6 ms·

Can confirm, was a contractor in Silicon Valley. The "narrative" these executives sell is little more than an opiate for their fleets of highly-paid engineers t

Can confirm, was a contractor in Silicon Valley. The "narrative" these executives sell is little more than an opiate for their fleets of highly-paid engineers to feel like they're justified in having a salary several times higher than the contractors they work with on a daily basis.

C1sc0cat 8y ago
Huh don't self employed contractors make more in terms of $ to cover the extra costs 3x is norm in the UK.
- maxxxxx 8y ago
  This is how I know it from Germany but in the US most contractors seem to make less than employees.
  - 01100011 8y ago
    Depends. If you're a talented engineer you stand to make a lot more money as a contractor if you stay busy and set your rates appropriately. The average salary in my area is $140k for a senior software engineer. As a contractor I could make $110-150/hr which could be $170k at the low end once the extra taxes paid by contractors are taken into account. None of those numbers include normal state and federal income taxes which would apply equally to both. Also being a corp entitles you to play a few tax games which let you reduce your tax burden slightly.
    - maxxxxx 8y ago
      I was contractor for a while and never saw those $100-150/hr contracts. In my current company the contracting agency gets within that range but the contractors themselves see much less.
      - curuinor 8y ago
        Did you have any leverage with the counterparty?
        plankers 8y ago
        Not even a tiny bit. Especially when it's your first job out of college.
      - mcguire 8y ago
        When I was working for a no-name contractor for IBM, the contractor got 13% of my hourly. Government contractors seem more like 50%.
      - 01100011 8y ago
        It helps to form your own corp and go direct. If your company can charge $150 for you, then you have a chance at charging $150 for you. Your company might provide some added value, so you might need to drop your rate a bit, but if you develop customer relationships and consistently meet expectations then you can get away with jacking up your rate a bit. There are times when you still might have to take a lower paying job but it varies.
  - curuinor 8y ago
    My contracting rate was double my hourly rate...
    - maxxxxx 8y ago
      Where?
    - dredmorbius 8y ago
      Given taxes, bench/beach time, risk premiums (unexpected downtime, search costs), that may well be too low.
- jldugger 8y ago
  AFAICT, there's two kinds of contractors. The first kind are experts that companies don't have enough ultraspecialized knowledge work to keep on a salaried basis. These people are like the Wolf (https://www.youtube.com/watch?v=wWmRTjLRMfU https://www.youtube.com/watch?v=wWmRTjLRMfU), brought in for problems nobody on staff was able to solve and charge accordingly. All the contractors of this type I know are self-represented, no middlemen. 3x is a norm, but often much higher due to their niche experience. The other kind of contractor is ordered from an agency. The agency might charge a shit ton, but the IC sees a fraction of that. These agencies only profit from the markup, so they position themselves accordingly; they find as much cheap labor as they can. If you look at the top H1-B sponsors, it's typically dominated by these places. Nominally places like Infosys file Labor Condition Assessments at 10x the rate of Google, but in a sense most big tech firms are outsourcing the H1-B process to the body shops. As you can imagine, this puts downward pressure on contractor wages.
  - plankers 8y ago
    Quite right. My contracting agency was making as much as I was for every hour I worked. Doesn't seem right when all they did was handle complaints and payroll issues. On the bright side, they were throwing money at us anyway and my student loans are paid off. Left a sour taste in my mouth, though. Haven't worked in tech since.
sjg007 8y ago
The w2 outsourced contractors are a long standing issue in silicon valley and tech, as such even the IRS has weighed in and basically only allows tech companies to have someone on contract for 2 years. There's some additional issues with it in that you really are a w2 employee because you don't get to chose when and where you do the work (or what hours you work).. So in a sense it is worse than uber because you can't choose your hours. Companies like it because it is low risk and you typically can get someone in for a lower wage than you would have to pay otherwise. Netflix is using contractors now btw.. I imagine things have evolved since the good old days: https://www.reuters.com/article/businesspropicks-us-findlaw-dont-treat-c/dont-treat-contractors-like-employees-idUSTRE53063S20090401 https://www.reuters.com/article/businesspropicks-us-findlaw-... But things largely have stayed the same.

C1sc0cat 8y ago

Huh don't self employed contractors make more in terms of $ to cover the extra costs 3x is norm in the UK.

maxxxxx 8y ago
This is how I know it from Germany but in the US most contractors seem to make less than employees.
- 01100011 8y ago
  Depends. If you're a talented engineer you stand to make a lot more money as a contractor if you stay busy and set your rates appropriately. The average salary in my area is $140k for a senior software engineer. As a contractor I could make $110-150/hr which could be $170k at the low end once the extra taxes paid by contractors are taken into account. None of those numbers include normal state and federal income taxes which would apply equally to both. Also being a corp entitles you to play a few tax games which let you reduce your tax burden slightly.
  - maxxxxx 8y ago
    I was contractor for a while and never saw those $100-150/hr contracts. In my current company the contracting agency gets within that range but the contractors themselves see much less.
    - curuinor 8y ago
      Did you have any leverage with the counterparty?
      - plankers 8y ago
        Not even a tiny bit. Especially when it's your first job out of college.
    - mcguire 8y ago
      When I was working for a no-name contractor for IBM, the contractor got 13% of my hourly. Government contractors seem more like 50%.
    - 01100011 8y ago
      It helps to form your own corp and go direct. If your company can charge $150 for you, then you have a chance at charging $150 for you. Your company might provide some added value, so you might need to drop your rate a bit, but if you develop customer relationships and consistently meet expectations then you can get away with jacking up your rate a bit. There are times when you still might have to take a lower paying job but it varies.
- curuinor 8y ago
  My contracting rate was double my hourly rate...
  - maxxxxx 8y ago
    Where?
  - dredmorbius 8y ago
    Given taxes, bench/beach time, risk premiums (unexpected downtime, search costs), that may well be too low.
jldugger 8y ago
AFAICT, there's two kinds of contractors. The first kind are experts that companies don't have enough ultraspecialized knowledge work to keep on a salaried basis. These people are like the Wolf (https://www.youtube.com/watch?v=wWmRTjLRMfU https://www.youtube.com/watch?v=wWmRTjLRMfU), brought in for problems nobody on staff was able to solve and charge accordingly. All the contractors of this type I know are self-represented, no middlemen. 3x is a norm, but often much higher due to their niche experience. The other kind of contractor is ordered from an agency. The agency might charge a shit ton, but the IC sees a fraction of that. These agencies only profit from the markup, so they position themselves accordingly; they find as much cheap labor as they can. If you look at the top H1-B sponsors, it's typically dominated by these places. Nominally places like Infosys file Labor Condition Assessments at 10x the rate of Google, but in a sense most big tech firms are outsourcing the H1-B process to the body shops. As you can imagine, this puts downward pressure on contractor wages.
- plankers 8y ago
  Quite right. My contracting agency was making as much as I was for every hour I worked. Doesn't seem right when all they did was handle complaints and payroll issues. On the bright side, they were throwing money at us anyway and my student loans are paid off. Left a sour taste in my mouth, though. Haven't worked in tech since.

sjg007 8y ago

The w2 outsourced contractors are a long standing issue in silicon valley and tech, as such even the IRS has weighed in and basically only allows tech companies to have someone on contract for 2 years. There's some additional issues with it in that you really are a w2 employee because you don't get to chose when and where you do the work (or what hours you work).. So in a sense it is worse than uber because you can't choose your hours. Companies like it because it is low risk and you typically can get someone in for a lower wage than you would have to pay otherwise. Netflix is using contractors now btw.. I imagine things have evolved since the good old days: https://www.reuters.com/article/businesspropicks-us-findlaw-dont-treat-c/dont-treat-contractors-like-employees-idUSTRE53063S20090401 https://www.reuters.com/article/businesspropicks-us-findlaw-... But things largely have stayed the same.