People Cost Examples

Example 1:

Wabash hires hundreds of temporary workers, with few benefits, and wages under the $9.16 starting rate for its permanent workers. (Year 1995 – SIC 3715)

Explanation: This Company hires permanent workers at $9.16 an hour and then pays benefits in addition to that hourly rate. Temporary workers have very few benefits and work at a rate below $9.16. The hourly rate and the benefits the permanent workers earn may be included as People costs.

Example 2:

Pitt-Ohio will experiment with city trucks. These trucks have lower driver pay scales because the drivers do not require a DOT-certified license. (Year 1997 – SIC 4213)

Explanation: The license required for the driver could be part of the People costs for the DOT – certified drivers.

Example 3:

Woodward workers’ wages are at 85% of the industry average. But, for the last two years workers have received a profit sharing bonus equal to about 50% of base pay, putting their gross pay well above the local averages. (Year 1986 – SIC 3728)

Explanation: The profit sharing bonus is part of the People costs for Woodward employees.

Example 4:

To avoid lay-offs, Lois Lane got New York State to subsidize payroll through a shared work program. The employees work fewer hours, but the state made up the difference in their take-home pay for as long as twenty weeks. (Year 1991 – SIC 4724)

Explanation: The subsidy by the State of New York reduced the People costs for this company.

Example 5:

JB Hunt pays its drivers more than other truckload carriers in order to reduce turnover. It invests to hire good drivers and to train them well. (Year 1998 – SIC 4213)

Explanation: The cost of hiring and training new drivers is part of the People costs for this company.

Example 6:

With 75% of its production in Mexico, at an average hourly wage below $3.00, the company now boasts strong 13% margins in its electric motors division. (Year 1997 – SIC 3621)

Explanation: The low hourly wages are part of the People cost for this company.

Example 7:

The unionized less-than-truckload carriers developed a concept called flexible work weeks. This concept enables companies to avoid paying a premium for weekends if that is part of the “week.”
(Year 1998 – SIC 4213)

Explanation: The premium the companies have been paying for weekend work is part of the People costs for these employees.

Example 8:

Merck invested in work and family benefits after it discovered that they were a source of employee turnover.
(Year 1988 – SIC 2834)

Explanation: This company added benefits, increasing its People costs, in order to reduce turnover, another People cost.