Why it's hard to get a big raise as a W2

One of the reasons it's hard to get a raise as a W2 in the government contracting industry is because the company needs to make a profit off your work.

But there's also another reason it's so hard to get a raise: fairness.

Companies past a certain size try to maintain stable pay structures and hierarchies with associated pay ranges.

If you work at a traditional consulting firm, the "ranks" might range from analyst at the low end, to senior consultant in the middle, to engagement manager, director, or other vice president as you move up.

The pay ranges for these roles may stay the same even if you jump to a position with a much higher billable rate!

You'd think that the company would be more open to be giving you a piece of that sweet sweet rate if you're good but they won't.

This is because if they give you a raise, every employee is going to want to find out their billable rate and capture more of it. You'll have junior people making more than senior people. And of course, if an employee goes to a position with a lower bill rate, you can't exactly lower their salary either.

So bigger companies have to manage fairness at the aggregate level, not the individual level.

This is why, even if you do well, it's so hard to get a meaningful raise and that to do so requires a significant promotion most of the time.

Don't bother fighting it.

Just switch jobs/companies or go 1099. That's the only way you'll get a big raise.

Want the full playbook? Check out Going 1099.