An employer thinking about whether to hire full-time or part-time help has to consider the following factors:
- Differences in compensation cost per hour: full-time workers must receive health insurance and usually receive other employee benefits as well, whereas part-time workers typically just receive hourly wages. Also, hourly wages in part-time jobs tend to be lower than in full-time jobs. Advantage: part-time.
- Costs of hiring and training workers: It takes twice as much effort and time to find and develop two part-time workers as it does for one full-time worker. Also, turnover is much higher for part-time workers, so that means even larger hiring and training costs. Advantage: full-time.
A recent WSJ article shows that some companies are rethinking this tradeoff and hiring more full-time workers. The Sheetz convenience store chain found that 83% of its part-time help left within a year, much lower than the 25% of its full-time hourly help. Sheetz also finds its full-time workers are more committed to customer service. Buffalo Wings & Rings finds that full-timers ring up more sales and have lower rates of absenteeism.
There is a simple economics lesson here: you cannot just focus on cost comparisons; you also need to think about productivity. As the unemployment rate keeps getting lower and more individuals drop out of the labor force, expect to see more companies calling up Sheetz's CEO.