Comment by sometimeshuman | Hacker News Reader

Comment by sometimeshuman | Hacker News Reader

Just to address one of your many points: "contractors don't get raises"

I heard similar at my company. But every year I write a letter requesting a raise and send it to at least two people in the company. "One of the owners..." then send the letter to more than one owner or an owner and your direct manager. That owner probably wouldn't re-iterate how cheap they are if a direct-hire is cc'ed.

In the letter, I politely explain my recent contributions, the fact I have competing interests and other opportunities but would like to keep working there. I don't make it sound like I have one foot out the door but it's implied I am standing near the door and it's up to them to keep me.

I have never failed to get a raise in over 10 years. When I shared this with a co-worker (contractor), I learned she hasn't received a raise in 4 years. Same goes for the other contractors (5+ years?). The money is there, so just ask for it. If they don't have the money for a modest raise then it's sinking ship.

Huh. I'm a contractor. I just tell them what my rate is. Then they have to pay that, or cut my hours. There's very little in the way of 'negotiation'.

In fact, the last two years require a rate bump of 25% just to beat inflation. You don't do that, you're losing ground.

This is the correct way to do it. There is no "negotiation" when you're a contractor, except between you and the market in that broad hand-wavey sense. You set a rate. They have a budget. The rest is just math.

The inflation number is absolutely wrong though. There obviously hasn't been nearly 25% inflation over the past 24 months.

The concept of asking for a raise doesn't make sense to me even as a regular employee.

If you need to beg for a raise, you're already in a bad negotiating position. The ideal situation is to figure out what you'd require to stay with your current employer, and see if they want to match that.

You shouldn't need to care what their HR says is the "going rate" for your position, nor what the company has allocated for yearly raises. That's largely posturing on their part, and tells you little about how much they're willing to pay you if push comes to shove.

If you're at a toxic company, you will need to ask for every raise, and will only ever get less than you ask for.

But I feel like this comment ignores the fact that companies do have budgets, and the people above you still have their own budgets and bosses to report to. If you work for a company (especially public or non-venture, especially non-tech) there will absolutely be a lot of cost controls and constraints around what is allocated to raises, new hire salaries, retention and signing bonuses, etc. It's exceedingly rare that the line manager has authority to give anyone a 20% raise when he's given a 4% budget increase across the board.

> But I feel like this comment ignores the fact that companies do have budgets, and the people above you still have their own budgets and bosses to report to.

I didn't mean to imply that those factors aren't real.

Rather, I was recommending that employees try to avoid being in a situation where those factors matter to the employee. Ideally you're aware of your options, and prepared to change jobs if it's in your interest.

Unless you're personally invested in the employer, it's just business.

>>The inflation number is absolutely wrong though. There obviously hasn't been nearly 25% inflation over the past 24 months.

Uhm, have you been to the grocery store of late? Inflation is damn near 40%

Certain items I buy one the regular have gone up a minimum of 25%

Look at fucking gas prices.

Yes, "look at fucking gas prices" to see the inflation-adjusted price has been stable and slightly decreasing for well over two decades. [0]

Your anecdotes about whatever random nonsense you're buying are irrelevant. Inflation is in the mid-to-high single digits. 25% a year for two consecutive years is a categorically false assertion.

[0] https://www.usinflationcalculator.com/gasoline-prices-adjust...

> The inflation number is absolutely wrong though. There obviously hasn't been nearly 25% inflation over the past 24 months.

Sure—judging from my grocery and gas bills, it's higher than that.

Unironically, food and fuel aren't including in US inflation numbers. Because reasons.

This isn't even remotely true. You can see what goes into the CPI, and food is the #2 category after shelter. Motor fuel is included in transportation.

https://www.pewresearch.org/fact-tank/2022/01/24/as-inflatio... https://www.bls.gov/cpi/factsheets/motor-fuel.htm

Now I'm confused. [0] states that food and fuel are exempt for the "Core Inflation" metric calculation because they are historically volatile.

> Core inflation is the change in the costs of goods and services but does not include those from the food and fuel sectors. This measure of inflation excludes these items because their prices are much more volatile. It is most often calculated using the consumer price index (CPI), which is a measure of prices for goods and services.

> The Fed prefers to use the PCE index rather than CPI since PCE tends to provide inflation trends that are less affected by short-term price changes. Also, the Bureau of Economic Analysis (BEA), a division of the Department of Commerce, calculates the change of prices by using existing gross domestic product (GDP) data, which helps to determine an overall trend in prices.

[0] https://www.livetradingnews.com/what-is-core-inflation-and-w...

The cpi and other inflation metrics get messed up by hedonic adjustment and improper weighing of the baskets. Sometimes just looking at the M2 money supply is a better estimate. https://fred.stlouisfed.org/series/WM2NS

Significantly more money chasing the same amount of goods= inflation

https://www.usinflationcalculator.com/inflation/current-infl...

Where are the two years of 25% inflation?

"There hasn't been near 25% inflation..."

The last two years alone add up to 16%. The next year looks to be similar.

Though I admit, I posted the wrong number - I have to raise my rate by $25/hr to keep up. I wrote that number instead of 16% which is what we've had to eat in the last two years.

Yeah closer to 35 so 25 is the low end

hasn't it been 9.5% in the US in the last year? i can believe 18 over 2 years

You're a contractor.

You don't get a "raise". You tell your client that your rates are changing and you would like to renegotiate your rate.

Also - if you're in a contract job for 4 years, there's something wrong

" if you're in a contract job for 4 years, there's something wrong"

Depends on your goals. I've been contracting at the same company for 10years. It gave me the flexibility to run and operate a successful side business and take unpaid vacation time whenever I want.

Let me correct myself - if you're in one contract doing the same thing for 4 years, there's something wrong.(IMO)

I love contracting and it's my preferred method of working. However - staying in one contract for 4 years is a red flag. (barring some really long term projects)

as a contractor for over a decade of my 25 year career - I would do big builds and some contracts were only like 9 months... and when I would apply at other places they would always ask me, because they were ignorant of what I did - "Why were you only there 9 months"

And I would have to explain "Because that was what I was contracted to do"

The only contract that I was terminated early from was FB -- but that was because I accidentally, through my status reports, revealed that a certain executive named "the Captain" was hiding build schedule delays for the Sydney office (he went on vacation so I had to speak directly to the contractors building out the office, and found out they were behind schedule by a month and over budget and I put it in my status report, and upon his return from vacation he had me terminated for revealing that info)

and the fucked up part was that my manager and team just left the area, then I got a call from the contracting company telling me I had to leave the building - and I was commuting to work via the FB van... so I was stranded in Menlo Park....

Employee - stuff a max of $20,000/yr into US retirement plans if your employer offers one, and pretty much no other tax deductions

Contractor - stuff $500,000/yr into a combination of US retirement plans, and a ton of other deductions

Don't forget, these plans grow tax free. Your 401k can invest in a Private Equity fund once it is also an accredited investor or can make the minimum investment amount.

I pretty much hate W-2 employment. It's the slowest way to make money and taxed the highest.

I'm familiar with places where contractors are like second-class workers hoping for a conversion to employment, that makes sense at low salaries. I think people are not revisiting the concept accurately at different income ranges.

Not sure how you'd get anywhere near $500,000 (employing a spouse and a couple of your kids offering them maxed-out matching contributions, too, maybe?) but I do suspect the most common way anyone approaches the 401k contribution limit is through kinda-shady family businesses in already-rich families. AFAIK you can't even hit 50% of the annual limit without nearly-unheard-of employer matching, because such a high proportion of the annual limit can only come from an employer—you can't contribute it yourself.

Still, without some real weirdness I'm not sure how you'd get near $500,000, even factoring in HSAs (primarily another tool for the already-well-off to avoid taxes—the trick is that if you put money in but never pay medical bills out of it you can save those receipts and get all that money you would have spent tax-free at retirement, while it's been growing all those years pre-tax like a normal retirement account) and using both IRAs and 401Ks.

When you attach your a single participant 401k to your own S-Corp (or to even just yourself as an individual), you can do maximum employer match alongside maximum employee contribution. This moves your max retirement contribution from $20,000 to $60,0000 as of time of writing. (you can also do the employee contribution exclusively with your W-2 employer, and if you have other sources of non-passive income you can just do all employee match for the other $40,000 into your own)

then you can also construct a Cash Balance plan, which adds a lot more and linked to your age, every year. ie. a 30 year old can contribute maybe $80,000 while a 65 year old can contribute maybe $450,000. Its not a "above age 50 catch up" like 401ks and IRAs have.

any cash amounts in any of these plans can be rolled over into whichever other kind of retirement plan is preferred.

so if you don't like compliance duties of a 401k, you can roll that into an IRA. If Cash Balance plan is too restrictive on investable assets, you can roll that into a 401k or IRA. You can roll any of this into the Roth products if you don't mind paying income tax that year.

Oh damn—good tricks, thanks, and I didn't realize you could do the 401k max-out thing as a sole proprietor.

Tax-advantaged retirement plans in the US really do seem structured to be nearly useless for normal employees, and very useful to those with a high incomes and a good deal of flexibility in how they structure their finances. I'd like to think that's an accident, but it's probably not.

[EDIT] Last bit not directed at you, just an observation. You gotta do stuff like this, if you can, or get screwed. Which sucks, but those are the rules.

well there is a populist push to get rid of contractors (California AB5, other states, Biden's plan), kind of ignoring that there are high earners running their own plans intentionally as opposed to someone relying on employer health insurance and paid leave

but fortunately I think that push is ignoring when an individual applies for the role as a single member LLC or other incorporated entity they control

I wasn't arguing against being an IT contractor long term. Tax benefits are very much clear to me.

One important thing to know is that people can say whatever they want, but it doesn't make it true.

Folks in business—especially sales—seem to do this a lot, where they say one thing as it's a firm rule, but it's actually not at all. It's probably super-effective against people who tend to take any statement by an authority figure as final, but in the end they're just some asshole saying whatever they like, they're not the arbiter of reality. You can't know the truth until you push back on it and see what happens.

If saying "yes" to a raise (or, rate change) is better than whatever risk they perceive from saying "no", they'll very likely agree to it, and you'll find out "contractors don't get raises" was just a self-serving lie.

Contractors get contract renewed, usually every year or so. Thats time for renegotiation, never hurts to bring competing job offer. Asking politely leaves money on table.

Being contractor for 4 or even 10 years is kind of fishy. Most countries have a law that converts temporary contractors into permanent employees after N years (4 in Ireland).

I really hate being an employee in EU. I don't want to be an employee. I want the flexibility and lack of those crappy "what do you want to do in 5 years" type of convos.

I know what I want to be and it's none of my client's business. I currently have to lie to my employer about "what I want to be", because there's an expectation.

What if my employer doesn't like the fact that I want to show off my feet on OnlyFans in 5 years, instead of being their "lead architect"?

I have literally moved out of Ireland to avoid being an employee.

There's a lot of contracting work in Ireland. What's your area? If it's around the data space I might be able to put you on touch with some people.

I live in NYC now, but thank you.

(Funny enough I am a data platform engineer)

Reply on news.ycombinator.com