Monday, September 6, 2010

Employer for a Moment
A key concept in any economic discussion is labor. You are the labor when you work for someone. You may be deemed "an employee", but in economic terms, you are "the cost of labor." And to understand the true cost of labor, you must look at what companies truly pay for an employee

To be an effective economic thinker, you cannot think as an "employee". Escape that mindset and think like a CEO. To top management you are "labor" and there are costs to hiring you that reach far beyond your hourly wage.For example, when you get hired, the true cost of hiring you is your hourly rate plus additional costs. In other words, your employer pays you $10 an hour, but it costs him at least an extra five dollars to keep you employed and happy. Again, if you get paid an hourly rate $10.00 you cost your company at least $15.00.

And this additional cost increases every time your company faces health insurance increases and every time the federal government imposes new regulations and various employment taxes.

Let's look at an example. You are paid $10 an hour and you get paid $400 a week. But as a $400.00-a-week employee you really cost your company $626.20 a week.

No comments:

Post a Comment