Different types of jobs
This post is intended to be a simple road map of the basics of the job market. Here, I will explain the different types of hires and what differentiates them, and give my opinion on where the types are headed in the near future. NB: No one has ever successfully and reliably predicted the future on a long time scale.
Employee: There are two sub-types; exempt (college degree) and non-exempt (usually associates or unfinished college degree). Both are assumed to have a fairly long-term interest in staying with the hiring company. In past times, for example, database administrators and system administrators were looking at about 3 years average employee job lifetime, while developers might have an 18 month average job lifetime.
Exempt employees are considered more elite than non-exempt, and can be "encouraged" to work ridiculous hours. Non-exempts pretty much are limited to 40-hour workweeks. There is considerable flexibility in both. Exempts are first in line for promotions to management. Employees are by far the most common types of workers due to both labor and tax law. This will be true going forward as far as can be seen.
W2 Contractor: Two sub-types: try-before-buy (contract to hire), a short-term contract relationship where the company checks out the contractor's work and the contractor checks out the company, and virtual slave (long-term W-2 contractor).
Try-before-buy is a fairly good way for both the company and the contractor to get some idea of the other before committing to an employer/employee relationship. I'm not wild about long-term W-2 contracting because the contractor is actually an employee of the contracting company, merely an abusable contractor to the principal company, is in a weak legal position, and has a very, very poor tax position as well. Most H-1B workers are in this position. Not recommended!
W-2 won't go away, especially the try-and-buy part. Because of the fairly extreme abuse suffered by H-1B visa holders, I rather hope the long-term side of this type of contracting is discouraged. I know the corporations are fighting for continued H-1B, and I'm fairly certain their arguments are specious, but I have no visibility into how this battle is going.
C2C / 1099 Contractor: This used to be the pinnacle of contract work, particularly if one could secure a long-term position. This was where one could get the highest pay, the best tax positions. I've been doing this a long time. This type of contracting is best done with multiple customers.
There are numerous tax and labor law pitfalls. All these folks need the services of an accountant. Marketing oneself is very, very hard, because most large companies in a position to hire such workers don't want to even talk to an individual, even if they need them now. Thus, most of these folks work as sub-contractors to some larger contracting agency. Crazy, expensive, but true.
To do this, you have to have a very, very thick skin, do a lot of trial-and-error marketing. Having a business / tax attorney you can trust to be your attack dog is absolutely essential, because you will wind up suing customers for breach of contract during the course of an average career.
I suspect this type of contractor will be increasingly employed in the gig-based economy. That's fine as long as the contractor markets in expensive cities and lives and works in cheap cities. Pure contractors are made for remote work, but most companies do not yet know how to use them properly.
Automated marketing of some sort (I haven't found a good system yet) will be necessary to maintain enough continuous employment to pay the bills. The days of long-term pure contractor gigs are coming to a close, unless the government eases up on the rules and the tax consequences. Might happen, who knows.
NB: Your value to the company is best understood by the so-called "sliced bell curve" which I discuss here. Don't over or undervalue yourself - both ways are losers.
Employee: There are two sub-types; exempt (college degree) and non-exempt (usually associates or unfinished college degree). Both are assumed to have a fairly long-term interest in staying with the hiring company. In past times, for example, database administrators and system administrators were looking at about 3 years average employee job lifetime, while developers might have an 18 month average job lifetime.
Exempt employees are considered more elite than non-exempt, and can be "encouraged" to work ridiculous hours. Non-exempts pretty much are limited to 40-hour workweeks. There is considerable flexibility in both. Exempts are first in line for promotions to management. Employees are by far the most common types of workers due to both labor and tax law. This will be true going forward as far as can be seen.
W2 Contractor: Two sub-types: try-before-buy (contract to hire), a short-term contract relationship where the company checks out the contractor's work and the contractor checks out the company, and virtual slave (long-term W-2 contractor).
Try-before-buy is a fairly good way for both the company and the contractor to get some idea of the other before committing to an employer/employee relationship. I'm not wild about long-term W-2 contracting because the contractor is actually an employee of the contracting company, merely an abusable contractor to the principal company, is in a weak legal position, and has a very, very poor tax position as well. Most H-1B workers are in this position. Not recommended!
W-2 won't go away, especially the try-and-buy part. Because of the fairly extreme abuse suffered by H-1B visa holders, I rather hope the long-term side of this type of contracting is discouraged. I know the corporations are fighting for continued H-1B, and I'm fairly certain their arguments are specious, but I have no visibility into how this battle is going.
C2C / 1099 Contractor: This used to be the pinnacle of contract work, particularly if one could secure a long-term position. This was where one could get the highest pay, the best tax positions. I've been doing this a long time. This type of contracting is best done with multiple customers.
There are numerous tax and labor law pitfalls. All these folks need the services of an accountant. Marketing oneself is very, very hard, because most large companies in a position to hire such workers don't want to even talk to an individual, even if they need them now. Thus, most of these folks work as sub-contractors to some larger contracting agency. Crazy, expensive, but true.
To do this, you have to have a very, very thick skin, do a lot of trial-and-error marketing. Having a business / tax attorney you can trust to be your attack dog is absolutely essential, because you will wind up suing customers for breach of contract during the course of an average career.
I suspect this type of contractor will be increasingly employed in the gig-based economy. That's fine as long as the contractor markets in expensive cities and lives and works in cheap cities. Pure contractors are made for remote work, but most companies do not yet know how to use them properly.
Automated marketing of some sort (I haven't found a good system yet) will be necessary to maintain enough continuous employment to pay the bills. The days of long-term pure contractor gigs are coming to a close, unless the government eases up on the rules and the tax consequences. Might happen, who knows.
NB: Your value to the company is best understood by the so-called "sliced bell curve" which I discuss here. Don't over or undervalue yourself - both ways are losers.
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