I went from contractor to "real employee" at a big company and it was no problem keeping the same take-home pay, while also getting paid vacation, cheaper insurance, 401k matching, etc., etc. I feel a little burned for not asking for more money, but nobody would actually take less money, right?
It's interesting seeing differences between countries. Like the author said in the comments, 401k isn't an "issue" in Australia. I don't know how 401k works, but Superannuation in Aus is a compulsory 9%-10% of your salary that your employer sends to your super fund (that you can't access until you're 60). If you're a contractor you don't have to pay yourself super (so you could have more immediately available money), but you could also put away 9% just like your employer would. There's no insurance issues because we get government provided healthcare, and depending on the contract structure you go with there's actually a few decent protections an employer is required to provide you (if you structure it that you're a company contracting to another company then you're out of luck there).
So realistically the major difference is "security", which to be honest there isn't much of regardless you being an employee or contractor. So at least in Australia, unless you're getting an increase in your hourly rate, or a company says they'll only continue to send you work if you're an employee, there's no major advantage to switching to be an employee.
I work for a tech company all of you know, and have plenty of friends at other major tech companies. I don't know any that pay your average senior engineer anything close to $200k, but that's the going rate for an average experienced contract. Specialized contractors get paid a lot more than that.
Often it appears that you take a hit to your pay, but when you do the benefits math (paid holidays, vacation, health insurance, sick days) it's at least a wash.
Yes, for the right job, or for something they love, they would do it. I know because I have done it.
I went to the UK in 2004 to do some travelling and working for a couple of years. Initially I was contracting in London at pretty good rates (between GBP 400 and 600 per day -- as I said, in 2004). The first year of contracting I earned just over GBP 120K. That's approx. USD $190k on the current exchange rate.
Part of the reason I went there was because I wanted to take a stab at the games industry. It was something that I had always wanted to do, and the industry here in Australia was awful. So I took at job at one of EA's studios.
That year I earned GBP 27k, approx. GBP 90k less than the year before.
Do I regret it? Not at all. I had a blast. It was a great experience and I met some amazing people.
So no, it's not all about the money. For the right gig in the right place with the right level of passion, earning enough to survive is exactly that: enough.
