Stop whatever you’re doing, close your eyes, and think about your ideal job opportunity. Can you envision it? You’ve probably thought about the industry, salary, and specialty that role might encompass, but I’m willing to bet the timeframe of your perfect role didn’t even cross your mind.
And why would it? To be employed is to be employed full-time, right? Most of us pursue jobs to stave off uncertainty and scarcity. Why would we accept anything other than a permanent role—like a contract position, for example—that could end and leave us searching again?
Well, I’m glad you asked! Contract roles have many benefits that you may not have considered, even when compared with the trustworthy full-time role. Believe it or not, many people who take contract positions stand to experience a higher level of job satisfaction because of higher pay, greater flexibility, and wider exposure. Let’s look at a pair of hypothetical young technologists—we’ll call them Jack and Jane—to break things down.
The Story of Jack & Jane
Both Jack and Jane pursued Computer Science degrees in college. After graduation, Jack landed a full-time job at an established corporate powerhouse. Today, he gets a 3 percent increase every year, almost like clockwork, and he’s not required to learn much in the way of new technology. This has made him an expert in a narrow field but leaves him underexposed to new and developing platforms. He’s comfortable, but bored, wondering what technology he could learn and languishing in his set work schedule and predictable routine.
Jane chose contract opportunities right out of school. She now spends six to 18 months in a role, her work tasks never become too repetitive, and she gains exposure to various technological environments. This readily offers her a clear advantage compared to someone who has only worked at one organization for most of their career. As most technologists already know, adaptability is one of the key traits that determine a successful tech career, so Jane has put herself in a position to become more adaptable at a quicker pace than her peers.
Jane earns more over the course of her contract roles than Jack does over the same period—this is because Jane’s employers don’t need to pay for benefits, unemployment insurance, or holiday pay, leaving more money in each paycheck. Jane often sees $15-20K increase after each contract since she’s able to build experience at an exponential rate.
And what could be more valuable than time? Not in terms of contract duration, but in terms of quality time spent away from work. Whenever Jack’s full-time job gets especially hectic, he often finds himself googling “How to ask your employer for a paid sabbatical” or something similar. Jane doesn’t have that problem because, as the end of her contract nears, she knows she can either pursue the next employment opportunity or take extended time off to travel, visit family, or whatever she chooses.
Taxes: How They Differ Between Full-Time Employees and Contractors
One of the biggest differences between full-time employment and contract work is how taxes are handled. For full-time employees, taxes like Social Security and Medicare are automatically deducted from each paycheck, with the employer covering half of these costs. Plus, full-time employees often enjoy tax benefits from health insurance and retirement plans, which help reduce taxable income.
Contractors, however, are responsible for self-employment taxes, covering both the employer and employee portions of Social Security and Medicare. This means a higher tax burden—about 15.3% of income goes toward these taxes. Contractors also need to estimate and pay their taxes quarterly. On the bright side, they can deduct business expenses like home office costs, equipment, and travel, which helps reduce taxable income. Staying organized and keeping records of all deductible expenses is crucial to avoid penalties.
Career Progression: Contract vs Full-Time
Career growth in full-time roles tends to follow a more linear path. Employees can climb the corporate ladder through promotions and regular performance evaluations, leading to a clear progression from junior roles to leadership positions. They also benefit from formal mentorship, networking within the organization, and steady salary growth.
For contractors, career progression is less predictable but more flexible. Contractors gain a wide range of skills and experiences by working with various companies and technologies, making them highly adaptable. This can lead to faster skill development and exposure to cutting-edge technologies, especially in fields like tech. However, contractors might miss out on leadership roles, as they are usually hired for specific tasks rather than long-term career development. Balancing contracts strategically can lead to impressive career growth, but it requires more initiative and planning.
Expanding on the Risks of Contract Work
While contract roles offer flexibility and potentially higher pay, they also come with several risks. Job stability is a primary concern. Unlike full-time employees who often enjoy long-term employment, contractors may experience frequent job changes or gaps between assignments, leading to inconsistent income. Additionally, contractors miss out on traditional employee benefits like paid time off, sick leave, and health insurance, which can lead to higher personal costs.
Lack of career development is another risk. Contractors may not have access to mentorship, internal promotions, or the ability to build strong professional networks within a company. There’s also the potential for loneliness or isolation from full-time colleagues, which can hinder professional relationships and support.
Industry Variations: Contract vs Full-Time in Tech, Finance, and Healthcare
The decision between contract and full-time work can vary greatly depending on the industry.
- Tech: In the tech industry, contract roles are common and often lucrative. Companies frequently hire contractors for short-term projects to develop new software, implement emerging technologies, or manage cloud infrastructure. Tech contractors enjoy exposure to cutting-edge technologies and can command high rates, but the competition is fierce, and roles are often temporary.
- Finance: Finance professionals can find both contract and full-time roles, but contracting is typically project-based, focusing on tasks like audits or consulting on compliance issues. Contract work in finance may offer less flexibility and more rigid deadlines compared to tech.
- Healthcare: The healthcare industry increasingly uses contract workers for specialized tasks, such as IT systems implementation or telehealth programs. However, full-time roles dominate in medical care positions, where long-term relationships with patients and institutions are critical.
Understanding these industry dynamics can help you determine which path—contract or full-time—aligns with your career goals and lifestyle preferences.
The Rest of the Contract Employment Story
Before you go away thinking that contract positions are your “golden ticket,” with little to no trade-off involved, don’t forget to take a holistic view of what your contract role entails. Some staffing and consulting firms—like BridgeView, for example—offer competitive benefits such as medical coverage, vision and dental insurance, 401k matching, and more. But this isn’t the case everywhere, so be aware that benefits can vary greatly by contract opportunity. Health insurance coverage is still mandatory in some states and most people rely on some form of coverage to receive basic healthcare services. Don’t let yourself be surprised by higher premiums after starting your next role!
Also keep in mind that what you receive in experience, you may lack in terms of connection with teammates, colleagues, and company leadership. It’s not uncommon for contractors to feel separated from the rest of the organization, and getting to know your coworkers can fall by the wayside if you’re only planning to be with the company for a short time. Regular employees do have an easier time building camaraderie and networks of support, so if you’re jumping into the contract world, be prepared to work more as a lone wolf, and less as a part of the herd.
And lastly, keep in mind that contract workers must constantly look ahead for the next opportunity. The right recruiter can absolutely help ease this burden, however, making this requirement far less daunting. Skilled teams like the one at BridgeView are adept at connecting IT professionals with jobs that match their skills and align with long-term goals. That’s why we’re here! So, if you’ve read up on the pros and cons and still feel more like a Jack than a Jane, rest assured there’s a whole frontier of exciting contract opportunities awaiting you. Here’s hoping we can put you on a more satisfying career path soon
Ask BridgeView : Contract v Full Time Roles
1. What are the main financial benefits of contract work over full-time roles?
Contractors often earn higher hourly rates compared to full-time employees because companies don’t need to cover benefits like health insurance or retirement contributions. However, contractors need to account for their own taxes and benefits.
2. Do contractors get health benefits?
Typically, no. Full-time employees are usually offered health, dental, and vision insurance, whereas contractors must source and pay for their own insurance plans. Some firms, like BridgeView, offer benefits to their contractors, so it’s essential to check what’s included in each contract opportunity.
3. Is contract work stable?
While contract roles can offer higher pay, they often come with less job security. Contractors need to be proactive in finding their next job and might experience gaps between contracts. A reliable recruiter can help ease this burden by connecting you with continuous opportunities.
4. What industries are best suited for contract work?
While contract work is often seen in tech, finance, and healthcare industries, any business can leverage contracted employees. The agile process to staff contractors often appeals to rapidly growing companies.
5. What is Fractional Hiring?
Fractional hiring involves employing individuals for a fraction of the time a full-time employee would work, allowing them to work for multiple organizations throughout the week. This strategy helps small businesses access specialized skills and expertise at a lower cost than hiring full-time employees. Benefits include flexibility for workers, reduced hiring costs for businesses, and the ability to build ongoing relationships with experts who can contribute significantly to the company’s growth.
6. How is fractional hiring different from a contracted employee?
A contract employee is typically hired for a specific project or a set period, working full-time or part-time hours as needed, and their engagement ends once the project is completed. In contrast, a fractional hire works for multiple organizations simultaneously, dedicating a fraction of their time to each, often in specialized or executive roles. While both are classified as contractors, fractional hires build ongoing relationships with their employers and provide continuous expertise rather than completing one-off projects.
Interested in the freedom and flexibility contract roles can bring? Get in touch with BridgeView today!
