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The economics of supporting an employee are optimal with them doing a full 40 hour workweek because of fixed costs. Their office space, desk, and equipment cos

The economics of supporting an employee are optimal with them doing a full 40 hour workweek because of fixed costs. Their office space, desk, and equipment cost the same whether they are working 1 hour a week or 40 hours a week. Their medical insurance that covers them 24/7 and other benefits cost the same whether they are working 1 hour a week or 40 hours a week. To reach the same optimal point for a half-time employee, their pay would have to be reduced by more than half to account for the fixed costs.

JoeAltmaier 6y ago
Not making sense to me. Fixed costs are a small fraction of pay. Further, costs are not subtracted from pay, but added to pay to calculate total cost of employee? In some imaginary scenario where you simply use twice the people and twice the fixed assets to perform the same tasks, then they'd be paid for half a job minus half the fixed costs I suppose. But not necessary to operate like that. Could share office space, share most fixed costs. Only medical remains. And some jobs don't even require full-time for the company to thrive. Payroll has to be processed every two weeks only, and doesn't take 2 weeks to calculate. Are they not worth having then? </pedant>
- ThrowawayR2 6y ago
  > "Fixed costs are a small fraction of pay." Across all employee types in the US, the estimate is that wages are ~70% of the costs and the the other ~30% are benefits and other fixed costs: https://www.bls.gov/news.release/ecec.nr0.htm https://www.bls.gov/news.release/ecec.nr0.htm. If that's small, I'd like to see your definition of large. As another datapoint, though this site is likely a bit biased (they're selling consulting services), they provide an estimated breakdown for a $100k/year tech employee that comes to about 46% burden rate (i.e. for every dollar paid to the employee there's an extra 46 cents in cost): https://telegraphhillsoftware.com/hiring-technical-employees-true-cost/ https://telegraphhillsoftware.com/hiring-technical-employees...
  - JoeAltmaier 6y ago
    Sure you 'fully load' costs on employees. But you have to have a building etc, no matter if its full. Not quite fair to divide 'cost of doing business' across employees, and mistakenly assume hiring another employee is going to change that. And yes, 1/3 is a small fraction. A large fraction would be 2/3 etc. I think I said that right, its normal mathematical usage. Anyway, its all talking thru our hats. In Russia for instance during the early Soviet years, they had no weekends. Only occasional holidays. So 40 hours is heaven compared to that. Honestly, 'full-time' Americans at least, typically get 114 days off a year. Out of 365. Pretty soft life.

JoeAltmaier 6y ago

Not making sense to me. Fixed costs are a small fraction of pay. Further, costs are not subtracted from pay, but added to pay to calculate total cost of employee? In some imaginary scenario where you simply use twice the people and twice the fixed assets to perform the same tasks, then they'd be paid for half a job minus half the fixed costs I suppose. But not necessary to operate like that. Could share office space, share most fixed costs. Only medical remains. And some jobs don't even require full-time for the company to thrive. Payroll has to be processed every two weeks only, and doesn't take 2 weeks to calculate. Are they not worth having then? </pedant>

ThrowawayR2 6y ago
> "Fixed costs are a small fraction of pay." Across all employee types in the US, the estimate is that wages are ~70% of the costs and the the other ~30% are benefits and other fixed costs: https://www.bls.gov/news.release/ecec.nr0.htm https://www.bls.gov/news.release/ecec.nr0.htm. If that's small, I'd like to see your definition of large. As another datapoint, though this site is likely a bit biased (they're selling consulting services), they provide an estimated breakdown for a $100k/year tech employee that comes to about 46% burden rate (i.e. for every dollar paid to the employee there's an extra 46 cents in cost): https://telegraphhillsoftware.com/hiring-technical-employees-true-cost/ https://telegraphhillsoftware.com/hiring-technical-employees...
- JoeAltmaier 6y ago
  Sure you 'fully load' costs on employees. But you have to have a building etc, no matter if its full. Not quite fair to divide 'cost of doing business' across employees, and mistakenly assume hiring another employee is going to change that. And yes, 1/3 is a small fraction. A large fraction would be 2/3 etc. I think I said that right, its normal mathematical usage. Anyway, its all talking thru our hats. In Russia for instance during the early Soviet years, they had no weekends. Only occasional holidays. So 40 hours is heaven compared to that. Honestly, 'full-time' Americans at least, typically get 114 days off a year. Out of 365. Pretty soft life.