Contract rates not obeying inflation

[WTFH]

so what is the main cause that house prices have exceeded pay raises?

You're not asking the right question, if you mean just contract rates.
Because for almost everyone house inflation has outstripped all other inflation, hence when someone in the 1980s got a house that cost 3x an average salary, they call anyone under 40 lazy because the same house would cost 6x the current average.

But, speaking personally, in 2002 I bought my first home in England. It cost about 800x my daily rate at the time.
In 2009 we moved. The house cost about 1000x my daily rate at that time.
In 2021 we moved again, and the house was about 1000x my daily rate last year.

So, one could argue that my daily rate has kept up with house price inflation, if you ignore a couple of key facts... Each move has been to a larger house/more land, each move has been to a different part of the country.

[KentDogWalker]

Never. Contracting is so diluted now not to mention the offshore offerings. Back in the day it was specialists on rates of 4 figures supplying services the clients just didn't have. Now it's just a defacto standard way to get a piece of work done without having to get lumbered with a permie. Droves and droves of people are turning to contracting and clients are ending up with more contractors than perms in the office.

Contracting as a specialist delivering high value work to a client are over. It's just a sausage factory now. Nothing specialist or clever anymore, just another average perm that left their job to go contracting.

On something more tangible, last I saw when projects were costing heads a perm was costed at roughly twice what they get paid as they cost the company in overheads, benefits, office and all that i.e. the total cost of emplyment. So they just farm the same role out at the same rate to the contractor. When people say we are an expensive resource we aren't really, we cost about the same as employing someone. People just make the mistake of thinking the wage is the only cost to conisder.

So same cost to the project, difference is we just pocket the lot. So in a good majority of cases our prices are driven by rate cards that are linked to the cost of perm so very little to do with market conditions, skills or anything. As salary is only part of the cost of a perm the rate card doesn't change much hence nor do rates. That's my ill educated opinion on part of the reason rates going up. The other above is a glut of tulip contractors and hey presto, no change and no chance of their ever being.

simply awesome

[lukemg]

Never. Contracting is so diluted now not to mention the offshore offerings. Back in the day it was specialists on rates of 4 figures supplying services the clients just didn't have. Now it's just a defacto standard way to get a piece of work done without having to get lumbered with a permie. Droves and droves of people are turning to contracting and clients are ending up with more contractors than perms in the office.

Contracting as a specialist delivering high value work to a client are over. It's just a sausage factory now. Nothing specialist or clever anymore, just another average perm that left their job to go contracting.

On something more tangible, last I saw when projects were costing heads a perm was costed at roughly twice what they get paid as they cost the company in overheads, benefits, office and all that i.e. the total cost of emplyment. So they just farm the same role out at the same rate to the contractor. When people say we are an expensive resource we aren't really, we cost about the same as employing someone. People just make the mistake of thinking the wage is the only cost to conisder.

So same cost to the project, difference is we just pocket the lot. So in a good majority of cases our prices are driven by rate cards that are linked to the cost of perm so very little to do with market conditions, skills or anything. As salary is only part of the cost of a perm the rate card doesn't change much hence nor do rates. That's my ill educated opinion on part of the reason rates going up. The other above is a glut of tulip contractors and hey presto, no change and no chance of their ever being.

WHS x1000 - Could try but would never be able to say it better ! They are buying the flexibility in the vast majority of cases for no additional cost. This is also why anything good never sees a job board as people hire from their own network or from trusted recommendations.
It's a myth that contractors are happy to buy into that they are a specialised resource, sorry, you ain't special.

[SussexSeagull]

I agree with that to a point but people need to take a step back and look how IT has developed over the last quarter of a century or so (more or less my tenure). It has gone from something that was considered highly skilled and in-demand to the market being saturated through out sourcing and immigration. This had led to permanent salaries stagnating and skilled people either going into management to make progress or cash their chips in and go contracting.

As for not being something special, we might not be in terms of skillset but while permanent employees are off having weekly one to ones or the 1001 other things that seem to stop them doing actual work we are churning away in the background getting the job done and when it is finished we disappear without having to go through a process or being paid off.

We are more artisan than artist bur if we didn't offer a valuable service people wouldn't be paying us several hundred pounds a day to do it.

[PCTNN]

Speaking of inflation, this just happened at my company that made me gag: hr sent an email out along these lines "struggling with rising living costs? make the most of the company's discount voucher scheme"

On the other hand, they're not giving out pay rises due to inflation, unlike a lot of competitors.

How about you give employees a 5% rise instead of a 5% cashback for b&q and just eat?

Thank God I'm leaving

[malvolio]

Speaking of inflation, this just happened at my company that made me gag: hr sent an email out along these lines "struggling with rising living costs? make the most of the company's discount voucher scheme"

On the other hand, they're not giving out pay rises due to inflation, unlike a lot of competitors.

How about you give employees a 5% rise instead of a 5% cashback for b&q and just eat?

Thank God I'm leaving

Because raising wages to match (or even exceed) inflation only leads to inflation. Reducing the cost of purchasing doesn't.

Economics 101.

[Guy Incognito]

I agree with that to a point but people need to take a step back and look how IT has developed over the last quarter of a century or so (more or less my tenure). It has gone from something that was considered highly skilled and in-demand to the market being saturated through out sourcing and immigration. This had led to permanent salaries stagnating and skilled people either going into management to make progress or cash their chips in and go contracting.

First there was Y2K when there weren't enough IT workers.

Then came the NHS spine.

We need another cash cow is all it is.

[Lance]

First there was Y2K when there weren't enough IT workers.

Then came the NHS spine.

We need another cash cow is all it is.

you missed the dot com boom, which coincided with Y2K.

IPv6 will be the next boom, but not until there is enough cash to pay for it.
Note that IPv6 has been urgent, and needed immediately for 25 years now and is still only really adopted by the carriers.
So as soon as the money is available to fund a boom, it will be come actually properly urgent.

Note: We are now closer to the 2038 bug than Y2k, so there's another boom yet to be milked.

[Paralytic]

Speaking of inflation, this just happened at my company that made me gag: hr sent an email out along these lines "struggling with rising living costs? make the most of the company's discount voucher scheme"

On the other hand, they're not giving out pay rises due to inflation, unlike a lot of competitors.

Even those giving our rises can muck things up - take the major high street bank who gave a 4% pay rise to everyone earning up to £32K and nothing to anyone earning more, so you ended up with two people in the same team, one who was a higher performer last year, taking their salary over £32K at the time, now earning less than their lower performing colleague, whose salary was just under £32K. Incredulous that HR did not see that one coming.

[ensignia]

I've been put forward for a couple of roles at £1100 (Umbrella) which is the exception. Most of the Outside rates are where they were 5 or 6 years ago and it's hard to get anything longer term (3 months+). Inside roles usually hover around the £650-£800 mark which is okay but nothing to write home about.

The Outside contract I've secured went from 6 months when I was offered it, to 4 months during onboarding and now 2.5 months when I got the contract through