This is the age of millennials pursuing financial independence and the digital nomad lifestyle (even if I am not). More than ever, the younger generation is bucking the trend of finding a company to work at for 45 years. What worked for our parents’ generation just doesn’t cut it anymore. Is full time employment overrated? Traditional full-time positions seem to be viewed as less and less attractive. Full time employment has some undeniable drawbacks if you’re pursing a life of travel and leisure. However, for all their drawbacks, there are a few things that make these jobs a potentially lucrative option. They shouldn’t be overlooked, no matter what lifestyle you are trying to build.
In Favor of Full Time
The main advantages of full-time employment often go unappreciated by those pursuing more. Full time employment can serve as a solid safety net for pursuing alternatives. In the right role and the right company, it’s possible to grow your income at your day job and pick up side hustles along the way as well. There are also other advantages that shouldn’t be overlooked.
I know, I know. Your job isn’t really secure. You could get laid off or fired, or your company could go under. These are all true statements. Traditional full-time employment is only really ‘secure’ for a pay period. After that, who knows what can happen. No job is ever going to be 100% secure – even if you go out on your own, your clients can leave you. Your web site could suddenly have a huge decrease in traffic due to SEO changes. Even if you go the self-employed route, there are a number of things that can happen that are simply out of our control.
Full time employment does offer at least some degree of security, knowing that even if you are pursuing alternatives you have something still there for you as long as you show up and put in the effort. Working full-time for a larger company often means that the things that may shut down a self-employed individual (like the loss of a big client) are handled by many people instead of putting all the pressure on you.
Becoming comfortable and slacking at work, of course, will put this job security in danger. There are many companies to work for, though. Even if you lose your job, you can still pursue an identical position at another company.
Income Stability and Predictability
This is one of the biggest benefits of traditional full-time employment. Income stability and predictability are great safety nets. Knowing that if you work you’ll get paid is a good feeling. Many self-employed individuals – particularly those starting out – put in countless hours for little or no pay. Sometimes – frequently – they have to spend money before they see a dime back in return. If that sort of risk isn’t up your alley, full time employment seems pretty rosy.
If you are self-employed, depending on what sort of work you have, it can be feast or famine. Take, for example, the self-employed CPA who does primarily personal tax returns. Tax season will comprise 80% of his invoicing for the entire year, all condensed into a few months. Between March and June, chances are he’ll receive a majority of the compensation he’s expecting for the year. That means budgeting for the rest of the year – when money is still coming in, but may not be enough to cover a month of expenses – will need to take the “feast” months into account. Others who do project-based work, such as a web designer, may see several large projects at once and then no new projects for a period of time.
Having the stability and predictability of traditional full-time employment tends to make budgeting a much easier activity.
Taxes and Benefits
The great thing about being a W-2 employee is that I don’t have to worry about withholding my own taxes from my paycheck. I’m not subject to double FICA taxes either, since my employer takes care of it for me. Sure, if you’re self-employed you can deduct half of it, but it’s nice not really having to care.
Benefits – like insurance and a 401(k) or 403(b) – are also good benefits of traditional full-time employment. Often times companies will do 401(k) matching to encourage people to save. At companies I’ve worked at the matching was 4% and half of what I contributed, maxed at 6% of my pay (so a 3% match if I contributed 6% or more). Some companies like Google and Microsoft actually do 50% matching, with no limit. That’s an extra $9000 a year if you’re able to max your 401(k). And, given what is known about the salaries at those companies, chances are you’d be able to.
Self-employed individuals aren’t totally screwed on this one, thankfully. In fact, between “employer” contributions and regular contributions, a self-employed individual can actually contribute more to their Simplified Employee Pension (SEP IRA) – up to $54,000. Being self-employed you can save quite a bit through tax-advantaged accounts. Unfortunately, however, no “free” money from employer matches.
In Favor of Alternatives
There are a ton of opportunities and alternatives to traditional full time employment. Everybody these days seems to be talking about their side-hustle game. Earning some money on the side through things you consider hobbies or a potential full-time endeavor down the road are both admirable and scary. The opportunity they grant, along with the flexibility and freedom, can make them very lucrative. However, pursuing work in this form requires an immense amount of effort and dedication. It is not for the weak-of-will.
Freedom and Flexibility
This is the biggest appeal for many individuals. Having the freedom and flexibility to choose your own hours and where you work is an often-idealized aspect of self-employment. My dad used to have a good reply any time somebody commented on this sort of flexibility. He used to say “Yes, setting your own hours is great. I can choose which 12 hours of the day I want to work!“. When you’re self-employed, you often spend long hours working, and end up working on vacation. It can sometimes be difficult to pull away – either out of necessity, or because you enjoy it that much (which might be a good problem to have).
Still, if you budget well, there’s no denying that self employment can potentially offer more freedom and flexibility than a traditional employment situation. Particularly if you run an online business, it’s easy to just pick up and go and take your work with you. All you need is internet access and your phone or a laptop. If you are trying to pursue the laptop lifestyle, self-employment may be your best bet.
This is, in my opinion, the biggest draw to alternative working arrangements. When you work for someone else, you typically know exactly how much money you’ll make. Maybe you have a portion (or most) of your income based on commissions or tips. Even so, your income and growth at a traditional job is relatively limited. Maybe you squeeze out a few extra sales which net you some more money this month. Chances are the company you work for is taking more money for themselves, their shareholders, and their overhead than you will see out of that deal.
Being self-employed, however, means that every additional dollar you earn for the company is, well, yours (minus, of course, taxes and expenses). There’s virtually no upper limit on how high you can push your income if you diversify your revenue streams. You also can tackle more than one thing at a time. Perhaps you are a self-employed tax preparer during tax season but also do web design and financial consulting. By picking up more side gigs and growing those, you’ve got many routes to making more money. If you just keep a traditional day job, however, you are limited down to one revenue stream.
Consensus: Is Full Time Employment Overrated?
I wish I could answer this question for you. The truth is, that while being a full time employee works out amazingly for some, it isn’t what others want out of their lives. I have friends who have jobs they love. They devote a significant amount of their lives to whatever company they’re working for. They find value in the work they do, and they feel good about what the company is doing. For them, full time employment absolutely is a great fit.
I have other friends who loathe this lifestyle. They’ve found ways to make money without having a traditional job. Some of them run their own businesses or own real estate. Others do some freelance work like web design and writing. For them, this arrangement works out well – they get to do what they enjoy and don’t have a lot of the negatives they’d experience in a traditional job.
Many are not as lucky. So many people wake up each morning dreading the thought of going into their workplace for eight hours a day. Add on the time spent outside of just being at work and many people pull in 10-12 hour days. Bleh.
At the end of the day it’s all about finding the right fit for you. Whether that’s full time employment, opening your own business, or getting by on freelance gigs and side hustles, finding what makes you happy is what it’s all about. And I’m not here to bash you if what makes you happy isn’t what makes me happy.
Do you prefer the stability and predictability of full time employment, or do you prefer the side hustle, freelance, or self-employed route?