To be clear, contractors charge a higher rate exactly because of what you describe. If you make $50/hr as an employee, you'll need at least $100/hr to pay for all the overhead with insurance, accountants, self-employment taxes, FICA, etc. These costs are mostly invisible in bigger orgs.
It may seem like contractor wages are greedy, but know that companies are willing to pay good money for domain expertise. Especially with all the friction of hiring a new full time employee.
It's not just taxes, though. It's the difference between salary and what's called Fully Burdened Labor Costs.
Say you're comparing eg. a FTE with $115k salary, and 4 weeks vacation. Naively, a contractor working those hours is 115 / 48 weeks / 48 hours = $60/hr for the same salary.
But the employer is also paying out payroll taxes, insurance, office space/supply expenses, retirement plans (401k) - this typically adds up to 25-30% on top of the base salary.
Meanwhile, the contractor also isn't expecting their position to be a long-term gig, and (at least if you're not at an agency) also is managing a business so needs to account for business overhead (legal/accounting) and time spent lining up more business, which is un-billable. If they worked 4 days weekly at the contract gig and 1 day as overhead, already they need to bump salary expectation by 25% to keep even. And if you want to account for downtime between gigs, that number gets higher much quicker.
yes but that is from the perspective of a big co adding on employee costs and not a consultant that is self employed. you need to make at least 2x what an employee makes in total comp.
It may seem like contractor wages are greedy, but know that companies are willing to pay good money for domain expertise. Especially with all the friction of hiring a new full time employee.