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How will I.T. contractors retire?

Posted on | December 10, 2007 | No Comments

I am happy to see that plenty of jobs are available in specialized I.T fields such as virtualization. I’ve been digging through the hundreds of head hunter web sites the past few days just to test the water and noticed that many of the posted opportunities offer contract positions.

If you aren’t exclusive to one company, contract work can net you significantly more at the end of the year than conventional full time employment, even considering the costs of paying your own insurance and other things that employers typically do for you in non-contract employment.

The postings that I saw are alarming (in similarity) because many demand well beyond 40 hours of work per week. This means, as a contractor, you would be exclusive to a company without benefits or the ability to advance yourself independently of the company. In essence, its the typical 50+ hour grind without benefits of any kind.

Most interesting to me is the trend to not post the compensation range with the job description. I contacted some of the employers asking about compensation prior to applying for a few positions, none of them wanted to talk to me until they had my resume in hand. Some wanted a non-disclosure agreement signed and submitted with my resume in order for it to be considered. What sense does that make? Are workers actually buying in to this human DRM mentality?

Its becoming painfully obvious to me that I.T. employees are valued similar to baseball cards. In any given year, only a select few of us become ‘valuable’ to any company, the rest of us are traded or discarded. I suppose that’s just the direction the industry is taking, complaining about it doesn’t seem very productive. I’m simply wondering, now that I have years invested in my industry, how the heck am I going to retire?

I do very simple math to determine how much a company values my time and help, I divide how much I take home by how many hours I spent away from home. For contract positions, we have to consider some additional math such as deducting the costs of our insurance, personal retirement plan and other things (normally) paid by employers before we do the division. Yikes, that means many of us are making $10 – $16 per hour.

I should note, many I.T. workers can’t manage to ‘pay themselves first’ (put away money for retirement) because they must save for their own tax liabilities the following year. Most contract employees are also responsible for managing their own taxes, as opposed to an employer deducting a little from each pay.

A while back, I was wishing for some kind of I.T. contract workers and freelancer association, I really hope that something like that pops up. I’m not angry with the industry, companies need to remain competitive and I’ve always favored globalization. I’m not hoping to have my cake and eat it too. I’m simply wondering, what happens when I’m 64?

Most of the positions that were salary (not contract) based seem to be coming from non-profit organizations. While the pay seems a bit lower, once you factor a shorter work week, non-exclusivity and benefits, working for them seems to be smarter than working for a start up. Unfortunately, with the employment market saturated with applicants, these jobs are hard to get.

I’m willing to accept that there’s a limit to how far I can advance myself in this industry, I’m not one of the people who feel that because I have skills the world should hand me a six figure income. In fact, I rather enjoy a modest salary in favor of having more time to enjoy life.

So, what do we do? Live and work abroad where its cheaper for 30 years while saving and then come home to retire? It seems like staying in this industry gives me two options, deal with not having quite enough now, or later. Never mind planning for education expenses (I have a 2 year old).

I’m really curious to see what other people are thinking and doing, comments are appreciated. :)

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