When you’re a contractor, you have to make decisions about hiring — many decisions, including who and where. One of the biggest decisions is whether to hire part-time or full-time employees for a project.
It’s not an easy decision, especially if you don’t have a ton of capital for remodeling or other projects. Here’s a brief overview of the pros and cons.
There are several benefits to consider when hiring part-time workers:
Health Care Benefits
The Affordable Care Act (ACA) requires that you cover people who work more than 30 hours per week if your company employs more than 50 workers. Health care insurance can be very expensive. Medical costs and insurance premiums keep rising every year, sometimes by extremely large amounts.
If you hire people to work less than 30 hours a week, or have less than 50 employees, you are not required to provide health care insurance. Although the ACA has come under congressional scrutiny, it is not clear whether it will be repealed or what would replace it in the event of repeal.
Salaries and Expenses
Part-time workers can cost less in salaries, and they definitely cost less in benefits. The government defines part-timers as people who work 17.5 hours or less per week or less than 1,000 hours per year. If a budget for a given project is tight, hiring people for 15 hours a week may be less expensive than hiring them for 40 hours.
Also, part-timers do not, by law, have to be paid benefits, so vacation, sick leave and 401ks do not have to be part of your planning or capital outlay. You also don’t need to hire someone to administer benefits.
Contracting and remodeling work is often seasonal. The number of people you need in June is not likely to be the same in December. In addition, even in the peak season, the amount of workers you really need on a project can vary markedly week to week.
The variability means the ability to have part-timers on short-term contracts can really help small business owners with flexibility. If you have full-time people, you need to keep them on the payroll whether they work or not. Part-timers can often be called in or not depending on needs.
These negatives might affect your decision to hire part-time workers for a job:
It takes a while to learn a job thoroughly. It also takes some time to work well on a team or crew. People who work only part time may be less productive as a result. Not only may it take them a while to come up to speed on a job in May, if they don’t work in July they may drop in productivity again in August, through no fault of their own.
The U.S. government estimates 5 million people are working part-time from economic necessity. In other words, they would prefer to have a full-time job, but are only able to find part-time work. The figure is 1 million more than the level in 2006 when 4 million people worked part time due to economic need.
As the economy strengthens, more highly qualified or skilled workers may move to full-time employment and leave part time. The result? People willing to work part time, with unpredictability and few benefits, may be far less skilled.
People generally feel most loyal to employers they feel treat them well. You may be a great boss or have great supervisors, but if workers want to work full time and you employ them part time to save costs or increase flexibility, they may be less than optimally loyal to you.
Lukewarm or nonexistent loyalty can have many effects. They could leave you for full-time work or may be less than engaged on the job. They might even slack off or pilfer supplies on a regular basis.
Hiring full-time employees has many plusses to consider:
If your goal is to maximize productivity, it may be better to hire full-time workers. Any worker likely becomes more productive the more steadily they perform a job. They are fully up to speed on the skills, the timing, and the teamwork.
Many businesses benefit from long-time employees who make productivity-improvement suggestions. Full-time workers are in a position to see places where methods could be streamlined to save costs or money. Part-time workers are far less likely to be in that position or to make these suggestions.
It isn’t only productivity that improves the longer an employee stays on the job. Their quality is very likely to improve as well. They learn higher-level skills, and their sense of doing good work to improve their standing with the team or with the company may rise as a result.
Full-time workers, if they are paid well and enjoy good benefits, will be much less likely to leave your company for another than part-timers. A dedicated crew can improve the reliability of your business and your ability to meet your bids. It therefore positively affects the rest of your business as well.
Loyal people are also less likely to leave as the economy heats up and more companies begin hiring. It gives you a steady workforce.
Bringing on a full-time crew has some disadvantages you’ll need to keep in mind:
Salaries and Expenses
There is no way around it: The salaries and expenses of full-time workers are higher than those of part-time people. You will not only pay more for an annual salary, but you may also end up paying more by the hour than you would for a part-timer. You will also have to provide benefits, including vacation and retirement. Administrators will become a necessity.
Health Care Benefits
If you have more than 50 full-time employees, you will have to provide health care benefits under the ACA. This is quite expensive per employee. It is also likely to go up in the future.
Again, the continuation of this requirement is uncertain. However, you will need to include it in your calculations to be on the safe side.
Construction work is seasonal. If you hire full-time workers, you will have to balance their work throughout the year. Do you have enough remodeling or other work in the slower season to make 40-hour weeks for certain workers doable? How much work do you have?
Making the Decision
As you can see from the pros and cons, these decisions are not easy to make. Solid pros and cons exist for each position.
One solution might be to hire part-time or full-time workers depending on the size of the job. Full-time workers can be placed on large jobs that will last several months. Part-time workers can be used for pick-up work and finishing.
A second idea might be to pair full-time and part-time workers. The part-timers could learn from the full-time people, and the part-timers could become the pool from which full-timers are chosen.
A third solution would be to use different solutions as your business grows. If you are in a startup stage, you may need to use part-timers for reasons of economy and flexibility. As word-of-mouth about your business spreads, though, you could make it a point to hire seasoned and capable full-time workers.
As in all business decisions, it’s good to weigh the benefits and drawbacks carefully. Monitor the consequences of your decision going forward, and the correct choice should seem obvious.