Question: Is it cheaper for companies to keep employees as temps even if they're paid more?

For example, at my job, I've been a temp through the temp agency on the same assignment for 2 years straight. From what I've been told by the permanent employees the temps get more hourly pay than the permanent people. temps get $12-14 per hour. Permanent people get $10-11 per hour. But, anytime there's a holiday they say that it's mandatory for the temps to work 8 hours of overtime on the Saturday before the holiday AND work four 10 hour days on during the actual week of the holiday to make up for being off an extra day. It's optional for the permanent people to do the overtime prior to the holiday. But, isn't it costing the company more to pay over time to temps versus permanent employees since the pay is higher plus they also have to pay an hourly fee to the agency for the temps? Seems like it would be a lot more expensive paying temps to work extra hours. When I started the job 2 years ago the workplace was made up of mostly permanent employees and just a few temps. Now, there are WAY more temps than permanent employees.

Answer:

very simple answer

company's dont have to pay insurance for temp employees and they dont get all the perks

so yes its cheaper to keep them temps

Do the full-time employees even get the option to work any overtime? I know plenty of full-timers who'd love the ability to work some overtime.

Management might be using temps because they have had a painful previous experience with layoffs, and they don't want to go through that again for the emotional health and well-being of the full-timers who remain, and they're willing to spend more on temps for the added piece of mind that they won't have to lay off anyone else in the future. Having the temps work most or all of the overtime seems consistent with the desire to maintain or improve the morale of the full-timers (if they in fact don't want to work the overtime).

I think this management decision is misguided because they fail to take into account the human toll on the temps, and of course the fact that full-timers tend to develop meaningful relationships with long-serving temps, which will end up causing just as much organizational pain when/if headcount has to be reduced.

no benefits are paid to temps. benefits cost about 35% added to the hourly labor cost. also, if you want to get rid of a temp, you call the temp agency and they are gone. if they are on your regular payroll, you need to worry about wrongful termination, discrimination charges, etc