Give yourself a raise, man. The only way to get a 5-figure raise is to quit and move onward and upward. If you don't, you'll stay at the same place until you are no longer marketable.
I wish I could tell you that working freelance is better, but it isn't. At least $34K is $4K more than I grossed so far this year, as a freelancer. Consider yourself fortunate to have a job at all in this economy.
I've been a massively underpaid one-right-hand-man-band like you describe, then an underpaid freelancer, then a well-paid full-timer, now a well-paid co-founder of a business. I've run quite the gamut.
- Barry and Luis are right: The world is too small to be aggressively cannibalizing clients. Capture clients with dignity and professionalism only.
- ShowMaker's right: As a hiring manager, it's frustrating to admit that unless you're the very cream of a company's crop - and even sometimes if you are - the best way for a large increase in compensation is to seek other work. Sometimes the same role in a different company might have a huge salary difference, to say nothing of actually getting hired for a more senior role.
- If you go freelance, it's best to have some cushion, whether it's rent-free living or some financial padding. The rewards can be just as big as the risks, which are considerable. Put away 50% of what you make for savings and taxes and you'll be playing conservatively, which is smart just starting out in your own business. Freelance work pipelines are always, always lumpy.
- Salary is supremely local, as is the consistency and density of work. Despite posts to the contrary, it's not reasonable to live in a market like SF or NY on the salary you're making. But in other areas, it's a reasonable wage. Researching salary surveys in different regions might be enlightening.
- A tried and true way to develop freelance business is to moonlight. It makes life harder, no question, but you can attract low-risk (albeit low-cost) projects to hone your freelance chops. This can be like holding down two jobs, but it let me develop an illustration portfolio (CD covers for the indie music scene) while holding down a job with a different focus, and can let you stretch related skills in different ways.