Friday, September 18, 2020

Contractor Life - Part 1

The world of working in software changed with the COVID-19/Coronavirus pandemic. Loads of people were "made redundant" or "laid-off" or simply fired. Many are having a hard time getting in with their "ideal" gig. Some, some of them being people I know, have simply given up and are doing other things "for now." This post marks the first of a series of posts on my experience working as a contractor - not a consultant. There are similarities but they are decided not the same thing. I will address the differences an up-coming post.

Full Time Employee to Contract: The Beginning

The last six weeks or so, I've had conversations with several former colleagues. These were people I worked with some time ago. A couple were recent, more were several engagements and a few jobs ago. All had been "let go" recently, either the result of the COVID-19 economic downturn, or some organizational restructuring or some other reason. I asked each of them the same basic question...

What kind of gig are you looking for?

They gave answers that could be summed up as "Just like the last one I had." This seemed reasonable, given they had been in their respective roles for some time. It was where they felt comfortable. Each of them added one more thing - the same thing: "I'm not interested in contract work. I want to be a full time employee."

I asked why that was such a hard requirement. The answers could be summed up in a few points.

1. Stability
Each wanted to have some sense of stability in their position. Some had left their last role after a couple of years. A couple had been with their company for 5 to 7 years. One had been there 14 years. "Stability" has a level of attraction which makes sense.

2. Medical Insurance/Benefits
For folks in the US, this is huge. The certainty of quality health care is a massive attraction in a society where most people's health care insurance is provided, or significantly underwritten, by their employer. This might not make much sense to people outside the US, but the simple fact is, for many Americans, if they lose their job they also lose their medical and health coverage. It might not be immediate. It might be a couple of weeks or a month. But sometime soon, those will end.

3. Sense of Belonging
This is the easiest one for everyone to understand. Most people, in my experience, want to believe, or feel, they are part of something bigger than them and bigger than a paycheck. The feeling of being an "outsider" can be hard, particularly in a society where mobility has transported family connections across the continent or the globe. When your identity gets defined by what you do and where you do it, when that ends, what now is your sense of identity?

These are all reasonable expectations. At least, they would have been reasonable 20 years ago. The might have been reasonable 10 years ago. For the situation we are in now? I'm not sure how reasonable it is.

Why Do I Think That?

Over the last 15 or 20 years, I've seen a shift in practices for a fair number of companies. Typically, they had "just enough" software folks to do what they needed to do. They would be able to make tweaks to the existing systems and modifications to what was going on. There was a time when building a website or mobile app would generate a fair amount of excitement among the software folks working there.

Before then moving away from a mainframe and shifting to a client/server environment generated a fair amount of excitement. I remember one place I worked where folks were excited about the shift to the "new language" of COBOL. They were shifting from PL/1. 

Excitement isn't enough to make things happen, unfortunately. Whatever illusions I had about working in software at a single company for my entire career ended long ago. (To be precise, 1985.) I knew I would never work for a company where I'd be presented a gold watch as my grandfather was when he retired. 

For some people, working at a single company for most, if  not their entire career, is normal and wonderful. It is very comfortable. And then it becomes not comfortable.

Stability is a Myth

If you are in the States, and live and work in an "at will" State, I suspect you have less safety and security than you think you do. You can be let go at any time, with or without a reason. Sure, you can collect unemployment for a while, but that is often far, far less than you might think, if you have never been on unemployment before. 

If you, like some of my colleagues, were "let go" because of the downturn from the pandemic, you likely have come to the same realization. Companies will do what they need to do for themselves or their stockholders. A shock to the financial statements might be one thing. There might be warning signs. There might not.

Medical Insurance

In the US, if you are the primary source of insurance coverage for you and your family, the Affordable Care Act (ACA) can help, maybe. You'll need to find some form of insurance to at least cover you for a while, until you "get back on your feet." 

The first time I took on a contract role, I went in well aware of the challenges. I was working as a straight C2C/1099/Self-employed contract person. I was responsible for buying my own health insurance, paying estimated taxes quarterly and paying "full book" for taxes where normally the employer pays half and the employee pays half. It was complex and a challenge in a lot of ways.

Unlike many today, I went into that well aware of what I was getting into and it was my choice.

Things Have Changed

Loads of companies, by no means all, are no longer willing to bring on "independents." They want someone "affiliated" with a company they trust, have worked with before, or at the very least, have heard of.

The result is many ads are being posted for positions by those firms (placement, contract, whatever) to meet their client needs and expectations. These come in several shapes, sizes and flavors. I'll talk about them in a bit.

The biggest change, and most consistent, is how you are working. Instead of being an employee of the client, you may likely be a temporary employee of the firm that placed the notice. The "temporary" part means you are an employee for the duration of the contract. The employee part is they will handle payroll tax withholding. They may also offer some form of benefit package you can choose to participate in.

If you DO choose to participate in the benefits, it may (and almost certainly will) limit what your billable rate will be. Ask. Ask what the costs are to participate in their "benefit program." Then compare that program with what you can find on the market. Your best bet might be to take their program, or it might be something on the open market.

What about stability and job security? Excellent question. There are a couple of ideas in my head around that idea. First, contracts have a fixed duration. They might be 3, 6, maybe months or longer. Usually they can be extended or renewed. 

Much of the time, there are clauses that allows them to cancel the contract. Most of the time, they can cancel at any time for any reason.

If you work in an "at will" state as an employee, this is exactly the same thing that can happen to you. You can be "let go" at any time for any reason. The difference in these two, is an employee may be able to file a claim for unemployment support, depending on things like what state the employee lives in and what reason, if any, the employer gives for you being let go.

Belonging and Community

This is a huge challenge. It will continue to be a challenge no matter if you are an "employee" at a company or a contract worker doing work FOR a company. Many, perhaps most, companies that make software have people working "remote" because of the COVID-19 pandemic. This trend will continue for some time, I suspect. (Last I heard, Uber software folks are not expecting to return to their offices until June of 2021 - at the earliest.)

When you are physically distant, as well as not really being part of the club, there are challenges in keeping and maintaining that sense of purpose and team.

Virtual meetings and "happy hours" don't relieve the strain and in some ways make it harder. These are part of what I see as a response to the pandemic-forced remote work - and not unique to contract employees.

In short, no one has a strong sense of belonging unless they make it for themselves.

Moving to Contracting

There is one consideration I have not mentioned. For a lot of people, even if there was some form of severance package, that money won't last for ever. Unemployment benefits vary by State. It almost never comes close to what your pay was before "the change in circumstance."

The adage about how it is better to be employed and looking than to not be employed and looking still holds true. I'd like to think folks are compassionate these days, considering the number of extremely talented people who find themselves "available" when they did not plan on it - like some of you reading this. 

Taking on a contract of 3 or 6 months might not be what you WANT to do. Still, it will bring money in - and give you a sense of purpose. You also have the sense of being able to provide for you and possibly your family. Loads of people have been talking about their "extra time" since March. I'm not one of those folks. I was busy before COVID - and have been even more busy since mid-March. 

There are some good and bad points to working by contract. There are also some things to remember as you look for the next opportunity. These can help you be successful and thrive while doing contract work - because it is DIFFERENT than when you are an employee. 

These differences are not all one way. Some are good. Some are less-good. I'll look at some of these in the next installment.

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