[Partial]

So I have a job offer for a developer position where I would be paid on a 1099 cash basis. I'm not sure how much I should ask for in hourly compensation, and I'm curious to what you guys think, knowing there are several added risk.

I'm just graduating school, but I have a fair amount of experience with having had project experience in writing java code as well as Adobe Flex code, as I'm been working on a project and making flex widgets for a year and a half.

With that said, I think a fair salary for a guy like me would be around 55k (its a recession) with average benefits (employers subsidizes a good amount of health insurance, dental insurance, optical insurance, 3% 401k matching, able to get unemployment if I get laid off, 15 days of vacation a year).

With that said, getting paid on a 1099 would be a totally different beast. For staters, in this economy, one has to compensate for the possibility of losing ones job. As an single owner LLC, I wouldn't be able to claim unemployment in the event my contract was terminated. Also, I wouldn't have the 3 weeks of PTO, or health insurance, etc.

With that said, clearly I would need to get my own health insurance, but I really don't have any idea how much something like that costs. Ideally, as a 20 something healthy male I would be able to get a package for around 6-7k a year.

With that said, with benefits and assuming 40 hours a week, a salaried employee at 55k works out to about 32-33 dollars an hour when all is said and done.

How much would you charge if you were in my shoes? I'm not really sure how much makes sense, as I do have to account for the risk of being unemployed, etc.

Any advice anyone here can offer me will be very much appreciated!

[scratt]

$55k plus benefits in a recession for a school leaver when the industry is laying off?

Wow. I can't offer you any advice but I need to charge people more.

[Robo]

Originally Posted by scratt $55k plus benefits in a recession for a school leaver when the industry is laying off? Wow. I can't offer you any advice but I need to charge people more.

And I need to change my career.

[Bryson]

I have no idea what the developer job market is like, but that sounds like a lot of money for a recent graduate of any discipline.

[Partial]

I don't know what to say exactly, but a grand a week is pretty cheap for a good developer imo. Plus, the area between Milwaukee and Chicago is known as one of the areas where you can earn some of the best money corresponding to cost of living.

Let's not worry about that element at this point, but how much would you mark up your services from being an employee with the ability to collect unemployment to the freelancer without? That's the part that I'm struggling with here.

[scratt]

I think what you need to ask yourself is why are you thinking of accepting this position?

If the position doesn't have those benefits it's probably because the company can't afford / doesn't want to pay them, therefore you are not going to get the balance of those things in cash on top of a cash wage.

Most likely a company like that is going to pay you less, not more...

You have to remember that any company in this economy is going to do the same things you are trying to do to protect itself. i.e. Pay less, get paid more, reduce expenses, and limit liability.

[Bryson]

Monster.com seems to agree with you, so, I could well be wrong...

Freelancers in my industry (by which I mean genuinely self-employed persons who take responsibility for all their own benefits, vacation, insurance etc etc) charge about 1.5x the salary rate.

Does that help?

[Partial]

That helps immensely. Does anyone else have any knowledge on the mark-up? The more data I have the better decision I can make!

Thank you Bryson!

[Swox]

Of course, in Canada our health coverage is free (well, paid for by taxes, but you get the idea). I don't know if you're a Canadian yet, Bryson...?

[Bryson]

Not a citizen, but a permanent resident. And not all health coverage is free in Canada....

[Stone Of Love]

I think your health care cost estimate is high too. Probably closer to 3k possibly 3.5k. But I'm assuming your a single person. I've got mine for a family down to about 6.25k this year, with the hope I won't have any co-pay costs. That if maxed out would put me over 10 grand for the year!

I don't have any experience in your field, but I do have a friend I am going to ask. He was just laid off from Seagate, and used to freelance when he was younger. He should have a clue.

My guess is $40 to $50 an hour. But that is just a guess.

[PB PM]

Originally Posted by Bryson Not a citizen, but a permanent resident. And not all health coverage is free in Canada....

No, not all health care coverage is free in BC... Somehow or another the BC government gets away with allowing violations the Canada health act, in some areas.

[GSpotter]

I can only help you with some german data. A magazine recently did an income survey in the IT market.
About 60% of the developers here earn between 40-50,000€ per year or less. An average Java developer gets about 52,000€ (although this is influenced by the area (e.g. in Stuttgart you might get more, but the costs of living are also much higher than elsewhere) and the size of the company (big corporations tend to pay more).

I think developer freelance rates are currently about 50€-70€/hour on average, depending on skill level. When I compare the rate my company charges for my services with my income (including benefits etc.), I could probably get 1.5 times my current salary as freelancer.

[Swox]

Ah, I forgot about the user fees in some provinces... I'm in Ontario where they have them too, but I'm still considered a resident of Saskatchewan (long, ridiculous story).

[turbulentfurball]

Originally Posted by Partial 15 days of vacation a year

Wow. 28 days is the statutory minimum for paid holidays here (Well, as of 1st April). I'd go crazy on 15 days per year.

[Partial]

Most entry level employees get two weeks of vacation. Some companies switch to PTO, and give the entry level people 3 weeks, and that includes there sick days.

[JohnnyTheA]

You also have to usually earn those hours as time goes by. Want to take a week off of work? It usually means working with no break for six months. In the UK/Euro not sure how that goes..

JTA

[GSpotter]

Originally Posted by JohnnyTheA In the UK/Euro not sure how that goes

In Germany, paid vacation time is typically quite long. In most jobs, you get between 25-30 days per year off. E.g. I have 30 days of vacation in my contract (based on a labor agreement).

[Stone Of Love]

This is what my buddy had to say.

It's really all what the market will bear. It sounds like he has some technical experience, but certainly not senior level. If I were him, I wouldn't ask for a particular hourly rate. He should just apply for (the) position and see what he is offered, and counter by adding 10%, and hopefully that will seem like a reasonable wage for him.   I certainly am not familiar with contract programming rates in the Chicago/Milwaukee area - I'm sure they are less than the Bay Area. He can also just call up a technical recruiter in the area, explain his background, and they will give him a reasonable estimate of what he should be asking for.

So there you go. Sounds like very good advice to me. Good luck!

[Moogs]

My understanding is many of the lucrative programming markets that sprouted up in the 90s and early 2000s, and paid a lot of money because the skills were relatively scarce, are paying out less now because of the huge influx of Indian and Chinese programming talent, and also the new generation of American talent. The kids who first grew up with the internet are now hitting the workforce and they know their stuff because they've been tinkering with it and learning it their entire adolescent life (unlike old dudes like me who tinkered with Apple IIc's and Green Screen monitors and made JumpMan levels as my closest foray into programming.

For web development in particular, rates have fallen quite a bit. Used to be you could earn $80/hour pretty easily doing that sort of work but I think in recent years that's been halved for even the most experienced people. There's a much larger pool of talent out there for employers to choose from than there was 8 or 10 years ago. And if Chicago is your target market, there is a large Indian demographic in this area. As in any other industry, they are technically sound and are willing to work for less money in many cases than western graduates. I can't say for sure but seems like your estimates are a little high for your experience level. I would start out negotiating at about $32/hr (they'll suggest $25) and expect to meet in the middle around $29 or something like that.

[Enki]

This isn't directly towards rate, but if you incorporate, spending the couple hundred that that takes, you get to work as an employee again. If you lay yourself off, you would be eligible for unemployment, because it was the corporation tha did it, not a sole proprietor not being able to get by anymore. The couple hundred it take to do that can be looked at as a form of insurance.

To address scratt's opinion that the company won't pay for benefits rate, I'm not so sure about that. First, as a contract the company gets to deduct all of that off the top line, directly as an external expense, where they only get partial deductions for payroll taxes and benefits. Also, outsourcing implies no long term obligations and the financial issues associated with terminating an employee such as unemployment insurance or workers comp costs, which make the many contracts competitive to almost double the wage rate.