Pros and Cons of Contract Work
The world of work is evolving, with a rising tide of non-traditional roles like gig jobs and contract work. Recent data suggests nearly 40% of workers now fall into this category, embracing a more flexible, temporary employment style.
For some, this is a deliberate choice, offering freedom and variety.
Others find themselves in contract roles due to the changing job market.
This way of working has its upsides and downsides. Flexibility and independence are big pluses, but these roles often need more security and the benefits of permanent positions. It’s a mixed bag, offering both opportunities and challenges.
Pros of Contract Work
Here are the benefits of a contract work;
1. You are Your Own Boss
Enjoy the freedom of being your boss as a freelancer or independent contractor.
This path is chosen by many for its autonomy. When working at a client’s site, you will be among their staff, but remember, they are clients, not bosses.
They guide but do not control your work like they would with their employees. This independence is a key distinction in the contractor-client relationship.
2. A Wealth of Opportunities
In Canada, the trend is leaning more towards contract jobs than steady, full-time roles.
This shift means if you are only hunting for a permanent position, you might bypass many exciting, temporary gigs.
These contract roles could be a perfect match for your skills and interests.
Remember, fixating solely on permanent jobs could stretch out your job search. Looking for contractor positions might open new doors for you, especially when full-time opportunities are scarce.
3. Become a Time Master
There is a neat little rule for freelancers!
Companies cannot tell you when to clock in or out, a freedom enjoyed by many contract workers, including those in specialized roles like contract engineers. So, if you are someone who hits their stride at the crack of dawn, go for it! As long as you are fulfilling those deadlines, it’s all good.
And no, companies cannot make you sit in an office all day, though going in for a meeting now and then is fair game.
4. Testing Out Employers, Industries, and Jobs
Job hunters commonly feel thrilled about landing a full-time position, only to discover they dislike the job, their boss, or the entire industry.
Here’s a smart move
Opt for contract work.
This approach lets you test-drive various roles and organizations. It’s a chance to uncover what excites you, what you excel at, and envision your future career path.
5. Potential For Higher Earnings
Businesses often choose contract workers for their adaptability and ability to save time, money, and resources, much like in manufacturing engineer jobs.
These companies prefer skilled professionals over beginners to avoid spending on training. Contractors who quickly understand and complete tasks are highly valued.
They efficiently handle the work without extra costs for the company.
Cons of a Contract Work
Here are the drawbacks of contract work;
1. Fewer Tax Options
When you work as a contractor, your paycheck usually comes without common deductions like income taxes or retirement fund contributions.
This might seem great initially, as you will see more cash in your account.
However, come tax season, it is a different story.
You will have to put in extra effort to sort out your taxes and ensure everything is in order. It is like having a fuller wallet now but facing a puzzle later, ensuring you have covered all your tax liabilities.
2. Work-life balance
Striking a balance between work and personal life can be tough, especially for contractors.
Imagine It!
Your boss’s emails keep showing up on your phone, even after work hours. And when your office is just a few steps away, it is tempting to sneak in “just to check one thing.”
But often, that one thing leads to another, blurring the lines between your professional and private life. It is essential to put in extra effort to maintain a healthy boundary.
3. Must Pay For Own Health Insurance and Benefits
Unlike employees whose companies usually handle these costs, contractors often cover their health insurance and benefits.
They also miss out on state unemployment benefits due to their self-employed status.
Planning for retirement becomes their responsibility, too, as they need to manage their funds. Regarding health and liability insurance, the rates are generally higher than what businesses offer employees.
4. Social Exclusion
Stepping into a contract job can sometimes feel like you are alone. Often, your fellow employees might hesitate to get to know you.
They might think, “Why bother?” since you will be around briefly.
This can mean fewer invites to join their group chats or lunch outings, and they might not share helpful tips or company news with you. It is a common situation in contract work, where nearly 36% of workers report feeling left out of the team dynamic.
Contract Work FAQs
Whether it is better to be a contractor or an employee depends on personal preferences and circumstances. Contractors often enjoy more flexibility and higher pay rates, while employees benefit from job security, benefits, and structured career progression.
Contract workers typically get higher pay rates to compensate for the lack of job security, benefits like health insurance or retirement plans, and the need to cover their taxes and business expenses.
Hiring contractors offers flexibility and cost efficiency for businesses. Contractors can be brought in for specific projects without the long-term commitments or additional costs like benefits and payroll taxes associated with permanent employees.
Wrapping Up!
Working as an independent contractor has its perks. You get to be your boss, pick your clients, and often work from home. However, this freedom comes with greater responsibilities.
One major aspect is handling your taxes, including those for Social Security and Medicare.
Also, you will likely need to invest in your tools and equipment. Remember, setting up tax IDs at both federal and state levels is part of the deal, too.