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Are You Really a Permanent Employee?

by Kevin Mulligan

This is a guest post by Kevin, who writes a get out of debt blog at No Debt Plan. He wants to help you get and stay out of debt. This is the third post in a series on unemployment and your finances.

In my first article I challenged your thinking on turning down job offers when you are unemployed. Last week in my second article I showed you the math on why taking a pay cut can be a great idea in the long run.

This week I hope to scare some sense provide insight into your “permanent” employment status.

I work as a recruiter for my career. I talk to hundreds of people each year and meet somewhere around 300 of them in person. That’s a lot of people and a lot of conversations about employment, benefits, and pay.

In my business we do a lot of contracting. Sometimes it is just a short term project a client needs completed – you work for three months, finish the project, and then you are done. In other instances the contract is more of a “try before you buy” situation for the employer. That is, they get to test you out for six months and before making you a permanent job offer.

Almost Everyone Wants to Be Permanent

Ah, the permanent (also known as perm) offer. The coveted piece of job real estate that everyone seeks. It’s comfortable. It’s secure. It’s just better.

Or is it?

One of the first questions many of the potential candidates I talk to on a daily basis ask is, “Is it a permanent job?”

If I don’t say anything other than “YES!” the job candidates usually don’t walk to talk to me anymore, even if the position has a great potential of going permanent (like a contract-to-hire).

That thinking is beyond flawed and I’m here to convince you why. (If I can’t do that I hope to at least make you pause and think about it. Fair?)

Dissecting the Perks of Being Permanent

If you ask someone to explain why they so badly want to be permanent you will likely get one of the two following answers.

1. Benefits – Everyone needs benefits in some way. Medical benefits being at the top of the list, followed by everything else like retirement, disability, and life insurance.

I will concede for the most part on this one. Medical benefits are likely to be very expensive if you purchased them on your own. However, many companies are switching to high deductible health saving plans in order to save the company money. You end up paying the same or higher premiums and have to front a large yearly deductible before the real insurance kicks in.

In terms of retirement, your 401k may be costing you more money than you realize. Many company 401k plans have hidden expenses added to them that dampen your returns. If you had invested that money into a Roth IRA instead of a 401k, those costs would be transparent (and likely much lower).

2. Stability – This is nearly on par with benefits. The stability of being permanent. What does being permanent even mean? Many people seem to think once you are hired it means you’ve been given the golden ticket. Time to work hard, earn a decent salary, and work an 8 to 5 schedule. Retirement is just around the corner!

Stability and the guarantee of a paycheck are driving forces for many people I talk with.

No One is Truly Permanent

Here’s the catch: no job is truly permanent. How many so called “permanently employed” family members or friends have you seen be laid off in the last twelve months?

When you hear about factories closing and rising unemployment do you wonder if they were contract laborers or permanent employees? I would argue a large chunk of them were permanent employees.

You see that’s the kicker: no one is truly permanent. From CEOs that get axed down to the newest guy in the accounting group who never had a chance to make a difference. We can all be replaced or simply let go, and our work put on the backs of those left behind.

I’m not saying contracting is the best thing on the planet. Each type of employment has its perks. But I hope this article challenges your assumptions about permanent employment. Generally speaking, if you are good at your job and the economy and your firm are in decent shape, you should be a low risk for getting laid off.

The problem is when either you or your firm are performing at a mediocre level and the economy goes in the tank. Suddenly decisions are made to cut 10, 15, or 20 percent of the workforce. The best get to stay and the rest… well, you know the rest of the story.


Published or updated September 1, 2009.
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{ 4 comments… read them below or add one }

1 DDFD at Defensive-Entrepreneurship

Great post! The days of lifetime employment are over, with the possible exception of government and education workers.

I have heard various statistics that the average person will hold 6-10 jobs in their lifetimes.

We all need to consider multiple careers, emergency funds, and side gigs (Defensive Entrepreneurship) to help and protect us from the uncertainty of today and tomorrow’s world . . .

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2 dima

I disagree with DDFD, I do not see a point in this post. Kevin starts up by saying he will show some insight but the article is very brief with a couple examples that glance over most of the details and do not provide any food for thought. If you were already thinking about comparing contracting vs permanent employment, this article does not give you any additional information. If you have not thought about it before, this article introduces the idea but fails to provide any additional information…

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3 the London renter

That article made me think a bit. Especially the part “No one is truly permanent”. And it is true it should better be called “employed …as long as things go well”

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4 Sliver1

There are certain principles that could be used to alleviate confusion in this article. However, I tend to agree with Kevin, that a permanent job is not really permanent based on the downturn in the economy. However, with the many talents that God gave us, we need to use our untapped talents and make it work for us.

Case in point where Kevin mentioned contracting, I think it is a brilliant idea, because this speaks to flexibility, being able to use up and find ways of completing an assigned job, having more than one project in different areas which is very versatile. Often times people work in a 9 to 5 job, and in the end their potential is underutilized.

Sometimes when you are in situation where you are forced to find a way, thats the time you really realize that there is much more to you than a 9 to 5 job.

I can speak like this, because I am living it. I am quite sure, you can do it too.

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