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?

Question

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

Answer 1

A contractor doesn’t get benefits like health insurance or 401k, and can be quickly hired/fired as needed for specific projects, busy times and such.