Why Have Contractor Rates Stagnated? 🤔

While delivering a training webinar for the Find Your Next – Or First – Project Management Job course, I noticed something that troubled me. I was helping the group conduct job searches on various recruitment sites that offer project manager roles, and I couldn’t help but notice that the contractor day rates hadn’t moved since I last contracted in 2018. In fact, they’d barely moved at all since my first serious contract role in 2014.

Permanent role salaries have increased – slower than inflation, I’m sure you noticed – but advertised contractor rates have stubbornly stayed in the same range as before. Worsening the situation is that many of those roles are now inside of IR35, so the amount of taxes paid is greater than before.
So what has caused this? Here are a few ideas, and I’ll be interested to hear your views.

* Supply and Demand. ⚖️
The number of projects that require project professionals may have increased, but the availability of new project professionals may have turned the ratio so that supply outweighs demand. If this is the case, then leveraging experience and specialisations may be the route to higher day rates.

* Changes in Hiring Practices. 💼
In the UK, IR35 laws were toughened up, and greater penalties were being leveraged on the client as well as the contractor. This led to a purge of contractors from a number of businesses in 2019, with a very slow reversal since then – and a greater preference for inside IR35 contracts. In this situation, you may attempt to negotiate the contract to be clearly outside IR35 compliant – but I don’t know anyone that has accomplished this, so can’t state for sure that it would succeed.

* Market Maturation. 📈📉
It could be possible that project management skills are so widely understood and adopted that companies feel less compelled to pay premium rates. In this situation, you way want to focus on specialisation (via continuous learning), demonstrating value (showcasing your accomplishments in complex projects), and building a strong personal brand. This should differentiate you from the rest of the market.

What else could be causing this?
Do economic factors mean that contractors now feel lucky to take any job, and are less inclined to negotiate terms? 💹
Has technology played a role in reducing the need for contractors? 🤖
Is globalisation a factor? 🌍

Let me know your thoughts!

Speaking of salaries, here is the video where I share my salary details throughout my project management career – which includes a few ups and downs: