Contract vs. Full-Time: 10 Pros and Cons

With Freelance work on the rise and polls projecting that nearly half of the workforce will be comprised of contract and freelance employees within the next decade – you may be considering the switch. Contractors work remotely and are often paid an hourly wage while full-time employees work in an office for a set annual wage. There are benefits and downsides to each type of employment, in more ways than you may have considered before.

Which are better—contract or full-time jobs?  The job that best fits in with your personal goals and lifestyle is the best one for you.  Contract jobs provide more flexibility, but full-time employment has security and predictability going for it.

Here’s our list of the top 10 Pros and Cons of each type of work: 

Contract EmploymentFull-time Employment
Remote, can work from homeLess Job Security. Temporary since projects commonly have a pre-determined end-dateJob security (but how much security if half the jobs will be remote in 10 years?)No overtime  or extra pay for longer hours (exempt employees) that may be required
Can accept or decline the project you wantHigh competition which leads to higher rejection numbersCan motivate you to grow in a professional environment, don’t have to self-disciplineAre forced to be a part of any project assigned, no declining it like contractors
No commute timeHave to invest in your own trainingThe company usually pays to train employeesCommute daily, often in peak rush-hour traffic times
Scheduling FreedomHard to schedule time offEmployees have a sense of company culture and moraleLess in control of your environment, office space, and schedule
Some have done the math proving that contractors earn more than full-time employeesWages are unpredictable and when between gigs you may fluctuate in revenueImmediate feedback from your employer and face-to-face interaction for clearer communicationWon’t have as much of a voice on a project compared to contract work. A smaller part of a larger team instead of an individual entity
Many contract employees still have benefitsMany contract employees do not have benefits and must pay their own separately.Benefits included almost always and less out of pocket on insurance
Usually make less money, but the trade-off is job security and insurance discounts
Varied subject-matter and differentiation in each dayMay not get to explore a single specialty as closely as a full-time expert. May have to offer a wider scope of capabilities than one expertise.Earning long-term loyalty from your employer because it’s not a temporary gig.Can become pigeonholed. Each day can look the same when you’re at a large company where everyone is niched to a specialty
Can travel the world and still workHave to be more disciplined and give up ‘off-time’ to job huntYou don’t have to look for work–they’ll always have more for youMay get delegated into one role at your company, not grow
Audition a company before accepting full-time positionYou have to accommodate the client62% say they prefer to work in an officeYou have to accommodate the company
Freelancing jobs are on the riseHave to do your own taxesTaxes are handled within the company, and it simplifies your tax responsibilitiesFull-time office positions are on the decline

Before making the drastic switch to contract or full-time, use this guide to break down what attributes will best suit your lifestyle and professional goals.  Many people recently have been offered a permanent position after thriving on a contract project, declining it because they don’t want to tie themselves down to a single employer. We want you to make an informed decision that will suit your needs and find the type of employment that is right for you!

Contract Employment

As you may have gathered from the chart above, no job is perfect. What we are looking for here is an ideal situation for you. Contract employment is well-suited to many people’s productivity styles and desire for control over a project.

In case you are not certain on the definition quite yet, according to the Business Dictionary, a contract employee is:

“A contract employee is hired for a specific job at a specific rate of pay. A contract employee does not become a regular addition to the staff and is not considered a permanent employee.”

You will often sign a contract that is due to end on a specific date and will fill out a W2 for tax purposes. You may also be required to sign an NDA (Non-disclosure Agreement) to enforce your confidentiality regarding the project.

Many employers hire on a contract basis to start with the intention of finding the right full-time employee. You may not be the right fit for the position long-term, but it is a way for companies to experience a trial period with you on the team, without fully committing themselves.

Like all forms of business, contracts are adjustable, and end-dates, payment amounts, and most other factors can be adjusted in the contract at any point.

You will have many benefits to look forward to under contract/freelance employment, but the advantages come with weighty responsibilities. Imagine how much more would be on your shoulders than if you had an entire company and team to support you.

The pros and their in-depth explanations are as follows:

The Pros of Contract Employment

The positive things that will entice you about contract employment are:

#1 Work Remotely 

Everyone’s favorite thing about contract work–you get to do it in your pajamas!

This is a very desirable quality for any form of employment because some employees do not have the flexibility to work in an office. If you are a stay-at-home parent or caring for an elderly family member, you may need to be home during the day.

If you can’t spare 40-50 hours a week away from the residence, contract work is an ideal solution for receiving a paycheck without abandoning your at-home responsibilities.

#2 Power to Accept/Decline

Unlike a full-time employee that is saddled with whatever their boss throws on their desk, a freelancer can choose the jobs they actually want to apply for, decline the ones that aren’t suited to their skillset, or remove themselves from projects if the professional relationship has hit a wall.

Of course, you will need to read the contract or NDA that has been sent to you by the employer. If you’ve already signed, it may be too late to quit the project until it is finished.

However, in many cases, you are working with an artistic client (on something like marketing content, ghost-writing, illustrations, formatting, graphic design work, coding, etc.) and if either party is not satisfied with the work, there is more freedom to part ways amicably because neither of you really ‘belonged’ to each other in the first place. If you’ve ever worked in an Advertising agency or worked with products/clients that you never would have chosen to work with willingly, think of how good it would feel to say yes or no to the clients of your choosing!

#3 No Commute Time

Employers of full-time businesses often require the employees to arrive between 7 a.m. – 9 a.m. (the peak time of morning traffic). After a long day of work, you are then sent on your merry way – right into another hour-long traffic jam at 5 p.m.!

It’s a vicious cycle where everyone working their 9-5 will conjugate in traffic on a daily basis like a party no one wants to attend. As an at-home employee, you can avoid what many consider the negative side-effects that are caused by your commute. According to Time Magazine, some of these include:

  • Increased risk for higher cholesterol and depression
  • Increased anxiety and blood pressure
  • Decreased happiness/life satisfaction
  • Your sleep-quality is altered
  • Back pain
  • And general aggravation

With people spending an average of “204 hours a year,” commuting, you’re clearly saving yourself some headache. Not to mention the body-aches too!

#4 Scheduling Freedom

Another perk of being a contract employee in your own work is being able to work when productivity fits into your schedule.

People have different times of the day when their body is at low energy and peak energy. Finding your personal routine of productivity will be about tracking when your mind is the clearest, your workflow is the most focused, and your distraction-levels are less vulnerable.

Redbooth reports on a study done on productivity time slots that discovered that “productivity among office workers worldwide is at its highest point at 11 a.m., and plummets completely after 4 p.m.”

You are most alert in the morning based on research, and lunchtime will take a huge hit against your productivity levels in most cases.

These are the general averages – but we are all incredibly different!

If you are working at home and despise the morning time (against what science says should be your peak productivity period), then you can wake up at noon and work until midnight! You are free to find the routine that suits your personal productivity cycle, without anyone to answer to.

Employers normally don’t really care when you work on it or if you sleep all day – as long as the project is finished before the deadline.

#5 Contract Employees Make More Money!

Not much to argue with here – Contract employees’ compensation can be up to 40% more than full-time employees, according to the Houston Chronicle. You can see a breakdown of the math done by a British company on compensation, proving that contractors earn more than full-time employees. Which leads us into our next point about –

#6 The Benefits Debate

Many people argue that’ benefits’ are the pinnacle of disadvantages to contract employment. However – it’s not always true.

More and more contract employees are offered benefits, so you can’t use the ‘benefits’ debate as your main argument against freelancing anymore.

Contract employees are also making nearly 50% more money than full-time so that supplemental income is intended to offer you extra cash for insurance, savings, retirement, time off, and security, essentially reimbursing you for the benefits not given.

Some contract workers are receiving benefits from their employer, although this is still the exception and not the norm.

With more and more employees moving towards freelancing, the benefits offered will need to adapt and change with the times, as we’ll soon be seeing more of.

#7 More Differentiation in Each Day

Think of it this way:

At a large firm, you have entire departments for copy/writing. Entire departments for art direction. Entire departments to produce the finished product, and an entire department to market and distribute that product or service.

When you are a contract freelancer – you have to be all of these things and a tax-expert all in one!

You will wear many more hats and juggle many varied responsibilities as a freelancer which can be a good and a bad thing.

As a freelancer, you’ll have to gain some versatility in what you bring to the table, but this can be an exciting step in your professional development anyway!

If you get bored of having a targeted specialty and not being able to step outside of this box, contract work may be an ideal next step for you.

#8 Can Work from Anywhere

Contract work is the answer to most people’s lifelong travel dreams and could be the most tempting factor of all!

Want to work in Egypt? Paris? Brazil? Anywhere?  You can!

As long as you have an internet connection, a form of communication to stay in contact with your contract employer, and the discipline to work on a project even when you want to explore a new city – you can work from anywhere in the world.

The difficult part is that:

  • As a full-time employee – you are given fixed times for work and told when you are free to play.
  • As a contract employee – no one will tell you when the work is done, or when you are free to go play.

It may always be work time, and like a surgeon, you may be ‘on-call’ at all times. One of the most difficult adjustments is learning that no one is there to force you to work. The ball is in your court and will only get done if you can hunker down and discipline yourself.

#9 Test-Run a Company

This is a way for you to sample the employer before signing on full-time. See if you enjoy the first 6 months before agreeing to a 5-year contract. Interview the employer in the same way they interviewed you.

#10 Contract Employment is on The Rise

With Sir Richard Branson, CEO of Virgin, claiming that the ‘death of the 9 to 5 workday’ is occurring within the next decade, he seems to be on par with what statistics are noticing as well.

“Currently, 1 in 5 workers is a contract worker, the poll shows,” according to They also found in this study that 94% of jobs created between the years 2005-2015 were temporary jobs. In this digital age that is rapidly evolving, we can only guess how many will be seeking contract employment in the next 10 years, but weforum is projecting that by 2030, “workers will enjoy fewer benefits like health insurance, pensions and long-term employment.”

The Cons of Contract Employment

The major disadvantages of being a freelance employee include:

#1 Less Job Security

You don’t have a steady paycheck and only have as much money as you hunt for. This can be very intimidating for those who have always relied on a steady 9-5, or for families with young children and mouths to feed.

When people are relying on you, it’s hard to choose the less stable employment option where most gigs will be temporary and have a pre-determined deadline.

#2 High Competition

Being that contract work is on the rise, there will be millions of creative freelancers competing for the same jobs as you.

“At present, more than 57 million U.S. workers are freelancers, and there is an estimated increase of 3.7 million freelancers in the U.S. in the past five years. It has that 43% of the U.S. workforce will be freelancers by 2020,” says Medium.

This can also be intimidating, so being a freelancer is not for the faint of heart. You will need to get very comfortable with rejection and make it your best friend. The two of you will get cozy fast with each other as you’re lucky to be hired for 1-5% of the jobs you apply for.

#3 No One to Train You

When you work a full-time position, you will often be brought into training seminars, lectures, meetings, or expected to keep up some continuing education. Your employer will guide you and wants everyone to be on-the-same-page with new software advances/changes.

As an independent contract employee – you are on your own.

No one is there to tell you when it’s continuing education time, homework time, or what the new trends are. You’ll have to find them yourself and be responsible for keeping up with evolvements in your industry.

#4 Can be Difficult to Schedule Off-Time

A freelancer is always on-call.

Even when you’re ‘off,’ you could be emailed an important deadline to be fixed on that same day. Planning a day out with friends or family can be harder when your work/off times are not predetermined.

It is up to each freelancer to find their own balance in this.

#5 Unpredictable Wages

Although freelancers are making more money, once that contract ends – you could be without any cash-flow.

The wages being unsteady is a major argument against freelancing in general.

#6 The Benefits Debate

As discussed above, many freelancers are beginning to receive benefits, although this is a new development. Yes, to be fair – in most cases as a contract employee, you will not have the benefits of:

  • Health insurance
  • Dental insurance
  • 401K 
  • Paid sick leave
  • Paid vacation time
  • Maternity leave
  • Disability

If you have a family or children, this can be especially unsettling.

#7 May Not Be as Expert at One Niche

We covered how you’ll be wearing many hats on a daily basis, but will that really allow you to become an expert at any single skill?

If you want to hone your craft or become completely proficient in one skill, you can’t divide your time between ten different ones.

#8 Off-Time is Not Always Off-Time

Your off-time will be about applying to gigs and finding more work. It can be hard to stop working for this reason alone.

#9 Accommodating Clients

You may be able to fire some clients if the relationship is a bad match, but most of the time, you will need to accommodate their needs. Your livelihood depends on it, and there will not be a ‘middle-man’ communicating on your behalf.

You will be responsible for taking care of that client from start to finish. As a freelancer myself, I can tell you that most clients don’t know what they want. They don’t know – until you show them! That’s the fun part, as well as the taxing part.

On a tangent note, if a client wants you to accommodate working on-site, check out this post!

#10 Taxes

Speaking of taxes, you will be on your own for these bad boys too!

Here are some guides to get you started:

Full-Time Employment

You’ve got the essence of what each employment form is about at this point, so we will breeze through some final pros and cons to consider for full-time employment and some resources to aid you in making a decision.

The Pros of Full-Time Employment

You may be completely sold on contract work. But first, understand precisely what you’re giving up.

The pros for a full-time position are:

#1 Job Security

This is a tricky benefit to full-time work. 

Yes, you will have a steadier income if you’re supporting children and a family. But it’s difficult to measure precisely how stable the job market is with freelancing so heavily on the rise.

In 50 years, we could be doing everything with Artificial Intelligence and remote-employees only. No one can say what the future holds, but it’s leaning towards a decrease in full-time positions with benefits. So how secure is it really?

Employers are looking for a way to get the most out of an employee without insuring them for life or taking them on as a full-time responsibility. Employees are looking for more vacation time and work/life balance. 

Learning some freelance skills (in case there is a major job-layoff-crisis in ten years) might not be a bad idea. But for now, it is a more secure employment option.

#2 Less Self-Discipline Required

Your boss tells you when you need to be at work and when you’re off. That takes pretty much all of the guessing work out of the equation for you. Self-discipline will be less of a requirement for you, so long as you can look busy or prove results while in the office.

#3 Paid Training

As aforementioned, if there are new developments in your industry, software, digital, marketing, sales, etc. – your employer will let you know.

You aren’t all on your own with full-time employment, and you will feel the support of a team. They want you to stay up-to-date on modern tactics so that you can be a better asset to the company. This takes a lot of self-education weight off of your back.

#4 Company Culture & Team-Mentality

Being a part of a team is fun! Some of the reasons we as humans love to work on a team includes:

  • Making friends
  • Someone has your back
  • Each person brings something unique to the table
  • Mission-mentality
  • Knowing you’re not alone

#5 Immediate Feedback/Clearer Communication

A study conducted by measuring how much clearer communication is when it’s done face-to-face as compared to email discovered that, “the face-to-face requests were 34 times more likely to garner positive responses than the emails.”

It is difficult to decipher people’s true intentions through email, such as:

  • When they inflect their voice
  • How serious they’re being
  • If they smile or are being funny

Face-to-Face will always be the clearest form of communication that will result in the most amount of context and the least amount of misinterpretation.

#6 Benefits Included

We’ve covered the benefits debate. If you’re working 40+ hours a week, you’re probably getting benefits for a discount of between 30-90% the normal rate, depending on how much your employer covers.

You’ll have to determine if that is worth it to you based on how many people you’re covering while considering the higher compensation for contract-employees.

#7 Long-term Loyalty

Hand-in-hand with being a part of a team, you are developing long-term relationships here, not temporary 6-month projects.

You can make deep relationships when you have a matter of years to solidify them.

This could lead to more opportunities down the line that you may not be exposed to if you’re cooped up at home all day.

#8 Always More Work

Did you finish a project at the office? Don’t worry–your boss always has more work to do! The name and game of capitalism and the never-ending machine.

This can be a benefit to you because you do not have to go out and ‘find the work’ to put food on the table. It’s always there for you.

#9 62% Prefer the Office

Funny enough, people find it easier to work in an office. This is due to their being:

  • Fewer distractions
  • You’re in a productive-work-space, not your cozy home space
  • They have all of the needed equipment at the office/not at home
  • Team environments can make people feel more motivated than a lonely one
  • You are being told to work by a higher power, easier than forcing yourself to do it

It’s very understandable to want to compartmentalize your life.

Work stays at work, home stays at home, and the lines remain un-blurry.

#10 Only Personal Taxes/ No Business Tax Responsibility

You can disregard the tax tips given above because your company will do their own business taxes.

You are only responsible for your personal ones, not the taxes of your own business (an entirely different beast altogether).

The Cons of Full-Time Employment

Lastly, the downsides that may talk you out of those wonderful benefits we just discussed.

The disadvantages of full-time employment are:

#1 No Extra Pay for Overtime

If you are an exempt employee, you won’t get any extra compensation for showing up on a Saturday. 

Sometimes projects take overtime, staying late, and finishing the project in time for the deadline. You may commonly work more than 40 hours a week and won’t see an extra dollar for that time. 

As a contract-employee, you’re often paid by the hour; therefore, this exploitation can be avoided.

#2 Can’t Decline Assignments

Most of the time, you really can’t say no to a gig you don’t want.

It can be really difficult to say no to your boss.

Enough said.

#3 Daily Commute

We covered this above on how miserable the commute makes humans. Do you want to make that your problem, or does traffic not bother you much? This could be a huge influence in your decision-making process.

If you want a full-time job, this is a non-negotiable part of the deal, unless you live next door.

Decide if the compensation is worth what the commute does to your body and health.

#4 No Control Over Environment, Space, Schedule

You probably can’t have a lava lamp or loud chips in your cubical. But you can have whatever you want at home!

You can’t control the annoying people you work within an office environment, the moldy-colored wallpaper, the elevator music, or all of the environmental factors you detest.

Home, on the other hand, is a sanctuary within your control. This can make focusing as hard or easy as you want it to be.

#5 Often Being Paid Less Money (Trade-off for Benefits)

Sure, you’re making $10,000 less a year, but you know when your next paycheck is coming and have the steady protection of insurance for your family.

It’s a trade-off, but understandably, it is worth it for many to stay full-time because they don’t have the luxury of not knowing where their next paycheck comes from. The 2019 employment rate is 3.5%, according to thebalance, which is the lowest since 1969! So it would appear that people are finding a secure position and holding onto it tightly!

#6 Less Power in a Group Than as an Individual

A sad yet funny thing about being a human being is that we are all guilty at one time or another of falling into the crowd-mentality.

If there is a polarizing debate, and the most powerful person in the room picks a stance, everyone is more likely to side with him or her. Those in the middle will feel peer-pressured to agree.  Most people don’t want the social isolation that comes with being seen as difficult. 

If you are working independently – it’s all up to you, and no one is there to influence your thought process or sway your opinions. This is a good and bad thing, as we all need to widen our personal perspectives, but it can also take you in directions you didn’t want to go. 

This can be a sweet relief that will allow you to not be forced into decisions you wouldn’t normally choose of your own will. Working in an office full-time will have you choosing sides that you most likely wouldn’t if you were working under contract.

#7 Pigeonholed into a Specialty

We covered this one above, but since the company is so large, they don’t need you to work on copy, marketing, graphic, distribution, packaging, etc. They only need you to be good at one of those things, but you have to be very good at that one thing.

You may end up pigeonholed into a niche or specialty that you feel is too narrow. This can make each day feel the same and have you wondering if you have more to offer the world.

#8 Hard to Move Up

Some of the reasons you may have trouble getting a promotion or raise in a full-time role includes:

  • There are so many people in the company that you blend in
  • You’re asking for too much upfront
  • Thinking that raises are based on merit when in some company cultures it’s about favoritism
  • Expecting it just because you’ve been there for 5 years, not because your work is high-quality
  • You might be trying too hard

Of course, it is not impossible to get a raise or promotion, but you’ll need to be able to outline to your full-time employer precisely what you have done for the company and measurable results of your contribution.

#9 Company Comes First

If you’re a contract employee, you can prioritize your own schedule and time at the forefront of the work, so long as it gets completed.

As a full-time employee, you might be at the office 40-60 hours a week, for the same pay regardless, and the company’s schedule will always trump your needs or schedule.

#10 Full-Time Positions are on the Decline

As The Gazette says, “The rise in part-time jobs also has been attributed to employers concerned about the effect of the federal Patient Protection and Affordable Care Act. The law will require any employer with 50 or more full-time equivalent workers to provide medical benefits.”

There are more part-time employees and less full-time because companies realize how expensive it can be to cover hundreds or thousands of employee’s benefits. 

Contract work is on the rise, and who knows what the future could look like in the next 50 years. With the rise of AI’s, full-time employment could go the way of the horse and buggy.


There are more freelancers than ever before, and there is no wrong time to jump into the freelancing game. If you are uncertain about making the leap, I recommend you try out freelancing in your free time before leaving your full-time job.

If you can sustain a steady-income and develop enough long-term clients that you no longer need your full-time job, the switch will be a much swifter process for you. Giving yourself this transition period will also reinforce your switch and make it to where you don’t have to return to a full-time position at the first financial speedbump.

Listen to your gut because only you know what’s right for you!