Eli5 How is it cheaper for a factory/company to hire contractors for basic work when there employees they hire are paid less per hr?

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I work for a contractor and I’ve always wondered why they hire us when I get paid $30 a hr and obviously my boss is making a cut on top of that. But the company I’m painting for only pays there employees $18 per hr? Wouldn’t it be easier just to hire an extra employee to preform simple tasks like painting, shoveling stone, ect these are all none skilled labor jobs.

In: Economics

12 Answers

Anonymous 0 Comments

Compensation is more than hourly/daily wage. Regular employees should have access to health coverage, retirement benes, vacation. In some states you need to be notified weeks in advance if there are layoffs. I’ll bet there is some insurance considerations. IE: a worker getting hurt will increase your worker comp coverage costs, but you hire a contractor who hires you, even if its yourself, hey it ain’t my problem.

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