It's been about a year ago when I wrote my first post about the differences and trade-offs between working for someone and working for yourself. My conclusion then was that you should add up the costs and benefits of everything and then make the best decision. The problem is that the true costs and benefits are obscured and it's hard to make an informed decision. I decided to expand on the topic and have a couple different posts exploring different dimensions of making the best decision for you.
In December 2008 I received a phone call from a friend, the type of call that you never want to receive. He informed me that he had been let go from his corporate job. He's not too far from retirement and almost had his house paid off and was well thought of at his job, but the management had to make a decision that I'm sure was not easy. He was shell-shocked, but quickly recovered and found something with little overall loss in pay and benefits. His statement to me "I thought it would be my last job" was telling. In his mind, he was relatively safe, having traded some dollars in pay (though not much, he was doing quite well) for perceived stability. All of my clients have let people go since last year. I wonder how many of them believed they were safe too. More to the point, I wonder how many believed they were safe and traded a decent amount of salary for that security which they did not receive?
What would you do if you have the choice of two jobs that
- Company A: $78,000 a year, history of mass layoffs and hire/fire shop
- Company B: $70,000 a year, history of never having a layoff
Consider all other benefits as being equal. What would your decision be?
This is a true life scenario of another acquantance of mine. She picked company B, and two years later the company, well known for it's stability (both good and bad) was sold and everyone was laid off. In that two years, she traded $16,000 of salary for perceived stability. After taxes, you have a new Ford Focus. To be fair, there is no guarantee that she would have made two years at company A, but the economy was growing and during that time A did not have any known layoffs.
The point of my exercise, in case you missed it, was to try and remove stability from the equation as much as possible, as stability is a factor that is so far outside of an employees' control. Look at local Tampa company WellCare, a stable company that just did a massive layoff due to some fraud charges. How many DBA or business analysts had any control over that?
Consulting hasn't been too much better over the past year. Many projects have been cut, cutback, delayed, etc and some consultants and contractors have been enjoying time at home. A consultant I know who lost a project was quite concerned and told me he only could survive 2 weeks without a steady gig, if that. Without knowing the details or being judgemental, that's not a good position to be in any way, but in that case being an employee might be a better route as generally layoffs include some kind of package or unemployement, where self-employed does not. (In case you're curious, he went exactly two weeks between projects).
In conclusion, I recommend completely ignoring any discussion or talk about job stability and focusing on other aspects before you make your decision.
Coming up next: Health care, the most dreaded expense.