17 June, 2013

dreamshade comments on Solving the mystery of Keynes' "mistake": Why do we work so much and enjoy so little leisure?

dreamshade comments on Solving the mystery of Keynes' "mistake": Why do we work so much and enjoy so little leisure?: Say you're the owner of a small business, and you estimate that you're going to need 600 man-hours of work every week for your business. Do you:

* (A) Hire 20 people to work 30 hours a week
* (B) Hire 15 people to work 40 hours a week
* (C) Hire 10 people to work 60 hours a week (assume time-and-a-half overtime pay)

The thing is, if you hire 20 people, that's 20 workstations that you have to build—20 people that need a bag of tools or a computer desk or a company phone. That's also 20 people's worth of bureaucracy—20 people who need health insurance, 20 people who need HR contacts and face time. If you hire 15 people instead of 20, then that reduces part of your overhead by as much as 25%, so (A) is clearly the least efficient choice. In fact, if the choice between (B) and (C) is a 16% increase in wages (60 hours with overtime equals 70 billable regular hours) but a potential 33% reduction in employee overhead, then the overtime pay may be your best option!