Yesterday, we looked at some of the new employment trends for 2013 as a result of Obamacare. Some employers are choosing to keep their full time staff right at 49 people to avoid having to offer health insurance or pay fines. Others are playing with the number of part time staff to avoid hitting the penalty. Their choices might have looked something like this. Given the options it seems like an easy choice to employ part time workers. And many small business owners and managers are probably thinking that when looking on a spreadsheet at the cost of a worker. But, as with many business decisions, we may not be looking at all the costs for an employee.
Here are just a few additional items for consideration when building a staff:
This is by no means meant to be comprehensive. A few of these go hand-in-hand though. Take turnover and recruiting. Part time employees are often looking for full time work. If it’s not offered where they get the PT hours then they’re very likely to leave when a FT position comes along. This increases your turnover and elevates the cost to recruit. FT workers are much more likely to be loyal.
Likewise, training costs can be very significant. At a fast food restaurant you have to learn about the company’s culture, standards for cleanliness and sanitation, and of course how to cook and serve quality food. All of this can be taught, but it takes time. That employee is paid while training, and usually a manager has to oversee it. That’s double to cost.
Furthermore, the productivity of a worker can vary based on how many hours they work. A PT worker has more setup costs because they come and go more often. A FT worker has longer periods of work vs “setup” time and can be more productive. A FT worker will also have more experience which pays dividends in their day-to-day responsibilities.
These costs are all highly variable from company to company and industry to industry. Research exists to show that PT employees can be more productive in certain environments. And FT workers are harder to fire if they aren’t good at their job. There is no right or wrong answer from a macro perspective, but there is from the manager’s.
If a company is going play these games with worker hours to try and avoid fees to the government or offering health insurance, they should first have a good handle on the other costs they face. If it costs $2500 to hire and train a new worker, it may be worth it to offer the health insurance or pay the fee. However most small businesses may not have a great grasp on these costs because they’re more focused other aspects of the business. Only if they do, can they make the right decision on how to arrange their workforce to comply with Obamacare.