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NC State Ag Economist Mike Walden – “Hiring or Contracting”

10-26-15  2:27 run time

Mary:  I’m Mary Walden, with economist MW, welcoming you to the economic perspective. Today’s program looks at hiring versus contracting.  Mike, there’s a debate today about how people work.  There seems to be an increase in contracting out- where doesn’t hire a person as an employee, but hires the person to do a specific task.  The worry is that workers hired as contractors lose the benefits that come with being an employee.   Is there a solution?

Mike:  Summary Answer

  1. Contracting out work is not new
  2. An economist – Roald Coase – in part won a Nobel Prize for analyzing why some firms hire employees and others contract out
  3. Comes down to costs of controlling quality of the work – when it is costly to control quality and workers need supervision, will hire as employee;  when easy to monitor quality, will contract out
  4. In terms of contractors missing out on benefits, there is research showing that firms – at least in part – pay for employee benefits by paying the employee lower wages
  5. So trickier than might appear
  6. I’m MW

Mary:  And I’m Mary Walden for the North Carolina Cooperative Extension Service