What are the advantages and disadvantages of hiring employees?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

If a business is to expand beyond a certain point, it needs to have people to perform various tasks.  If it is not going to hire, the most likely alternative is to pay independent contractors to do the work rather than hiring people to work as employees.

There are pros and cons to hiring.  Please follow the link to look at a longer discussion of this question.  However, here are what I see as the main pros and cons of hiring.

  • Con: Hiring tends to cost more.  This is because you are having to pay for employee benefits, for their social security taxes, etc.
  • Con: Hiring tends to make it harder to be flexible.  If you don't have enough work for your employees, you have to fire them.  If you just have free lancers, you just don't hire them again after a specific task is done.
  • Pro: Employees, on the other hand, tend to be more loyal and more available to you.  You don't have to worry that they will not be there when you need them.
caledon's profile pic

caledon | High School Teacher | (Level 3) Senior Educator

Posted on

One disadvantage, which I believe is asserting itself more aggressively in today's economy, is the fact that the employer does not have full control over the process and retention of the employee. 

While the employer retains the right to hire the employee and fire them, there are not only restrictions placed on these choices, but upon the terms the employer may place as well. For example, the recent push for a $15 minimum wage means that anyone who hired an employee would now be legally forced to pay them more, whether or not the business can afford it or the employee deserves it. This means that hiring employees requires a degree of foresight and trust in the employee and the government to do what is at least equally in the interests of both. 

Another disadvantage is in the accountability of the employee. For example (and I'm only speaking from personal experience here) when something goes wrong at a fast-food franchise and the public hears about it, blame is rarely placed on the employee; instead, the call goes out for the entire company to take responsibility. Additionally, the employee may not possess the knowledge necessary to adapt to an unpredicted situation, resulting, again, in the employer taking the blame. The 1993 Jack in the Box E.coli outbreak is one good example.

On the other hand, providing jobs by hiring employees goes beyond the immediate benefits of the work that they provide for the employer, and can generate both tax benefits as well as goodwill among the community. In a societal sense, employees are necessary because otherwise no one would have the money necessary to buy the things those employees produce. Additionally, there are many jobs for which automation or computerization are impossible, and many for which a human interaction is the best means of accomplishing the task, such as teaching, field research, counseling and agriculture.

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