subtract 200 hours, you end up with a total of 1880 actual work hours, if the company you work for honors all federal holidays, and most companies only have 8 holidays (for instance, MLK day is generally not recognized as a holiday by civilian companies).
Of course none of this matters - at all.
".45 ACP - because shooting twice is just silly" - JSOP, 2010
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You can never have too much ammo - unless you're swimming, or on fire. - JSOP, 2010
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When you pry the gun from my cold dead hands, be careful - the barrel will be very hot. - JSOP, 2013
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John Simmons / outlaw programmer wrote: You math is seriously whacked.
Not my Maths, Nagys. I was getting my figures from his and pointing out that his subtractions were wrong.
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Sounds like a cut down version of what @Ennis-Ray-Lynch-Jr [^] used to recommend whenever the question was asked. At one point he also had a calculator to help in factoring in how much more you should ask to cover the inevitable downtime between contracts; but a quick search failed to find it.
Did you ever see history portrayed as an old man with a wise brow and pulseless heart, waging all things in the balance of reason?
Is not rather the genius of history like an eternal, imploring maiden, full of fire, with a burning heart and flaming soul, humanly warm and humanly beautiful?
--Zachris Topelius
Training a telescope on one’s own belly button will only reveal lint. You like that? You go right on staring at it. I prefer looking at galaxies.
-- Sarah Hoyt
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It was Ennis and I apologise for forgetting and giving credit.
veni bibi saltavi
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The rule of thumb we follow in the states is pretty much 2xPer hour = annual salary. Sooo,
$90 per hour is about 180k per year.
so that is a great deal more than 115k.
That is pretty much it.
To err is human to really mess up you need a computer
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I've had to do the same calculations. Of course your results will vary, but maybe this will help:
I take 5 weeks vacation. No sick/personal time allowed. Add in 7 holidays and that's 32 days per year. This means with contract I'll just get paid for (5 * 52) - 32 = 228 days. 228 days * 8 hours * $90 = $164160 annually. Now, I would have to pay about 9% in social security, medicare, and unemployment tax separate from what an employee pays (as a contractor). Next, I'd lose a 3% contribution towards a 401k plan. That brings it down to $144460. From here, remove any annual bonuses. Then remove medical/dental/vision benefits. For me that would take it down to about $135k. So contracting is better in this case using my numbers.
It's possible you'll find that there's no clear winner. It comes down to personal preference much of the time.
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Not really. Contract means you have to renegotiate your job terms every 6 months. Next time you might not be so lucky. No severance etc. Contract means the company doesn't really want to keep anybody around
modified 20-Oct-19 21:02pm.
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You aren’t going to find a chart on this subject, but I would not choose to be a contractor for just the money; that is short-sided thinking. I see a contractor as someone who has an advantage over typical employees and make more money with no benefits. Also, contractors don’t get stuck in the same place for their whole career; they can spread their wings and grow. If that is your passion, then go for it.
To answer your financial question, my suggestion would be to either write a program or create a spreadsheet and take comparable salaries, benefits (medical, life, and 401k), raises, and inflation and determine how much you’d make. This is over your lifetime, not 6 months or 1 year. I have done this for my life and decided contract work would not be feasible after 35 years old. Unless you are a superstar contractor; you’d better expect to be working at Lowe's when you’re over 55 because I just don’t see many older contractors.
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Maybe you are used to have companies that actually PAY contractors. In Italy the payment is usually after 60 or 90 or 180 days from the receipt and normally companies simply won't pay. Add the fact that autonomous job has an overall fiscal pressure of about 70% and... well I'd never choose contract work here. It is assured slavery and doom (not the one from ID software though).
Geek code v 3.12
GCS d--- s-/++ a- C++++ U+++ P- L- E-- W++ N++ o+ K- w+++ O? M-- V? PS+ PE- Y+ PGP t++ 5? X R++ tv-- b+ DI+++ D++ G e++>+++ h--- r++>+++ y+++*
Weapons extension: ma- k++ F+2 X
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I've always used 2048 hours per year. It's not exact, but is close enough.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
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...and a power of 2. Being the job we do what it is...
Geek code v 3.12
GCS d--- s-/++ a- C++++ U+++ P- L- E-- W++ N++ o+ K- w+++ O? M-- V? PS+ PE- Y+ PGP t++ 5? X R++ tv-- b+ DI+++ D++ G e++>+++ h--- r++>+++ y+++*
Weapons extension: ma- k++ F+2 X
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wow man, where do you get that form? here in the uk, we get minimum 20 + 8 days off.
hear is how I got it to 1635 hours per year... (7.5 hour working days, we don't get paid for lunch hour  )
Days in year 365
Bank Holidays, xmass etc. 8
Weekend days (52*2) 104
Full Paid Holidays 31
Full Paid Sick Days 4
Days actually working 218
Hours working 1635
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40 hours per week * 52 weeks is 2080 hours per year. So I was 32 hours off; it's still close enough to be able to figure out a yearly salary based on a per-hour wage.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
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pfsWrite!
Oh how I remember that one.
Go for the contract. You cant buy priceless autonomy.
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If you are contracting through an agency, the agency will take care of taxes. If not, find yourself a good accountant. The annual salary takes into consideration FUTA, local unemployment and a few other fringe taxes the employer pays for which, as an independent contractor, you are stuck paying. Is your contracting rate inclusive of sales tax? This is sometimes a pain in accounting as your invoices need to carry sales tax as a separate line item and you need to report this to the appropriate tax agency. Failure to do so can bring substantial penalties.
The difficult may take time, the impossible a little longer.
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By my calculations, a $90 an hour job would bring you home approximately $112,000 after taxes, health insurance, and other deductions (depending upon where you live) if was extended out for the year. The $115,000 would put about $69,000 in your pocket if you got your own health insurance, etc. I use 60% as a general rule for what I put in my pocket from gross after deductions for taxes and the like. Keep in mind that the employer matches what you put in FICA. From the looks of it, you might put as much in your pocket in 6 months as you would working for them for a year.
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