Thinking about making the leap into contracting? You are not alone. Many working professionals find the freedom of self-employment and variety of contract work very appealing. But what exactly does it entail, and is it the right move for you?
Contract work can offer a flexible and exciting career path, with opportunities to work on diverse projects while enjoying higher pay than a traditional 9 to 5 job. However, it also comes with its own set of risks and challenges, like managing business finances, securing continuous work, and retirement planning as a contractor.
In this guide, I will explore the pros and cons of contract engineering, so you can make an informed decision and prepare for a successful journey in the contracting field.
Self-Employed Contracting vs Full-Time Positions:
Choosing between full-time employment and self-employment really comes down to each individual’s preference.
Self-Employed Contracting: A self-employed (1099), freelance, or independent contractor is someone who does contract engineering work for themselves. Self-employed individuals usually get paid a much higher hourly rate but will have to cover the costs of insurance and benefits out of their own pocket. They do receive more tax credits and retirement options as a business owner but may have difficulty finding more or consistent work.
Full-Time Contract Position: This person works for a consulting firm, or engineering services company as a W2 employee. They do not get paid a higher salary because their company must cover their insurance, benefits, and other expenses while maintaining a decent profit margin. They also miss out on tax credits but have the backing of the company to find consistent work with many clients.
The Pros Of Contracting:
Contracting has several benefits that make it an attractive option for many engineering professionals. Here are some of the key advantages:
1. Job Flexibility:
One of the best perks of being a contract engineer is the job flexibility it brings. Unlike traditional full-time jobs, you get to pick and choose projects that really interest you.
Imagine working on something you’re passionate about and then moving on to a new, exciting challenge once it’s done. Plus, you can take on projects you want and decline contract projects you do not want to work on.
This kind of job flexibility can lead to a much healthier lifestyle, especially if you are only working on the jobs you love to do. Coming into a work environment where you are happy and excited to do your job can really improve the mental stress this type of work can have on engineers.
Another great thing is the variety of job environments you will get to experience. One project might have you providing production support in a well-established automotive manufacturing plant, and the next could be installing equipment for a small up-and-coming integrator that provides pharmaceutical equipment.
This constant change in jobs keeps things fresh, challenges your technical skills, and helps you avoid the monotony that can come with staying in one place for too long. You also get to meet new people, learn about different technologies, and keep your engineering skills sharp.
2. Higher Pay:
Another big draw of contract engineering is the potential for higher pay. Let’s face it, money talks, and in the world of contract work, it can speak quite loudly.
Companies will pay premium rates for skilled contract engineers because they usually need your specialized skills now and do not have time to hire or train new employees. You are bringing technical expertise to the table, and they’re willing to pay more for your high-level contribution.
Higher pay can provide more financial flexibility for you and your family. With more money coming in, you have the option to save for retirement, provide education for your kids, buy or payoff a home, or even take that dream vacation without worrying about your family budget.
3. Technical Skill Development:
One of the best things about being a contract worker is the opportunity to develop your technical skills constantly. When you are always moving from one project to the next, you will have an opportunity to learn new technologies, client requests, and problems that can really broaden your engineering expertise.
Each new project brings a fresh set of challenges to solve and potentially new (or old) technologies to master. You might be troubleshooting complex automation systems, and on the next job, you could be learning a new software program to track machine downtime. This variety of skills keeps the job exciting and ensures you are constantly learning something new.
Plus, working in different contract engineering jobs means you get exposed to various ways of doing things between different companies. You’ll pick up new methodologies, tools, and best practices from each new team you work with.
4. Job Selection:
A major perk of being an independent contractor is the independence it can offer. Choosing which contract projects to take on and which to pass up, gives you more control over your work-life balance. This freedom allows you to work when you want rather than being stuck on job assignments handed down from above.
Some independent contractors take the summer off, while others focus on making one hundred thousand dollars and are done for the year. Others only take on work within an hour of their home and some contractors only choose to work in certain industries.
5. Work-Life Balance:
Being an independent contract engineer offers a unique opportunity to achieve an incredible work-life balance. Since you have control over your projects and schedule, you can much more easily align your work with your personal life. Need a few weeks off for a family event, a long vacation, or maybe just don’t want to work for a month? You can plan your contracts around it, allowing you to enjoy your personal time without the constraints of a traditional 9 to 5 job.
This flexibility also means you can avoid burnout. If you feel overwhelmed after a demanding project, you can take an extended break before jumping into the next one.
The Cons Of Contracting:
Of course, no job is perfect, especially in the contracting field. Even though being a contracted 1099 employee sounds incredibly tempting, there are still a lot of potential cons to consider.
1. Job Security And Finding Work:
One of the biggest hurdles in contract engineering is the lack of job security. Since your contract employment is tied to a specific project or client, it is important to remember there is no guarantee of steady work.
Once a project wraps up, you might find yourself looking for the next project for weeks or months. This can lead to some stressful periods of without work and can also be a financial burden. The uncertainty of not knowing where your next paycheck is coming from can be a significant source of stress. This is why I always recommend that contractors live off their per diem, spend money like they only work 40 hours, and invest the rest so when the slow periods arise, they are prepared for a downturn.
Finding new contract projects or clients can be a job in itself. You’ll need to constantly network, market yourself as an independent contract engineer, and stay on top of industry trends to land your next contract job. It’s a continuous grind, and if you are someone who prefers stability and predictability, this aspect can be particularly difficult to navigate.
If you are looking for contract engineering jobs, try using engineering service platforms like JOINER Services to help you find more contract work. They offer all types of contract jobs for independent contractors.
2. Lack Of Benefits:
Unlike full-time employees, 1099 job seekers typically miss out on employee benefit packages like health insurance, retirement matching plans, and paid time off. This means you will need to arrange and pay for these types of benefits yourself, which can be both costly and time-consuming if you are unsure about what to do.
Similarly, planning for retirement without an employer-sponsored plan requires extra effort and financial savvy, which is why I always recommend working with a financial advisor and your accountant to help manage your retirement.
Additionally, without any paid time off or leave, any breaks from work for vacation, illness, or any other personal matters means no income if you are not working. This can definitely add another layer of financial stress to your family, especially if you’re not good at budgeting or saving money for these downtimes.
3. Limited Career Growth:
One downside of contract engineering is the limited career growth. Since you are often hired for short-term projects, there’s no “climbing the ladder” that most industry professionals focus on in their career development. You will not receive the traditional promotions that a direct hire would get.
Companies will also prioritize their full-time workers for professional development opportunities, mentorship programs, and training sessions over contract workers. These opportunities cost money, and it might be something that you may have to pay for out of pocket if you want the same opportunity.
Working in a contract position also means you’re not always part of the company’s big picture or vision for the future. You might not get invited to high-level meetings or be involved in decision-making processes, which can be frustrating.
While you’ll gain a lot of different experiences from various client projects, your exposure to high-level managing could be limited unless you start to hire employees to grow your own small business.
4. Financial Management:
Managing your finances as a contractor is difficult, especially if you are not financially savvy. Unlike a permanent employee with employer-provided benefits, you will need to manage your own finances for health, retirement, taxes, and accounting.
You must budget carefully, which includes business expenses because your income is constantly fluctuating. One month might be great financially, but the next, you might now have work, so having a financial cushion is essential for all contract employees.
What is an independent contractor?
An independent contractor is someone who is hired temporarily to work on specific projects for a set period of time. Instead of being a full-time employee, they can jump into engineering tasks like installation, production support, or troubleshooting for a particular project. Once the project is done, they leave to company.
This contract role is perfect for those who love project variety and can’t stand the idea of doing the same job every day. Contractors must adapt to different situations, be great communicators, and introduce their specialized skills to the client’s teams quickly. It’s all about being flexible with your workload and ready to work on new challenges.
If you enjoy working on different projects, traveling, meeting new people, and working in different engineering environments, then being a contract engineer could be just the right fit for you.
Find the best contracting jobs on JOINER Services.
Jumping into the world of independent contracting offers you the freedom, variety, and independence that traditional W2 roles might lack. Sure, there are challenges like managing finances, finding steady work, and planning for retirement, but the benefits can far outweigh them. With a bit of planning and organizational skills, you can thrive in this fulfilling career.
Are you ready to take control of your career and enter the exciting world of contract engineering services? Start your contractor journey with JOINER Services! JOINER connects talented professionals with amazing projects and also offers benefit resources you will need to run a successful business.
Join us today and step into a more flexible, rewarding career!
FREQUENTLY ASKED QUESTIONS
Below, I list more FAQ’s about the pros and cons of contract engineering.
