"Contract-to-Hire" is the "We'll See" of Dating.
It’s the oldest trick in the staffing book. The recruiter calls you. "We don't have the headcount approved just yet, but it's a Contract-to-Hire role! If you crush it for 6 months, they’ll convert you to full-time."
You take the job. You grind. You work late. 6 months pass. They extend the contract. 12 months pass. They extend it again. 18 months pass. They lay you off.
You weren't a 'future employee.' You were a 'permanent temp.'
As a staffing agency owner, I see the backend budgets. I know exactly why this happens. It’s not because you aren't working hard enough. It’s because the math was rigged against you from Day 1.
Here is the financial reality of why "C2H" (Contract-to-Hire) roles are mostly vaporware in 2025.
1. The "OpEx" vs. "CapEx" Trap
This is boring CFO stuff, but it explains why you are unemployed. Companies have two buckets of money:
- CapEx (Capital Expenses): This is for permanent employees. It’s hard to get approved because layoffs look bad to investors.
- OpEx (Operating Expenses): This is for software, rent, and... contractors.
In 2025, tech companies have frozen their CapEx (Headcount) but have unlimited OpEx. They can't hire you. The bucket is welded shut. But they need the work done. So they lie. They label the role "Contract-to-Hire" to get an A-player like you to accept a risky job. They know the conversion budget doesn't exist. They just hope that maybe in 6 months it will. (Spoiler: It won't).
2. The "Carrot on a Stick" Productivity Hack
Employers know a dirty secret: A contractor hoping for a full-time job works 30% harder than a full-time employee.
- The Employee: Leaves at 5 PM. Takes sick days. Complains about process.
- The Hopeful Contractor: Stays until 7 PM. Never calls in sick. Says "Yes" to everything because they are terrified of losing the "conversion."
By keeping you in "Contract-to-Hire" limbo, they get your maximum effort for minimum liability. Why would they buy the cow (hire you) when they are getting the milk for free (your panic-induced productivity)?
3. The "Try Before You Buy" Myth
Recruiters say C2H is to "see if it's a good fit." Bullsh*t. If they wanted to interview you, they would interview you. Google doesn't hire software engineers on a 3-month contract to "see if they can code." They do a loop and hire them.
If a company needs to "test drive" you for 6 months, it means one of two things:
- Their interview process is broken.
- They have trust issues. Neither is a good sign for your future tenure there.
The Real Numbers: Why You Are Cheaper as a Temp
I ran the math on why a CFO prefers to keep you as a contractor forever.
| Cost Category | Full-Time Employee ($120k) | Contractor ($60/hr) |
|---|---|---|
| Health Insurance | $15,000 / year | $0 (You pay your own) |
| 401k Match | $5,000 / year | $0 |
| Payroll Tax | $9,000 / year | $0 (Agency pays or you pay SE tax) |
| Severance Risk | High (Legal risk) | Zero (End contract today) |
| Total Cost to Company | ~$155,000 | $124,800 |
The Verdict: You are $30,000 cheaper and 100% easier to fire. Why would they ever convert you?
Frequently Asked Questions (That Recruiters Dodge)
How do I know if a C2H role is real?
Ask for the Conversion Salary in writing before you sign the contract. If they say: "We'll figure that out later based on performance," run. It's fake. If they say: "The converted salary is $130k and here is the benefits package," it might be real. Real roles have a budget line item attached to them today. Fake roles do not.
Can I negotiate a higher rate for C2H?
Yes. You should charge a "Risk Premium." If the full-time role pays $60/hr, you should ask for $75/hr as a contractor. Tell them: "Since I am taking the risk of no benefits and no job security, I need to adjust the rate to cover my own insurance." If they refuse, they are looking for cheap labor, not a future partner. See our guide on Rates for the exact math.
What if I'm already stuck in C2H limbo?
Force the issue. At the 6-month mark, request a meeting. Ask: "Is the requisition for the full-time role open?" If they say "Not yet," start applying to other jobs immediately. Do not wait for the 12-month mark. The longer you stay, the more you look like a "forever contractor" to other companies. See our Resume Guide to fix your title.
Leon Staffing places contractors who know their worth. We don't sell fake promises. View our transparent contract rates here.