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Suppose you have a job that pays $2000 for 40 hours a week, ie $50/hour. You might want to work only 30 hours, and get paid $1500/week. But your employer has fi
by ajb 13y ago
Suppose you have a job that pays $2000 for 40 hours a week, ie $50/hour. You might want to work only 30 hours, and get paid $1500/week. But your employer has fixed costs per employee: insurance, and the IT, HR, finance and management functions. This can be as much as 2X, ie another $2000/week. So they are currently paying $100/hour for your services. But if you go down to 30 hours and get paid $1500/week, they would still be paying $3500/week, so their cost would go UP to $116/hour.
You might be able to reduce all these administrative costs, but splitting work up among more people has its own cost. Remember Brooke's law, "adding manpower to a late software project makes it later" - the same effect is in play.
[Editted to fix arithmetic. This makes the example less dramatic, but still significant given the profit level of many companies]
- pyre 13y ago> they would still be paying $4500/week I don't understand this. If you are paying: $1500 for a 30 hour week +$2000 for administration costs ------------------------------- $3500 Am I missing something on how changing the $2000/week pay to $1500/week makes the price go up by $500/week?
- kaybe 13y agoIt's a typo I reckon, but the original point seems valid to me. It would be better to hire one person for 40 hrs than 2 for 20 hours each because of the overhead.
- ajb 13y agoYeah, sorry, it's a typo. Will fix.
- lifeisstillgood 13y agoit's per hour costing: 2000 /wk labour 2000 /wk overhead ---- 4000 /wk @40hrs/wk 100 / hr vs 1500 /wk labour 2000 /wk overhead ---- 3500 /wk @30hr/wk 115 ish / hr