Contract or FTE?

It's been about a 1.5 months since I started my job search, with the last 2 weeks being the most intense as I was unemployed during that time (I had seen it coming). We all read the 'doom & gloom' reports about the economy everyday. Whether it's the actual economy or just the fear of a bad economy, companies are generally not hiring full time. If they are, they are probably inundated with applicants. There are too many applicants and not enough full time employee jobs - and I am finding it hard to get noticed, even when I network my way in.

There are organizations out there that still need to hire people even though they are in a hiring freeze. They hire employees on CONTRACT then, because technically that does not count as a new hire. I am finding that in this economy, it may be easier to get a contract position than an FTE position - and maybe that is a good way to keep working and ride out this horrible situation.

I've always snubbed contract work. Everyone knows you don't get benefits, its short term, and they can let you go at any time. You just don't get all the perks that regular FTE's get. When I was an FTE, I'd always feel bad for the contractors. But you know, I am starting to take a look at the upside of contracting.

• You get paid by the hour, which means you qualify for OVERTIME. OT? OMG! As an FTE I was always putting in OT, but of course you don't get paid extra for that.
• You get paid MORE by the hour than FTE's. I am looking at about a 20-25% mark up in my hourly contract wage versus my hourly FTE wage.
• The reason you get paid more is because you have to buy your own healthcare and other benefits, but I still believe you can come out on top (especially if they have you work OT).
• You don't accrue vacation time or get paid for holidays, but you may still be able to accrue sick time (by law in some places).
  

Typically, a company will work with an outsource agency. You work for the agency, and the company pays the agency for your work (and the agency then pays you). That agency may offer you benefits (like health or 401k) after 3-6 months. Types of contract work:

• W2 contractor: Taxes are withheld and payroll taxes are paid for you (good for full time).
• 1099 contractor: No taxes withheld generally (good for part time)
• Corp to Corp: You form an LLC and then bill the company for your time (meh, thinking 1099 is just as good but with LLC you at least get liability protection)
  

Before you head into contract work, make sure you have good agency representing you. One that offers you some benefits after 3-6 months is pretty good. Also make sure the contract length is worth-while. For example, I am looking at a 6 month contract now with the option to stay on longer (up to a year or more). I like that it is for at LEAST 6 months and I could possibly continue if things are working out. This could be just the time I need to let the economy recover, find FTE employment, and earn a living in the process.

If anyone who has done contract work in the past has words of advice, please comment...