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Am I in the minority here for being a contract developer who is happy to be in this place? * I make over 40% more than I did when I was full-time, and I was al

Am I in the minority here for being a contract developer who is happy to be in this place? * I make over 40% more than I did when I was full-time, and I was already in the top band for pay in my title. This far exceeds the 15% markup for self-employment tax. * My wife works full time so she has our back for health insurance * I can save way more for retirement with an SEP IRA than I ever could with a company-sponsored 401k...it's $55k/yr for 2018 (assuming you contribute 25% of earnings or make $220k/yr) I can understand that the Gig Economy is certainly not benefiting everyone (e.g. Uber drivers, Postmates runners), but I mean boutique consulting firms have existed for a while and many of them achieve many millions in revenue even with only a few partners. Am I missing something or delusional in my thinking?

briffle 9y ago
How would your situation change, if item number 2 was no longer there. (ie, your wife became a contractor) I think that is the largest concern/tipping point for most people..
- Consultant32452 9y ago
  Single father and consultant of 5 years here. It's easy if you're conservative/responsible with your money. Buy health insurance, get short and long term disability. Keep 6 months of expenses in your emergency fund. Don't have any consumer debt. I think the hardest part for most people is being able to not burn through their money as fast as they get it.
  - dgabriel 9y ago
    But possibly not easy for an Uber driver, rather than a highly skilled tech worker.
    - Consultant32452 9y ago
      The national average income for Uber drivers is about $20/hr. That's plenty to live off of. The average in Detroit is only $9/hr. That's a tough place to be, but not unique to consulting or gig jobs.
      - rectang 9y ago
        Are you factoring business expenses into that $20/hr, or are you confusing raw revenue with income, and failing to take into account all the risk that Uber offloads onto its contractors? If you're confused, then you have a lot in common with many Uber drivers!
        Consultant32452 9y ago
        Yes, that national average of $20/hr is after expenses. That language, offloads, is loaded. This idea that it's someone else's responsibility to handle even the most trivial of life's decisions for us is toxic. If you don't understand the basic concepts around running a small business, there's plenty of books on the subject in the library.
        rectang 9y ago
        > Yes, that national average of $20/hr is after expenses. Where on earth is that number coming from? Uber? https://www.buzzfeed.com/carolineodonovan/internal-uber-driver-pay-numbers https://www.buzzfeed.com/carolineodonovan/internal-uber-driv... "In early 2015, a study commissioned by Uber found that drivers in 20 cities, including New York, Los Angeles, San Francisco, and Boston, were grossing around $17 an hour.... But the $17-an-hour figure was based on data from 2014, when Uber rates in most cities were higher than they were in late 2015. It was also based on gross earnings and did not account for driver expenses."
        Consultant32452 9y ago
        https://www.washingtonpost.com/news/the-switch/wp/2016/06/27/how-much-uber-drivers-actually-make-per-hour/?utm_term=.58ee266c5a08 https://www.washingtonpost.com/news/the-switch/wp/2016/06/27... This is from an article complaining about how little Uber drivers make... >But in three large metropolitan cities, drivers make far less than the national average, about $20 per hour, after expenses.
  - rectang 9y ago
    It's also expensive, inconvenient, time-consuming, and risky to be poor. None of the suggestions you make are "easy" for poor people. Consider how much time, energy, and expertise it takes even to research disability insurance and buy the appropriate product.
    - Consultant32452 9y ago
      There are basically two options for disability insurance, 50% or 75% of what you currently make. I'm sure there's other options, but those are the default choices. The minutia of what's covered basically the same across the industry and if you just choose the first provider you talk to it's not really different than getting it from your employer where you had no choice of providers or coverage. The big barrier is realizing you have personal agency and can do basic things like shop.
      - rectang 9y ago
        > The big barrier is realizing you have personal agency and can do basic things like shop. This argument reminds me of web designers who blame users for the mistakes they make when presented with a horrible user interface -- that there is no system so terrible that the user can't be a moral failure, 100% responsible for their own misfortune.
        Consultant32452 9y ago
        The difference between you and me is that you believe poor people are stupid and I don't. Otherwise you wouldn't have felt the need to qualify how difficult it would be for "poor people" to figure out how to buy disability insurance, a product that's largely off the shelf.
        rectang 9y ago
        No, the difference is that I factor in structural factors that keep people poor, while you pretend they don't exist.
  - DoreenMichele 9y ago
    Keep 6 months of expenses in your emergency fund. You have to have sufficient income to consistently cover basics with money leftover. Some people simply don't have that.
    - Consultant32452 9y ago
      The vast majority of people do have that. Whether or not they behave in an financially responsible manner is a different question altogether.
      - DoreenMichele 9y ago
        Given the high cost of healthcare in the US, the lack of affordable housing and other constraints, no, this is not merely an issue of lack of personal restraint.
        Consultant32452 9y ago
        Are we trying to talk about an average person who might be considering branching out on their own or are we going to try to solve every problem for a blind one legged cancer patient? For the average person it very much is a matter of adopting different behaviors including but not limited to personal financial restraint.
  - TheCoelacanth 9y ago
    It's so easy. All you have to do is make plenty of money. Why didn't those stupid poor people think of that?
    - Consultant32452 9y ago
      You are making a lot of assumptions about my current income and how much I have made historically. I did all of those things except buy my own health insurance when I was working inside at a pizza place, that means I was making less than people who deliver pizzas for a living.
- grasshopperpurp 9y ago
  Seems like the OP is making enough money that it wouldn't be a significant issue - assuming the OP is living within his/her means. It's the 3rd point ($$) that differentiates the OP from the vast majority - as far as I can tell.
- neogodless 9y ago
  I think the real tipping point is income level as an independent worker. Personally, I'm in software and got a 60% pay increase when I jumped to 1099. My wife didn't have health insurance offered before, and she still doesn't. But the $680/month I'm paying is easily covered by the increased income. (I was paying around $300/month even when my employer offered health insurance. And my coverage is actually much better now.) But I'm not a typical contractor, just a typical software contractor.
  - chatmasta 9y ago
    Are you paying 680/mo for just yourself or both you and your wife? That seems like a really high number, but maybe that’s the privilege of youth talking...
    - neogodless 9y ago
      We are 38/33 and that's medical for both. Additional $57 for vision/dental (optional, of course). This is in PA. I was unsuccessful in using the marketplace, and in my county there's basically only one insurance provider any more. So I get quotes from them directly. On the bright side, it's good coverage. We could save $150/mo, but the deductibles go through the roof. Since we are child-bearing age (and my eyes are terrible), we prefer better coverage.
rectang 9y ago
The trends in the article don't impact people like you much -- but they have a huge impact on these Uber drivers and Postmates runners, and there are a lot more of them. Your situation doesn't generalize to the wider population.
Jesus_Jones 9y ago
It might work for some people. Many people don't have a spouse providing health insurance - without that it's drastically different. Probably your spouse has a reliable job so you can weather the danger of not having work when a contract ends. You are fortunate, good for you. But if you got hurt, and were single, you'd be much more vulnerable. I'm lucky, I work in a full time job with all the benefits, but not everyone is that lucky.
- Consultant32452 9y ago
  I consulted for 5 years. I bought my own health insurance, and short and long term disability. I budgeted properly so that I could easily weather periods of time between contracts. This is all while being a single father. It's really not difficult, the hardest part for most people seems to be being responsible with your money. It's certainly not a matter of luck though. The only reason I stopped is because someone offered me significantly more than I was able to make on my own.
  - jxramos 9y ago
    Last time I contracted I got into a individual market Blue Shield Silver Plan PPO for around $1100 a month. This was for family coverage. It is a matter of budgeting asking for a higher rate if need be. At the end of the day we all need to be aware of some form of budget to know how much we need and how much we can set aside and what not.
  - ryandrake 9y ago
    Did you ever require care that was not covered by insurance or maxed out your coverage? Or have an expensive pre-existing condition? There's certainly an element of luck involved, especially when it comes to the US healthcare system!
    - Consultant32452 9y ago
      >Did you ever require care that was not covered by insurance or maxed out your coverage? Not that I recall, but that situation could happen to you if you had employer or government provided coverage. >Or have an expensive pre-existing condition? No, but there are other options like health-shares. These are usually tied to religious organizations and works almost exactly like health insurance, pooling costs. Obamacare grandfathered in existing health shares but made it illegal to start new ones. >There's certainly an element of luck involved, especially when it comes to the US healthcare system! There's a certain element of luck to life in general. I'm certainly not dismissing the unfortunate souls you're referring to, but we equally should not pretend like these things are all that difficult for the average person to do.
hkmurakami 9y ago
You're certainly more exposed to downturns, much like solo lawyers, consultants, etc. It's a trade-off and comes with definite benefits like you listed.
- adventured 9y ago
  > You're certainly more exposed to downturns At the same time, companies fire by the millions in aggregate in a recessionary environment. Or worse, your employer simply vaporizes and goes out of business, which similarly happens in droves. If you're a contractor, your exposure depends on who you're doing business with, how strong their circumstances are, just as it does when it comes to who is employing you. The U6 went up to ~17.5% during the great recession. There is a very small group of elite tech companies that weathered that storm without firing people. Google is up at 80,000 employees now, Microsoft is at 125,000. Do they avoid layoffs in the next recession? I'm skeptical. Microsoft has almost no growth, any recession would hit them hard. Google's growth is 1/3 what it was ten years ago, a recession would slam their ad business and bring their growth down toward single digits.
dmoy 9y ago
> * I can save way more for retirement with an SEP IRA than I ever could with a company-sponsored 401k...it's $55k/yr for 2018 (assuming you contribute 25% of earnings or make $220k/yr) Note on this point: many company-sponsored 401ks do allow you to contribute up to $55k/yr - though a good chunk of that will be after-tax money. (Though again, the after-tax can often be converted to Roth, which has its own benefits)
AgalmicVentures 9y ago
Disclaimer: I am not an accountant and I am definitely not your accountant. Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. This is because you can contribute up to 25% of your taxable income, but your contributions are deducted from your income. For example, if you make $1, and put $0.20 in your SEP-IRA, your taxable income is $1 - $0.20 = $0.80, so the $0.20 you put in is the full 25% of your income. To contribute $55K in 2018, you will need to generate $275K of income.
- paulclinger 9y ago
  > Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. I don't think this is correct. We are talking about employER contribution to the employee SEP-IRA account, which is 25% of the compensation, not exceeding the annual limit (https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps-contributions https://www.irs.gov/retirement-plans/retirement-plans-faqs-r...).
  - AgalmicVentures 9y ago
    Disclaimer: I am not an accountant and I am definitely not your accountant. You are correct to say that you can contribute 25% of compensation. However, your wages are different than your profits, even as a self-employed person. Let's say you are self-employed and you make $1 of profits and pay yourself $0.80 of wages. You can contribute the other $0.20 you have to your SEP-IRA, since it's 25% of your wages (or 20% of your profits). Because of this, you need $275K of profits to generate $220K of income and a corresponding $55K SEP-IRA contribution. For more, see: https://en.wikipedia.org/wiki/SEP-IRA#Reduced_rate https://en.wikipedia.org/wiki/SEP-IRA#Reduced_rate
zardo 9y ago
Yes, you are in the minority. The huge rise in contract work is not in boutique consulting firms or well compensated tech consultants. It's low skill work, groundskeepers, janitors, housekeepers, drivers. Businesses have moved to contracting to effectively lower total compensation.
- acconrad 9y ago
  I guess part of why I posted that is the audience - I imagine in submitting this article to HN, it is meant to resonate with two subsets of people here: 1. Entrepreneurs running gig economy startups and the implications for how they should treat their workforce 2. Tech workers who work in the gig economy (e.g. Gigster developers, PullRequest reviewers, independent developers) So I read this and bring up my point because it seems like contract work, inherently, is not the problem. The problem is, what others have mentioned, that the government regulates employment in such a way that we tie benefits like health insurance to the employers, and do not align incentives properly. Would you say that's an accurate assessment?
  - zardo 9y ago
    Yes. Man is a featherless biped may work to describe the category. But if you give a tax break based on the number of men living in each home, you'll find a lot of people plucking chickens.
  - gech 9y ago
    So as the next step you support moving from employer-tied benefits to universal health care?
  - Chaebixi 9y ago
    > I guess part of why I posted that is the audience - I imagine in submitting this article to HN, it is meant to resonate with two subsets of people here: That's a pretty limited view. There are plenty of non-entrepreneurs on HN who are looking for interesting technology and tech-related society articles. It could also be meant to resonate with people who just think that the gig economy is questionable development. > So I read this and bring up my point because it seems like contract work, inherently, is not the problem. The problem is, what others have mentioned, that the government regulates employment in such a way that we tie benefits like health insurance to the employers, and do not align incentives properly. Would you say that's an accurate assessment? I don't agree with that. I think the problem with contract work, especially the gig economy kind, is that it's a further progression of the dehumanization of work. More an erosion of the social contract than a failure of government regulation. That dehumanization reduces the buffers between actual people and the more sociopathic aspects of capitalism.
deleted 9y ago
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lev99 9y ago
Being a contract developer is a happy place to be. Here are some things you haven't mentioned. * Contract developers have greater flexibility on taxes. "Pass through" entities are big now. * Contract developers are more independent in a lot of ways. Some employees have clauses where they give up all IP they create. * Contract developers often move from project to project more, which gives them a better network effect then their W2 counterparts.
- seangrogg 9y ago
  The real question I have is what prospecting looks like, as that is typically the most difficult part of the process. In my experience, many BigCos like contracting through temp staffing agencies. Are there reliable sources of contract work? I have yet to find any, though I admittedly haven't been looking the hardest.
  - lev99 9y ago
    Staffing agencies are reliable sources open to all programmers, but I have never personally taken a contract from one. The best paid work comes from a professional network. When I look for a new project I send an email to former co-workers and some past clients asking for leads. I then follow up on those leads.
DoreenMichele 9y ago
I am not a developer. I don't make a lot of money. I wouldn't say I am happy with my situation. But, I am medically handicapped. When I had a corporate job, I lived in fear of losing my job for taking too much time off. My life revolved around getting myself together enough to make it to work 5 days a week. I don't have those issues anymore. I can take time off at will and resume working when I feel better. My access to paid work is not threatened by that. My income is portable. This has allowed me to repeatedly move to improve my quality of life. Historically, this was a luxury enjoyed by only the jet set and well off retirees, not working stiffs. I think we need to provide national healthcare in the US to make the lack of benefits less of a problem. But I think if gig work is well designed, it can raise quality of life for ordinary people. I wish my life were easier. I am really grumpy about it not being easier. But gig work is a viable solution for me under circumstances where most normal jobs simply are not. This has helped make it possible to make headway on my problems when I should simply be doomed with no real hope. So I think we need to just focus on making gig work a positive. I don't think it is a given that it has to be a terrible experience, even for people who aren't making tons of money.
walshemj 9y ago
Only 40% is this net? I would be aiming for > 100% Gross as a it contactor in the UK and pay less tax.
- acconrad 9y ago
  Well my utilization rate is 100% right now, so I objectively make more money than I made before, there is no getting around that one. If it were lower I would indeed need to pad it more, and hopefully with my next engagements I will be able to hit that rate :)
seangrogg 9y ago
For those interested (namely, me) could you describe your current situation? * What sort of business entity are you using? What considerations did you make when choosing this entity? * What is your work like? Are you remote/onsite? Do you have one client or multiple? * What is your staff like? Are you a lone worker? Do you have coworkers in your business? What did you choose to offload onto others? * How do you manage taxes, insurance (beyond those covered by your wife), and finances? * What alternatives have you considered in the event that your wife couldn't cover you? Mostly interested because this seems like a viable career path (to me) but I would definitely want to consider it with eyes wide open and learn from someone else's successes and failures.
- acconrad 9y ago
  * Currently sole proprietor. Will switch to LLC or C Corp in 2018 (depending on income), but I'd talk to your accountant to find out what's best for you. * I'm remote currently with high utilization client (as a subcontractor) and smaller retainer clients. * I am a firm of 1. * I have an accountant to manage taxes and finances. I keep meticulous records of what is a business vs a personal expense. The subcontractor gig is insured by the main contracting company. The retainer gigs stipulate it is knowledge/access only, so without any IP deliverables required, so there's no need for insurance on that. I may get insurance if my employment situation changes in terms of the contracts I take on. For this, I'd talk with your lawyer. * I would just buy health insurance through the state. I live in MA, so we have to have something. We're both young and healthy, and she has an incredibly stable job, so I don't worry about this one too much. I should point out that I'm very new to this (4 months in) so definitely don't look at me as a source of having "done things right" - I am learning every day and still sweating it all.
  - seangrogg 9y ago
    Very interesting. Thanks for being candid with your freshness to this experience; it's valuable all the same. A few more questions, as your availability permits: * Have you considered an S-corp? If so, reasons against listing it as an option? * Any recommendations in general contractors (even if not specific ones, just things to look for in a general contractor)? Thanks for your time and response(s)!
danans 9y ago
> Am I in the minority here for being a contract developer who is happy to be in this place? > * My wife works full time so she has our back for health insurance Being an independent contractor or a self employed business owner is fine for someone who has an entrepreneurial bent coupled with unique skills that are in high demand. Such people can likely charge rates that more than compensate for the lack of employer benefits as a contractor. However, the contractors described in the article don't appear to have that combination of advantages. Presumably they also don't have spouses who can carry them on their health insurance plans. In a previous era, their jobs might have previously carried benefits, but many of these jobs have been reclassified as "variable workforce" positions, as companies restructure their employment to minimize the carried costs and risk of fulltime employees.
paulclinger 9y ago
> This far exceeds the 15% markup for self-employment tax. It's not even 15% difference, as the salaried workers also pay half of it, so the difference is just the employer portion, which is paid by self-employed contractors. I've been paying for my own insurance (a bronze plan) for the last three years, as it was cheaper than adding me to our family plan. It wasn't very expensive (started around $300/month in WA), but was going up about 20% each year, so this year we switched to a high deductible plan.
- shostack 9y ago
  >"It wasn't very expensive (started around $300/month in WA), but was going up about 20% each year, so this year we switched to a high deductible plan." This is what bugs me to no end about insurance. They get you with a low intro rate, then jack it up a massive amount annually, and leave your option as basically switching (if there are better options even available), or shouldering more of the risk by moving to a high-deductible plan (which makes them more money). Are there no good, consistently-priced insurance options for those who are not full-time employees with benefits?
  - paulclinger 9y ago
    Not just that; they keep changing the plans, so that the plan you are currently on may not be available next year, but there is a "similar" one that is 20% more expensive and has worse coverage (and/or higher deductible). Those contractors that have LLCs may look into group rate insurance, as those are generally cheaper than individual ones (but you may need to have more than one employee to qualify).
ilaksh 9y ago
Just because you are a contract developer does not mean you earn a high income. Even in the United States. I am sure that few in my situation would like to admit it. For most of my adult life I have worked as a programmer on a contract basis mainly online for rates or fees that are well below the market rate for my area. For the last few years I have worked for non-funded or poorly funded startups for very small income amounts and no benefits. Even for jobs that were on site, many of the opportunities were spelled out in the ad or description as low rates like $70 or even $40 an hour. I am sure that people will find lots of reasons to believe that I did something wrong or am an exceptional case, but I don't believe that. I think I am just an exception in terms of people like me who will admit it. I have had a few well paid contracts but the income isn't consistent. But not every contract programming gig is rich. It just absolutely isn't. And not everyone can get those high paying gigs. Also for me I have been trying to get into business in startups and not all startups can or want to receive funding and somebody like me is taking those jobs and happy to have them. Again, go ahead and try to say there is something unusual or wrong. about me. I maintain the only really unusual thing is that I am admitting it on HN. My current startup does have a lot of potential so I am hopeful about future income.

briffle 9y ago

How would your situation change, if item number 2 was no longer there. (ie, your wife became a contractor) I think that is the largest concern/tipping point for most people..

Consultant32452 9y ago
Single father and consultant of 5 years here. It's easy if you're conservative/responsible with your money. Buy health insurance, get short and long term disability. Keep 6 months of expenses in your emergency fund. Don't have any consumer debt. I think the hardest part for most people is being able to not burn through their money as fast as they get it.
- dgabriel 9y ago
  But possibly not easy for an Uber driver, rather than a highly skilled tech worker.
  - Consultant32452 9y ago
    The national average income for Uber drivers is about $20/hr. That's plenty to live off of. The average in Detroit is only $9/hr. That's a tough place to be, but not unique to consulting or gig jobs.
    - rectang 9y ago
      Are you factoring business expenses into that $20/hr, or are you confusing raw revenue with income, and failing to take into account all the risk that Uber offloads onto its contractors? If you're confused, then you have a lot in common with many Uber drivers!
      - Consultant32452 9y ago
        Yes, that national average of $20/hr is after expenses. That language, offloads, is loaded. This idea that it's someone else's responsibility to handle even the most trivial of life's decisions for us is toxic. If you don't understand the basic concepts around running a small business, there's plenty of books on the subject in the library.
        rectang 9y ago
        > Yes, that national average of $20/hr is after expenses. Where on earth is that number coming from? Uber? https://www.buzzfeed.com/carolineodonovan/internal-uber-driver-pay-numbers https://www.buzzfeed.com/carolineodonovan/internal-uber-driv... "In early 2015, a study commissioned by Uber found that drivers in 20 cities, including New York, Los Angeles, San Francisco, and Boston, were grossing around $17 an hour.... But the $17-an-hour figure was based on data from 2014, when Uber rates in most cities were higher than they were in late 2015. It was also based on gross earnings and did not account for driver expenses."
        Consultant32452 9y ago
        https://www.washingtonpost.com/news/the-switch/wp/2016/06/27/how-much-uber-drivers-actually-make-per-hour/?utm_term=.58ee266c5a08 https://www.washingtonpost.com/news/the-switch/wp/2016/06/27... This is from an article complaining about how little Uber drivers make... >But in three large metropolitan cities, drivers make far less than the national average, about $20 per hour, after expenses.
- rectang 9y ago
  It's also expensive, inconvenient, time-consuming, and risky to be poor. None of the suggestions you make are "easy" for poor people. Consider how much time, energy, and expertise it takes even to research disability insurance and buy the appropriate product.
  - Consultant32452 9y ago
    There are basically two options for disability insurance, 50% or 75% of what you currently make. I'm sure there's other options, but those are the default choices. The minutia of what's covered basically the same across the industry and if you just choose the first provider you talk to it's not really different than getting it from your employer where you had no choice of providers or coverage. The big barrier is realizing you have personal agency and can do basic things like shop.
    - rectang 9y ago
      > The big barrier is realizing you have personal agency and can do basic things like shop. This argument reminds me of web designers who blame users for the mistakes they make when presented with a horrible user interface -- that there is no system so terrible that the user can't be a moral failure, 100% responsible for their own misfortune.
      - Consultant32452 9y ago
        The difference between you and me is that you believe poor people are stupid and I don't. Otherwise you wouldn't have felt the need to qualify how difficult it would be for "poor people" to figure out how to buy disability insurance, a product that's largely off the shelf.
        rectang 9y ago
        No, the difference is that I factor in structural factors that keep people poor, while you pretend they don't exist.
- DoreenMichele 9y ago
  Keep 6 months of expenses in your emergency fund. You have to have sufficient income to consistently cover basics with money leftover. Some people simply don't have that.
  - Consultant32452 9y ago
    The vast majority of people do have that. Whether or not they behave in an financially responsible manner is a different question altogether.
    - DoreenMichele 9y ago
      Given the high cost of healthcare in the US, the lack of affordable housing and other constraints, no, this is not merely an issue of lack of personal restraint.
      - Consultant32452 9y ago
        Are we trying to talk about an average person who might be considering branching out on their own or are we going to try to solve every problem for a blind one legged cancer patient? For the average person it very much is a matter of adopting different behaviors including but not limited to personal financial restraint.
- TheCoelacanth 9y ago
  It's so easy. All you have to do is make plenty of money. Why didn't those stupid poor people think of that?
  - Consultant32452 9y ago
    You are making a lot of assumptions about my current income and how much I have made historically. I did all of those things except buy my own health insurance when I was working inside at a pizza place, that means I was making less than people who deliver pizzas for a living.
grasshopperpurp 9y ago
Seems like the OP is making enough money that it wouldn't be a significant issue - assuming the OP is living within his/her means. It's the 3rd point ($$) that differentiates the OP from the vast majority - as far as I can tell.
neogodless 9y ago
I think the real tipping point is income level as an independent worker. Personally, I'm in software and got a 60% pay increase when I jumped to 1099. My wife didn't have health insurance offered before, and she still doesn't. But the $680/month I'm paying is easily covered by the increased income. (I was paying around $300/month even when my employer offered health insurance. And my coverage is actually much better now.) But I'm not a typical contractor, just a typical software contractor.
- chatmasta 9y ago
  Are you paying 680/mo for just yourself or both you and your wife? That seems like a really high number, but maybe that’s the privilege of youth talking...
  - neogodless 9y ago
    We are 38/33 and that's medical for both. Additional $57 for vision/dental (optional, of course). This is in PA. I was unsuccessful in using the marketplace, and in my county there's basically only one insurance provider any more. So I get quotes from them directly. On the bright side, it's good coverage. We could save $150/mo, but the deductibles go through the roof. Since we are child-bearing age (and my eyes are terrible), we prefer better coverage.

rectang 9y ago

The trends in the article don't impact people like you much -- but they have a huge impact on these Uber drivers and Postmates runners, and there are a lot more of them. Your situation doesn't generalize to the wider population.

Jesus_Jones 9y ago

It might work for some people. Many people don't have a spouse providing health insurance - without that it's drastically different. Probably your spouse has a reliable job so you can weather the danger of not having work when a contract ends. You are fortunate, good for you. But if you got hurt, and were single, you'd be much more vulnerable. I'm lucky, I work in a full time job with all the benefits, but not everyone is that lucky.

Consultant32452 9y ago
I consulted for 5 years. I bought my own health insurance, and short and long term disability. I budgeted properly so that I could easily weather periods of time between contracts. This is all while being a single father. It's really not difficult, the hardest part for most people seems to be being responsible with your money. It's certainly not a matter of luck though. The only reason I stopped is because someone offered me significantly more than I was able to make on my own.
- jxramos 9y ago
  Last time I contracted I got into a individual market Blue Shield Silver Plan PPO for around $1100 a month. This was for family coverage. It is a matter of budgeting asking for a higher rate if need be. At the end of the day we all need to be aware of some form of budget to know how much we need and how much we can set aside and what not.
- ryandrake 9y ago
  Did you ever require care that was not covered by insurance or maxed out your coverage? Or have an expensive pre-existing condition? There's certainly an element of luck involved, especially when it comes to the US healthcare system!
  - Consultant32452 9y ago
    >Did you ever require care that was not covered by insurance or maxed out your coverage? Not that I recall, but that situation could happen to you if you had employer or government provided coverage. >Or have an expensive pre-existing condition? No, but there are other options like health-shares. These are usually tied to religious organizations and works almost exactly like health insurance, pooling costs. Obamacare grandfathered in existing health shares but made it illegal to start new ones. >There's certainly an element of luck involved, especially when it comes to the US healthcare system! There's a certain element of luck to life in general. I'm certainly not dismissing the unfortunate souls you're referring to, but we equally should not pretend like these things are all that difficult for the average person to do.

hkmurakami 9y ago

You're certainly more exposed to downturns, much like solo lawyers, consultants, etc. It's a trade-off and comes with definite benefits like you listed.

adventured 9y ago
> You're certainly more exposed to downturns At the same time, companies fire by the millions in aggregate in a recessionary environment. Or worse, your employer simply vaporizes and goes out of business, which similarly happens in droves. If you're a contractor, your exposure depends on who you're doing business with, how strong their circumstances are, just as it does when it comes to who is employing you. The U6 went up to ~17.5% during the great recession. There is a very small group of elite tech companies that weathered that storm without firing people. Google is up at 80,000 employees now, Microsoft is at 125,000. Do they avoid layoffs in the next recession? I'm skeptical. Microsoft has almost no growth, any recession would hit them hard. Google's growth is 1/3 what it was ten years ago, a recession would slam their ad business and bring their growth down toward single digits.

dmoy 9y ago

> * I can save way more for retirement with an SEP IRA than I ever could with a company-sponsored 401k...it's $55k/yr for 2018 (assuming you contribute 25% of earnings or make $220k/yr) Note on this point: many company-sponsored 401ks do allow you to contribute up to $55k/yr - though a good chunk of that will be after-tax money. (Though again, the after-tax can often be converted to Roth, which has its own benefits)

AgalmicVentures 9y ago

Disclaimer: I am not an accountant and I am definitely not your accountant. Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. This is because you can contribute up to 25% of your taxable income, but your contributions are deducted from your income. For example, if you make $1, and put $0.20 in your SEP-IRA, your taxable income is $1 - $0.20 = $0.80, so the $0.20 you put in is the full 25% of your income. To contribute $55K in 2018, you will need to generate $275K of income.

paulclinger 9y ago
> Heads up that you can only contribute 20% of your earnings up (up to the limit) to a SEP-IRA. I don't think this is correct. We are talking about employER contribution to the employee SEP-IRA account, which is 25% of the compensation, not exceeding the annual limit (https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps-contributions https://www.irs.gov/retirement-plans/retirement-plans-faqs-r...).
- AgalmicVentures 9y ago
  Disclaimer: I am not an accountant and I am definitely not your accountant. You are correct to say that you can contribute 25% of compensation. However, your wages are different than your profits, even as a self-employed person. Let's say you are self-employed and you make $1 of profits and pay yourself $0.80 of wages. You can contribute the other $0.20 you have to your SEP-IRA, since it's 25% of your wages (or 20% of your profits). Because of this, you need $275K of profits to generate $220K of income and a corresponding $55K SEP-IRA contribution. For more, see: https://en.wikipedia.org/wiki/SEP-IRA#Reduced_rate https://en.wikipedia.org/wiki/SEP-IRA#Reduced_rate

zardo 9y ago

Yes, you are in the minority. The huge rise in contract work is not in boutique consulting firms or well compensated tech consultants. It's low skill work, groundskeepers, janitors, housekeepers, drivers. Businesses have moved to contracting to effectively lower total compensation.

acconrad 9y ago
I guess part of why I posted that is the audience - I imagine in submitting this article to HN, it is meant to resonate with two subsets of people here: 1. Entrepreneurs running gig economy startups and the implications for how they should treat their workforce 2. Tech workers who work in the gig economy (e.g. Gigster developers, PullRequest reviewers, independent developers) So I read this and bring up my point because it seems like contract work, inherently, is not the problem. The problem is, what others have mentioned, that the government regulates employment in such a way that we tie benefits like health insurance to the employers, and do not align incentives properly. Would you say that's an accurate assessment?
- zardo 9y ago
  Yes. Man is a featherless biped may work to describe the category. But if you give a tax break based on the number of men living in each home, you'll find a lot of people plucking chickens.
- gech 9y ago
  So as the next step you support moving from employer-tied benefits to universal health care?
- Chaebixi 9y ago
  > I guess part of why I posted that is the audience - I imagine in submitting this article to HN, it is meant to resonate with two subsets of people here: That's a pretty limited view. There are plenty of non-entrepreneurs on HN who are looking for interesting technology and tech-related society articles. It could also be meant to resonate with people who just think that the gig economy is questionable development. > So I read this and bring up my point because it seems like contract work, inherently, is not the problem. The problem is, what others have mentioned, that the government regulates employment in such a way that we tie benefits like health insurance to the employers, and do not align incentives properly. Would you say that's an accurate assessment? I don't agree with that. I think the problem with contract work, especially the gig economy kind, is that it's a further progression of the dehumanization of work. More an erosion of the social contract than a failure of government regulation. That dehumanization reduces the buffers between actual people and the more sociopathic aspects of capitalism.

deleted 9y ago

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lev99 9y ago

Being a contract developer is a happy place to be. Here are some things you haven't mentioned. * Contract developers have greater flexibility on taxes. "Pass through" entities are big now. * Contract developers are more independent in a lot of ways. Some employees have clauses where they give up all IP they create. * Contract developers often move from project to project more, which gives them a better network effect then their W2 counterparts.

seangrogg 9y ago
The real question I have is what prospecting looks like, as that is typically the most difficult part of the process. In my experience, many BigCos like contracting through temp staffing agencies. Are there reliable sources of contract work? I have yet to find any, though I admittedly haven't been looking the hardest.
- lev99 9y ago
  Staffing agencies are reliable sources open to all programmers, but I have never personally taken a contract from one. The best paid work comes from a professional network. When I look for a new project I send an email to former co-workers and some past clients asking for leads. I then follow up on those leads.

DoreenMichele 9y ago

I am not a developer. I don't make a lot of money. I wouldn't say I am happy with my situation. But, I am medically handicapped. When I had a corporate job, I lived in fear of losing my job for taking too much time off. My life revolved around getting myself together enough to make it to work 5 days a week. I don't have those issues anymore. I can take time off at will and resume working when I feel better. My access to paid work is not threatened by that. My income is portable. This has allowed me to repeatedly move to improve my quality of life. Historically, this was a luxury enjoyed by only the jet set and well off retirees, not working stiffs. I think we need to provide national healthcare in the US to make the lack of benefits less of a problem. But I think if gig work is well designed, it can raise quality of life for ordinary people. I wish my life were easier. I am really grumpy about it not being easier. But gig work is a viable solution for me under circumstances where most normal jobs simply are not. This has helped make it possible to make headway on my problems when I should simply be doomed with no real hope. So I think we need to just focus on making gig work a positive. I don't think it is a given that it has to be a terrible experience, even for people who aren't making tons of money.

walshemj 9y ago

Only 40% is this net? I would be aiming for > 100% Gross as a it contactor in the UK and pay less tax.

acconrad 9y ago
Well my utilization rate is 100% right now, so I objectively make more money than I made before, there is no getting around that one. If it were lower I would indeed need to pad it more, and hopefully with my next engagements I will be able to hit that rate :)

seangrogg 9y ago

For those interested (namely, me) could you describe your current situation? * What sort of business entity are you using? What considerations did you make when choosing this entity? * What is your work like? Are you remote/onsite? Do you have one client or multiple? * What is your staff like? Are you a lone worker? Do you have coworkers in your business? What did you choose to offload onto others? * How do you manage taxes, insurance (beyond those covered by your wife), and finances? * What alternatives have you considered in the event that your wife couldn't cover you? Mostly interested because this seems like a viable career path (to me) but I would definitely want to consider it with eyes wide open and learn from someone else's successes and failures.

acconrad 9y ago
* Currently sole proprietor. Will switch to LLC or C Corp in 2018 (depending on income), but I'd talk to your accountant to find out what's best for you. * I'm remote currently with high utilization client (as a subcontractor) and smaller retainer clients. * I am a firm of 1. * I have an accountant to manage taxes and finances. I keep meticulous records of what is a business vs a personal expense. The subcontractor gig is insured by the main contracting company. The retainer gigs stipulate it is knowledge/access only, so without any IP deliverables required, so there's no need for insurance on that. I may get insurance if my employment situation changes in terms of the contracts I take on. For this, I'd talk with your lawyer. * I would just buy health insurance through the state. I live in MA, so we have to have something. We're both young and healthy, and she has an incredibly stable job, so I don't worry about this one too much. I should point out that I'm very new to this (4 months in) so definitely don't look at me as a source of having "done things right" - I am learning every day and still sweating it all.
- seangrogg 9y ago
  Very interesting. Thanks for being candid with your freshness to this experience; it's valuable all the same. A few more questions, as your availability permits: * Have you considered an S-corp? If so, reasons against listing it as an option? * Any recommendations in general contractors (even if not specific ones, just things to look for in a general contractor)? Thanks for your time and response(s)!

danans 9y ago

> Am I in the minority here for being a contract developer who is happy to be in this place? > * My wife works full time so she has our back for health insurance Being an independent contractor or a self employed business owner is fine for someone who has an entrepreneurial bent coupled with unique skills that are in high demand. Such people can likely charge rates that more than compensate for the lack of employer benefits as a contractor. However, the contractors described in the article don't appear to have that combination of advantages. Presumably they also don't have spouses who can carry them on their health insurance plans. In a previous era, their jobs might have previously carried benefits, but many of these jobs have been reclassified as "variable workforce" positions, as companies restructure their employment to minimize the carried costs and risk of fulltime employees.

paulclinger 9y ago

> This far exceeds the 15% markup for self-employment tax. It's not even 15% difference, as the salaried workers also pay half of it, so the difference is just the employer portion, which is paid by self-employed contractors. I've been paying for my own insurance (a bronze plan) for the last three years, as it was cheaper than adding me to our family plan. It wasn't very expensive (started around $300/month in WA), but was going up about 20% each year, so this year we switched to a high deductible plan.

shostack 9y ago
>"It wasn't very expensive (started around $300/month in WA), but was going up about 20% each year, so this year we switched to a high deductible plan." This is what bugs me to no end about insurance. They get you with a low intro rate, then jack it up a massive amount annually, and leave your option as basically switching (if there are better options even available), or shouldering more of the risk by moving to a high-deductible plan (which makes them more money). Are there no good, consistently-priced insurance options for those who are not full-time employees with benefits?
- paulclinger 9y ago
  Not just that; they keep changing the plans, so that the plan you are currently on may not be available next year, but there is a "similar" one that is 20% more expensive and has worse coverage (and/or higher deductible). Those contractors that have LLCs may look into group rate insurance, as those are generally cheaper than individual ones (but you may need to have more than one employee to qualify).

ilaksh 9y ago

Just because you are a contract developer does not mean you earn a high income. Even in the United States. I am sure that few in my situation would like to admit it. For most of my adult life I have worked as a programmer on a contract basis mainly online for rates or fees that are well below the market rate for my area. For the last few years I have worked for non-funded or poorly funded startups for very small income amounts and no benefits. Even for jobs that were on site, many of the opportunities were spelled out in the ad or description as low rates like $70 or even $40 an hour. I am sure that people will find lots of reasons to believe that I did something wrong or am an exceptional case, but I don't believe that. I think I am just an exception in terms of people like me who will admit it. I have had a few well paid contracts but the income isn't consistent. But not every contract programming gig is rich. It just absolutely isn't. And not everyone can get those high paying gigs. Also for me I have been trying to get into business in startups and not all startups can or want to receive funding and somebody like me is taking those jobs and happy to have them. Again, go ahead and try to say there is something unusual or wrong. about me. I maintain the only really unusual thing is that I am admitting it on HN. My current startup does have a lot of potential so I am hopeful about future income.