FORTUNE -- Dear Annie: I've been working as a full-time contractor at a semiconductor company for the past year. Officially, I'm a W-2 employee of the staffing agency that supplies freelancers like me to client companies. Now, my boss here wants to hire me as a regular full-time employee with a salary and benefits, which would be great, and I'm trying to figure out how to negotiate a compensation package.
I've done all the basic research on what similar positions in this geographic area pay, including what various Internet sites say this company pays its employees, but I still feel I don't have enough information. I know what I make hourly, but I don't know how much this company is paying to the staffing firm. Here's how I'm looking at it: If the client, my prospective employer, is paying $X plus $Y to the agency, and then the agency keeps $X and pays me $Y, then I'm worth X plus Y to the company, and my new salary should reflect that. Right? Or am I missing something? — Jersey Boy
Dear JB: Your approach certainly seems logical at first glance but, as you suspect, it leaves out a couple of crucial considerations. First, a bit of background: Melissa Quade, manager of professional services at compensation research site PayScale.com, points out that, if you're a typical skilled contract worker, the hourly rate you're getting now is probably pretty high.
"Generally speaking, contract employees are paid a premium rate," says Quade. "I worked with one consulting firm that paid its contract people four to five times the hourly rate that regular employees' salaries would work out to, because the contractors had specialized knowledge and were always being poached for permanent jobs at the companies where they were placed. So this firm felt they had to pay what they did in order to hold on to these workers."
Your situation might be similar, so basing your salary expectations on what you call Y -- that is, what the staffing agency pays you -- may be unrealistic. Quade says the agency is getting paid a fee somewhere between 15 and 30% of your current pay. Using your X plus Y formula, that would mean you'd be asking for a salary of what you're making now plus, let's say, 20%. More
To get a formerly routine pay hike, you now have to "exceed expectations," says a new study. Here's how to make your pitch.
By Anne Fisher, contributor
Dear Annie: Is this a good time to ask for a raise? I haven't had a pay increase in over three years now, and I really feel I am overdue for one. Business at my company has been picking up over the MOREMar 18, 2011 11:32 AM ET
You've survived rounds of layoffs. But you ended up with the work of everyone who didn't. Here's how to turn a tough situation to your advantage.
By Vickie Elmer, contributor
In this environment it's great to have a job. But three of them? That's the situation facing Judy Gray, president of the Florida Society of Association Executives, and her team. In the past two years she has added two partial assignments: MOREFeb 1, 2011 5:00 AM ET
Believe it or not, two-thirds of U.S. employers plan to give pay hikes before the year is over, according to a new survey, writes Fortune's Anne Fisher in her June 12 Ask Annie column. Has your company cut or frozen pay in the past few months? Have you asked for a raise lately? Did you get it? If so, what do you think helped you the most in persuading your MOREGabrielle S. (CNNMoney) - Jun 12, 2009 10:57 AM ET
It seems that when it comes to jobs, 2009 is going to be a lot like 2008, only worse, writes Fortune's Anne Fisher in her Jan. 7 Ask Annie column. Feeling stressed out now is totally normal. The trouble is that letting an out-of-control environment get under your skin will eventually make you less great at your job, hence more likely to lose it.
Are you stressed by the economic MOREGabrielle S. (CNNMoney) - Jan 6, 2009 5:14 PM ET
If you're attentive, or snoopy, the tax rebates that are starting to arrive in Americans' bank accounts this week are a chance to figure out roughly what co-workers make, writes Fortune's Anne Fisher in her April 29 Ask Annie column. Is pay a big secret where you work?Is there anyone whose pay you're curious about -- or who you suspect is curious about yours? Have you ever tried to figure out MOREGabrielle S. (CNNMoney) - Apr 28, 2008 6:16 PM ET
According to our crystal ball, your salary increase will be just so-so this year, writes Fortune's Anne Fisher in her January 3 Ask Annie column. Do you expect to get a big raise this year? Made any career-related New Year's resolutions? Tell us about them.Gabrielle S. (CNNMoney) - Jan 2, 2008 3:54 PM ET
People earning over $100,000 a year are almost twice as likely to apologize after an argument or mistake as those earning $25,000 or less, Fortune's Anne Fisher reports in her Oct. 17 Ask Annie column. What do you think? Has a well-timed apology at work (or the lack of one) ever had an impact on your career - or changed your opinion of a boss?Gabrielle S. (CNNMoney) - Oct 16, 2007 10:49 AM ET
The U.S. Supreme Court decided Tuesday in a 5-4 ruling that employees who want to take legal action against a discriminatory employer must file a formal complaint with a federal agency within 180 days of an employer's explicit offense (i.e. either hiring a woman for less pay than a man or giving her a smaller raise because she's female), explains Anne Fisher in her May 31 column. What do you think MOREGabrielle S. (CNNMoney) - May 30, 2007 2:36 PM ET
It's hard to predict how any individual job candidate will fare, writes Fortune's Anne Fisher in her March 27 Ask Annie column. If you've switched jobs recently, what have you found? Did you find employers willing to give you a raise - or even a signing bonus - to woo you? Or is the job market in your field so competitive that you felt lucky to get an offer?Gabrielle S. (CNNMoney) - Mar 27, 2007 9:29 AM ET
|GM's recalled Cobalt was a failure from the start|
|Michaels hack hit 3 million|
|Walmart offers cheaper money wire service|
|Why you should pay off your car loan ASAP|
|Americans have fallen in love with real estate once again|