I guess hiring for contracts routes around arbitrary headcount limits.

Not really arbitrary. Headcount are typically approved in tranches, budget is a lot more fluid. Headcount is also part of long term forecasting whereas again contractors are just a budget item.

"A $100k engineer costs $150k per year all in" vs. "We need to spend $150k to get X done"

I think it has more to do with getting around benefits, usually.

The expense for businesses isn't just the salary, in fact alot of businesses, if they could just pay the salary, would be able to retain / hire more people, but benefits + high salary is harder to take on.

This is a great argument for universal healthcare and a nationalized pension system, but I digress

But you just pay _more_ for the contractors, at least if you hire locally. In my experience contract rates for comparable work any place you'd want to work are typically marked up (at least) enough to roughly compensate for the difference in benefits and taxes.

Especially now that remote for FTEs has become so common, there wouldn't be much motivation to take long term contracts otherwise. That may change if the job market goes pear-shaped, but doesn't seem like we're there yet.

Tech workers are so highly compensated anyway that benefits aren't a huge percentage of the total cost of employment. The main reasons to prefer contractors in times of economic difficulty are: (a) contracts are fixed length, so it's easy to simply let a contract lapse rather than renewing it if conditions worsen/don't improve and you want to cut headcount without having a layoff, and (b) contractors frequently count differently on a balance sheet (as operating expense vs employee expense).

tech workers are not highly compensated on average, lawyers, doctors etc are.

Average salary for a lawyer isn't that different than for a software engineer (slightly higher). Doctor's average on the other hand is more than double.

>Doctor's average on the other hand is more than double.

And often have spent a lot more time in relatively low-paid training.

And lawyers are at least somewhat bimodal (though maybe trimodal). White shoe firms, corporate lawyers/successful private practices, everyone else.

if you are one, you are not the other (type of lawyer), in same vein as dentist will never be GP or neurosurgeon or dermatologist and vice versa. you also don't see linux admins leading development of some software projects

Not really. They all went to law school and passed the bar. Of course, there are tiers of school, class rank, and clerkships that perform a sorting function. Law has pretty strong credentialing mechanism.

any lawyer you try to hire in the bay area will be charging you $700+ per hour. doesn't matter if they work for a big law firm or not. the lowest I ever paid a lawyer was $400 per hour.

I don’t know the situation in the US but in Germany a large part of basic benefits (your company might offer more on top) are explicitly a % if your salary, to the point where you can say the minimum legally required benefits (and often the minimum is what you get) mean salary cost regardless of how much you earn is about 23% higher than gross salary. When I worked remotely for a US firm they paid me 25% more on the advertised gross salary to compensate for not being able to offer benefits abroad (I was a freelancer as they didn’t have a German subsidiary), which sounds like not that different than the German overhead.

Also lets you trim headcount without announcing layoffs, down the line.

I’ve always seen a lot of those, i think the SNR just favors them for now with general slow down in direct hires.

Contract rates are down though, less than what you would expect to earn as a FTE.

I’m intrigued. Can you share any data points here?

I haven't seen this at all, I'm currently contracting and I see rates anywhere from 63.50 per hour to 80+. Depending on the locale and whether we're talking FAANG or not those are pretty good rates. (130-150+ respectively)

$150 per hour is very low.

I've never seen anything close to $150/hr -- I'd jump on that if I did. $63-$80/hr is actually about what I'm seeing, which is less than I'd made from my last FTE gig (I have 16 yoe, mind you). When you consider those rates don't include PTO and benefits, it's even worse.

Contracting is the thing you do when you're between permanent jobs and you do it because it pays better than slinging coffee and keeps your resume current.

contracting is being in business for yourself which means you need to learn how to sell and negotiate. if you don’t do that then yes, you will work for a low rate.

That's 130,000-150,000 annually if you clock 40 hours 5 days a week, not hourly.

I don't know in what universe you think $150 per hour is low, I've never seen anything near that rate. Maybe for highly specialized work but not any general purpose development.

cost of living in US metros is extremely high. and you need to pay for the cost of being self employed.

150k is still a great wage in most major US metros. The bay is expensive, but this is still a top-10% compensation package compared to the general population.

150/hr would be great in europe, and companies do pay it, not to individual contractors, but to other companies

I really like contract to hire, both from the employee and the employer perspective. You have a nice honeymoon period and if it works then great and if not no hard feelings.

It sounds like you are either being dishonest or you haven’t actually thought about this.

Or the recruiters are working extra hard to avoid layoffs