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What Is the Ongoing Rate For Contract Jobs In the US?  RSS feed

 
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A recruiter at a recruiting agency told me that people with some experience (2 to 3 years) and certificates are able to sell at only US$28/hour. No health, dental, 401K, etc. It is a contract job! Charging employers over US$30/hour is difficult to sell.
She also said that those who with more than 7 years of experience (senior ones who used to make 6-digit salary during the boom years), the rate is about US$50/hour.
Do the figures sound right?
 
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Definitely this is not a good market for people who don't have a lot of experience, particularly contractors. There are too many people looking for work with 5, 10, and more years of experience.
In better job markets there are three ways I know of to do the estimate for non-employees:
1. Find out the hourly salary for employees and add about 30% on top of that (for loss of benefits) to get the hourly contractor rate.
2. Take the annual salary for employees and use 1% of that number as the hourly contractor rate.
3. Find out what the local market is willing to bear (by talking to other people in your field, for example).
Approach #1 applies to contractors who work through agencies and consulting firms that take a big cut of the bill rate. Those firms do the work to place you, and they have established clients, but they take a really hefty cut.
Approach #2 applies to contractors who work without agencies. Depending on how the contractor structures the agreements, a 10 or 20% cut of the bill rate may go to some firm that handles the paperwork, billing, etc. The downside is that they have to find the jobs on their own, so that takes up part of their time.
Approach #3 mostly applies to freelance consultants, not contractors.
In this market, I doubt you'll see too many of the independent contractors getting a bill rate based on 1%. If they are working at all, I suspect it is in the 1/2% to 3/4% range. Contractors often get hit first when companies downsize, which is why the bill rate is higher in the good times.
I'd suggest asking the H/R person what the bill rate is (the rate the client company pays the recruitment firm for your time). Don't be surprised at how big a cut it is. If they won't tell you the bill rate, this is probably a firm you don't want to deal with. Once you do know the bill rate, you can try and negotiate something equitable.
 
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You may also want to check out this thread.
Keep in mind, if you have special skills, you may be able to demand more, e.g. expertise in security, or a particular database, or knowledge in some particular special field.
--Mark
 
Reid M. Pinchback
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Another thing to factor in is personal finances. If you have a working spouse, and you are covered under their benefits, then that tends to reduce the risk of being a contractor. It gives you a bit more flexibility in what kind of rate or length of contract you might need to make contracting worthwhile.
 
JiaPei Jen
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Thanks to all of you for those good information and advices.
I told that recruiter about how the rate for contract positions is calculated taking all kinds of factors into account. The recruiter who said US$28/hour stops talking to me.
I think that she may have realized that US$28/hour is too exploitative.
 
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JiaPei Jen :
- Probably not the answer you are looking for:
- If I were in your shoes (junior level programmer) - I would look for a permanent position.
- The market is ultra slow right now for the IT industry - even slower now than in Jan/Feb. So my advice would be to get a standard W2 Java or help-desk position.
- I would use this time then to get more education - which is what I see my old colleagues at Hewlett-Packard doing. Most are going back for MS-CS or MBA degrees while working help-desk or more junior level positions within the company.
- Basically going back to the old axiom of trying to turn a negative situation into a positive.
Johnny
(jpcoxey@aol.com)
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