Did I Get a Bad Job Offer?

Basically, I’ve been in a full-time freelance job for the past couple years. I like it, it’s easy. I got a totally out-of-the-blue call from HR today offering me my same job, full-time with benefits, dental, 401(k)—the total package. I’ve never had benefits before. I was excited, until I heard the salary, which is 10 percent less than I make now. So, blah blah blah, HR says: The benefits are worth it! I don’t really believe that full-time staffers have any more job security than freelancers, based on recent layoffs. I’ve been trying to do all the math, but it’s looking like freelance + Obamacare is a better deal than full-time with benefits. I tried to negotiate, but was totally shot down.

I don’t know what I want to do. I don’t really feel like I can say no to the full-time job, which my boss very nicely put me up for, and, which is actually something I had planned on asking about the possibility of. But, I feel sort of taken advantage of that they want to pay me less to do the same job. WWYD? Get them to promise me a raise or something? — M.

So, a few things: The person from HR is right that benefits are worth something—especially if the 401(k) comes with a match, which is basically free money if you contribute enough to get a full match. You didn’t mention if paid sick days and vacation days were also part of your benefits package, and those are worth something too; as freelancers, we don’t get paid for the days we can’t or don’t work.

There are other benefits to full-time work: Payroll taxes (i.e. social security, Medicare, state unemployment insurance), for example, which means you don’t have to do estimated taxes every year. And regarding job security, if you do get laid off, you have the option of filing for unemployment, which you wouldn’t be able to do if your freelance work dried up.

Depending on how robust the benefits that are being offered to you, they can be worth between 18 to 26 percent more than your base salary, which means that although you are taking a 10 percent base salary cut, you may actually be coming out ahead.

So take these things in consideration when calculating whether this full-time position is worth taking. It’s not just freelance + Obamacare vs. full-time with benefits. It’s freelance + figuring out your own health plan + figuring out your own estimated taxes + figuring out a retirement plan + making sure you have money set aside if your freelance work dries up vs. full-time + benefits. Which is to say, in this WWYD situation, I’d likely choose the full-time job.

The question, though, is if you actually want this job. Is there room for you to grow at this company and receive future salary increases? And beyond the money, will you be doing work that you enjoy?

If the answer is no, don’t take the job. You can say no—you’re not obligated to do anything that you don’t want to do.



9 Comments / Post A Comment

melondrama (#5,276)

Ack, Mike, typo in the second to last paragraph. “Their” should be “there.”

Mike Dang (#2)

@melondrama Fixed!

I work in HR. What you’re being offered is completely standard. Not necessarily a great deal, but no, they’re not trying to pull a fast one. Freelancers and temps get paid a premium because they have to cover their own insurance. Regular workers get paid less hourly, but receive enough in benefits to make up the difference. Based on your freelance wages + Obamacare analysis, this might not be the right move for you, but I wanted to chime in to say your company isn’t being shady.

limenotapple (#1,748)

@TheclaAndTheSeals Yeah, I logged on to say this. When I went full time, my organization kicked 10% of my salary into whatever our 401K equivalent is. That’s 10% pretax. And I get life insurance, ad&d insurance, and better health insurance than I could get on my own (pre-healthcare reform). But the big win for me is that as a non-full time employee, I didn’t get annual pay raises, and as a full-time employee, I do. So I don’t have to go too far into the future to make up that 10%. And it was an organization I wanted to stay with for a while, so that makes a difference.

This is exactly what happened to me with my job offer, and I was always a little paranoid that I got taken advantage of. Thanks for explaining it Mike!

NoReally (#45)

Not only not having to figure taxes quarterly, but also not having to pay the employer-side share of Social Security and Medicare. If you’re getting a 1099 then you’re paying both. When you go to a W-2 position, they start paying half. Something like 7.5%.

aetataureate (#1,310)

@NoReally It is so clear to me that I’d take less money in the interest of not having to think about those things, let alone actually set the money aside on my own. Like paying a little bit for a housekeeper for your taxes.

I think that was a great response. I think the important part we are missing is the fact that an employment offer is just that- an offer. That is their starting point for negotiations. If, after reading the above response, you still feel you are being under paid or low balled, I would negotiate higher pay or more vacation time.

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