Do i expect salary to drop transitioning from contract to fte? (health insurance, home)

[guyencd000]

Doing contract as an engineer but expecting to be a full time to be soon. Havent discussed with my manager about the salary yet. For those who did the same transition, will I expect to be at a lower salary range or should I insist the same amount as a contract?

[sonarrat]

Were you working through an agency? I'm not an engineer, but after switching from a temp job to a full-time one, I almost doubled my income. They take quite a bit off the top.

[guyencd000]

sorry i dont understand ur answer. u said doubled which meant 2x increase then u say they take a bit off the top which looks like a decrease. confused.

[roadwarrior101]

Originally Posted by guyencd000

Doing contract as an engineer but expecting to be a full time to be soon. Havent discussed with my manager about the salary yet. For those who did the same transition, will I expect to be at a lower salary range or should I insist the same amount as a contract?

I've seen examples here in the valley where contractors are making about $75/hour and transition into full time roles making about $120k plus bonus. When you add in all benefits including healthcare, 401k match and vacation time, you come out ahead as a FTE.

On the other hand, I've known people in specific areas making $125-150/hour. In those situations, you'll come out far ahead as a contractor, despite not having any benefits.

[Wintermomma]

I have seen the "hourly" rate go down b/c the benefits (health care, paid time off, options, etc.) carry an additional value.

[80skeys]

Originally Posted by guyencd000

Doing contract as an engineer but expecting to be a full time to be soon. Havent discussed with my manager about the salary yet. For those who did the same transition, will I expect to be at a lower salary range or should I insist the same amount as a contract?

Your total compensation package (wage, health insurance, vacation, sick, 401k, bonuses, expense reimbursement, stock options) should be the same minus the value of the risk in being a contractor.

[80skeys]

Originally Posted by sonarrat

Were you working through an agency? I'm not an engineer, but after switching from a temp job to a full-time one, I almost doubled my income. They take quite a bit off the top.

This means you did not negotiate your temp wage correctly.

[guyencd000]

Originally Posted by Wintermomma

I have seen the "hourly" rate go down b/c the benefits (health care, paid time off, options, etc.) carry an additional value.

Well for the sake of simplicity, lets not consider benefit okay. i am talking about before taxes.

[80skeys]

Originally Posted by guyencd000

Well for the sake of simplicity, lets not consider benefit okay. i am talking about before taxes.

You have to consider benefits because they carry real cash or cash equivalent value.

[roadwarrior101]

Originally Posted by 80skeys

You have to consider benefits because they carry real cash or cash equivalent value.

Yes, I would actually think that your hourly rate equivalent should be at least 1.5 times your salary, maybe closer to 1.75-2 times (your fully loaded cost). You need to factor in the following into your FTE calculation when translating to an hourly rate:

-Annual Salary
-Expected Annual Bonus
-401k match
-Healthcare costs
-Tax benefit of being a FTE vs independent contractor (e.g., do not have to pay double social security)
-Vacation time

Of course, you can subtract the additional tax deductions you can often take when you are an independent contractor:

-Gas mileage/transportation/tolls
-Home office expenses (if working from home while owning your contracting business)
-Miscellaneous (marketing, etc)

In addition, you need to factor in the uncertainty that if your contract ends, you may not have something to replace it with right away.