Economics Essay: Temporary Workers - Advantages & Disadvantages

This economics essay examines the practice of businesses hiring temporary workers to manage costs and adapt to economic conditions. It explores the advantages, such as reduced payroll costs and flexibility, and the disadvantages, including lack of job security, limited benefits, and potential negative impacts on employee morale and productivity. The essay discusses the effects of temporary employment on workers, such as increased rates of depression and anxiety, and how this can affect the firm's marginal physical product. It contrasts the short-term benefits of temporary workers with the long-term advantages of permanent staff, who are more invested in the company's success. The essay also considers the implications of temporary workers on cost structures, including fixed and variable costs, and highlights the importance of considering both explicit and implicit costs in economic decision-making. The essay concludes that, while temporary workers offer some short-term benefits, permanent staff are more beneficial in the long run.

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

ECONOMICS
Why should not business continue to hire business temporary workers as a strategy to
contain their costs or to help them restructure?
Businesses might hire temporary workers for filling the short run needs or for filling
the place of an absent full time staffer in order to reduce the payroll costs. While such help
van be beneficial to a business, there are some downsides to the approach. It have been found
out that more than 26 percent of the US workers are the temporary workforce. One of the
disadvantage of working as a temporary employees is that they have no job security. The
recession and the financial crisis affects mostly to the temporary workers. Since the candidate
pool known to have grown larger, the criteria for getting a temporary job has increased .
Another disadvantage of being a temporary employee is that they does not get any paid
vacation and zero paid sick days. However, a firm needs to pay fixed cost even when the
output is declining and therefore they will be leading to significant losses when there will be
economic downturns.
As the temporary workers do not have job security, they face higher rates of
depression and anxiety for which the productivity also decreases. As the employees will be
suffering from stress, they will also less productive in nature. When the productivity of the
firm will decrease, the marginal physical product will be even lower. Although hiring
temporary employees will be beneficial since they do not have to pay for sick leaves,
vacations, health insurance of the employees. Since the temporary workers do not have job
security and sometimes even no fixed payments, they are known face higher rates of
depression and anxiety. As they have no job security they are very easy to lay off. When
temporary workers are hired in place of full time staffers for reducing the costs or for
avoiding, it will be creating an environment in which employees feel undervalued in general.
The longer an employee is with the company, the better it is for company since, they become
with your products and client base. Staffers with an investment in the company for a long

ECONOMICS
period of time will can be the positive representatives of the organization than the people who
are short timers. Temporary employees might be beneficial in the short run, however in the
long run the permanent staffs are only beneficial to the company.
Firm hire temporary workers since there will be increased flexibility, lower hourly
cost per worker and presence of economies of scale. The law of diminishing returns states
that the marginal output of the production decreases when the amount of single factor of
production is incrementally increased. They firms will also not have to pay for retirement
plans and occupancy cost which will lower the variable cost of the company. As the variable
cost decreases, the average variable cost will also decrease. The total variables costs are
those cost which vary with output. However, employees fighting stress and depression will
also face health issues which are characterized under implicit cost which have taken place
but not shown as a separate expense.
The economic cost is the combination of opportunity cost as well as accounting cost.
The explicit cost are out of pocket costs for firm whereas the implicit costs are the
opportunity cost of resources which are owned by the firms. The firms should also reduce
hiring temporary workers since they will have no company funded retirement plan and also
they will be facing no fixed occupancy cost.

ECONOMICS