Fun With Figures

Have you ever heard employers trying to convince the government to give them a tax break or a special grant to cover the cost of training new employees. During times of high unemployment, for example, the government will be keen to find new jobs for the citizens and that's when the employers pounce. They point out that it costs (say) $10,000 to train up a new employee and many of those new employees will leave after only a few weeks on the job - which means the employer has to waste another $10,000 training-up another newbie.

Under normal circumstances we don't hear much about training costs, but when the government is begging employers to create new jobs the employers say, "Well gee, Mr Government Man, we'd sure as hell like to help you out, but it costs us $10,000 just to train-up a new guy, so how about you kicking in a few dollars to help defray that expense?" And the government might offer to pay the employer $5,000 for each new person they hire. The incentive will usually be paid in increments: $500 upon hiring, another $1,500 after the new guy has been in the job for three months and $3,000 more after six months.

So you turn up to start your first day at your new job and the the employer takes $10,000 out of the 'company account' and puts it into the 'training new employees account'. This money is being set aside to cover the costs that will be incurred during your first year on the job. If you are in Australia (where I live) in an industry with a strong union, then those costs will include fourteen public holidays, six weeks annual leave, ten days sick pay (and other things I can't really think of at the moment). In Australia the average weekly pay is about $1,000 so these 'training costs' will add-up to about ten thousand dollars.

But what happens if you don't like the job and decide to leave after just a few weeks? Well the employer takes the $10,000 out of the training account (because not one cent of it has been used so far) and puts it back into the company account alongside the $500 incentive he has already received from the government. "Not bad," says the employer, "I made $500 profit on that deal. Let's hope the next guy leaves just as quickly."

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OK, it never works out as neatly as I have described it here, and the rules change from year to year, but rest assured; the employers don't spend much cash on training new employees. Remember too, that in most jobs the worker starts producing items on the very first day - and those items can be immediately sold for a profit so any training costs are quickly recovered. The new worker doesn't really cost the employer anything; the new worker is making money for the employer from day one.