Until recently the majority of my adult life has been spent as a technical or managerial contractor in one form or another.
If I had a nickel for every time I was told I would be “Brought on board shortly” I would never have needed to take another contract.
It appears that MarketWatch has caught up with me
Temp workers are a boon to companies, but a nightmare on the economy.
As a contractor you may spent 3 to 8 months on a contract on average. The really fortunate may see a year. When those are over however its either A: look for a new contract or B: file unemployment.
Benefits are nil, the hours are long. There is little to no legal respite if you are wronged by a company. I once drove from Buffalo, NY to Atlanta, Ga after being told I would have a position on my arrival. I waited a week but was never contacted again and my calls stopped being answered.
H1B has not helped. With the new regulations foreigners can be hired at half the salary you or I would make thanks to the exchange rate.
Employers shifting to contract workers is a bad sign. For companies its great. For the American workforce…not so much.
Whereas workers have a regular and steady income, with contracting its feast or famine, and when famine bills do not go paid in order to eat.
Personally I think this situation is dire. When these new contractors are compounded by the rising gas costs, the lower pay of contracting and the lengthy times of unemployment: the economy will rumble to a even further decline.
When they are given the choice of paying their house payment versus buying groceries because of the cost of gas. When groceries cost more because of the cost of fuel, and as credit gets stretched to breaking in a effort to stay afloat, these contractors will discover what I discovered several years ago: You can’t maintain a family, or credit as a contractor.
As the rising costs put basic purchases out of reach or on the envelope of breaking, furthered by the lower salary of contracting and lengthy unemployment, and it creates a perfect economic storm.
Think the last housing crunch was bad? Toss in lower wages with $5 gas. Reduced healthcare and more expensive coverage.
Contracting may be work, but its work without a safety net. And given the current economy, a safety net is something everyone needs.
If inflation continues look for companies to possibly start laying off, typically in FIFO (First in First out). Why FIFO? Because those employees earn more money and a replacement can be hired from outside for less or a contractor used for even further savings (no 401k, no healthcare and lower wages to boot).
Here’s some tips to help:
*Put no less than $10,000 dollars in to savings. This is your emergency money.
*Try to put at least $2,000 in to a high interest CD. A 1 year or 2 year is preferred. Most banks will loan you money against a CD so think of this as a emergency credit collatoral without the high interest rate.
* The above 2 items may have stretched your purse but if you have anything left ignore the TV and the News: now is the time to buy stocks. Look at companies like Ford, GM, Target, Wal-Mart and others. These are companies who supply something people need even when at the breaking point financially. Buy Gold. Buy Oil.
*Every chance you get pay off a debt. Eliminate your credit cards. Ignore the hype about credit ratings and length of time. This is about survival, not buying a new house. Pay extra n any debts you have. Every debt or credit card you eliminate is more money in your pocket in the long term. Better to suffer in the short term before it gets out of hand.
* Don’t pull your money out of your 401k or Mutual Fund. The losses reflected are temporary in the grand scheme. In other words its just digital numbers. Continue to contribute during the decline if you can. When the market recovers in 5 to 10 years you’ll thank me.
When the smoke clears you may be one of the few left standing.
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