...both contractors and FTEs can be considered second-tier based on their capabilities
Except that FTE's have the full protections and benefits of the main entity employing them, with the typical ability to plan for years at a time. On the other hand, contractors typically do not receive the full protections and benefits of FTE's - as the main purposes of contract/agency arrangements are to dodge those costs and view the covered individuals as a problem.
And everyone without their head up their ass knows they always have multiple masters, regardless of how far up the food chain they are.
Typically, the average FTE answers to internal/external entities to the mission, vision, and direction of the company itself - a single master. The contractor/agency worker has multiple sets - the agency and the client(s) - that do not always coincide with one another.
A skilled contractor is never treated as a second-tier person. In my company for instance we have two contractors who are highly fought over resources by our project managers.
Such individuals understand their value and have the rare option to not go as a regular entity. For most people, they're lucky if they have the former.
Want to make that route more attractive? Make it a strict option to do anything less than FTE, with no penalty or skill restriction.