Why is contractor the next step after senior engineer?

Question

Frustrated London contract engineer here. I worked my way up from junior to senior engineer, didn't want to go into management, and hit the salary ceiling for permanent jobs in Europe. Contracting was the next logical step. I earn 1.5-2.5x the market salary of a senior engineer, but I would rather have a permanent job.I have some questions:i. Why is the market like this? Something seems very wrong about this situation. Surely this is neither optimal for myself or the companies I work for.ii. Am I missing something? There seem to be perhaps a hundred high paying engineering jobs in all of Europe, and they all seem to be in hedge funds. Or am I somehow not seeing them?iii. How is everyone else handling this? Are you also going in to contracting, moving into management, or accepting that your senior engineer salary is as good as it will ever get?

uberman · Accepted Answer

1) If you are self employed (at least in the USA) you are responsible for some taxes typically paid by your employer. Additionally, your employer does not provide you any benefits. From the perspective of both the employee and the employer, this alone can make a 1x employee compensation effectively the same as a 1.5x contractor compensation. I personally HATE doing taxes for contracting work so I will not work for less than double my salary.
2) Anyplace in Europe, you are going to be comparatively "close" to Eastern Europe where the cost of living is low and super talented programmers can be found for "peanuts" and compensated under the table directly via paypal. This drives the local cost of talent way down.
3) Don't move to management unless you are sure that is the right role for you. A great programmer is not (necessarily) even a mediocre middle manager. If you are suited to it then great. If not, start your own company or look to find a senior position some place else with better compensation (remember, not all compensation is pay) For example, many employers off discounted home loans, education assistance, retirement contributions, or stock purchases.

pestatije · Answer

You can "contract" through a body-rent(or is it head-rent? not sure) company. Or if you are in a jurisdiction that permits it, directly contract with your current company.
If your preference is a permanent job, management is the answer. You have the choice.
Well, of course the domain makes a lot of difference. Seems to me the requirements are very narrow: permanent, not management, existing domain, salary > 1.5x market salary. Can you not compromise?
I'm not in that kind of position, but I'd say, what's wrong with hedge funds? What's wrong with management? What's wrong with keeping your 1.5x market salary?

doggodaddo78 · Answer

Because efficiency for one doesn't mean efficiency for the other. The business gets expertise on-demand without paying over senior rates, but the over senior professional doesn't have any real stability. It's a failure to unionize and negotiate the pay scales and progression, because it's basically a pipeline to force people out into uncertainty. Why participate then?