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
- Contracting out work is not new
- An economist – Roald Coase – in part won a Nobel Prize for analyzing why some firms hire employees and others contract out
- 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
- 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
- So trickier than might appear
- I’m MW
Mary: And I’m Mary Walden for the North Carolina Cooperative Extension Service
