Why Do Most Businesses Only Hire Part-Time Employees? - Zupnick Associates

(By Saad Imran)

By definition, a part-time employee is someone who works fewer hours than a full-time employee. However, there is no one valid definition of a full-time employee; it varies from one employer to another. 

A standard full-time work week in the US consists of 40 hours. Some employers also consider it full-time when their employee works for less than 34 hours a week. So, any employee who works less than their employer’s full-time hours is regarded as a part-time employee.

According to the statistics, there were 20.13 million part-time employees in the US in 1990. This number rose to 24.61 million in 2020. 

Data released by the US Bureau of Labour Statistics showed that the number of people working part-time for economic reasons increased during and post COVID. Most people who worked part-time had lost their jobs due to the pandemic or got their hours reduced due to business conditions. 

A USC study has projected that the US economy will lose more than $3 trillion due to business closures during the pandemic. Running a company during such an unprecedented time and ensuring your business’s survival can be a hectic task. 

Most employers concerned with their company’s bottom line look towards hiring part-time employees to save on payroll costs and employee benefits. 

Part-Time Employment & Benefits

Since part-time employment is used as a strategy to lower business costs, some businesses offer no benefits at all. 

The majority of businesses who opt to provide benefits provide low-cost benefits like sick days, paid vacation, tickets to entertainment events, and telecommuting options. A study shows that benefits make up only 16.4% of part-time worker’s compensation. 

Legally, businesses are required to offer some kind of benefits to part-time employees. 

Under the Affordable Care Act (ACA), employers should offer health insurance to employees working at least 30 hours a week. This is significantly more important during the present time since a pandemic is going, and the US healthcare system is in shambles

According to Employee Retirement Income Security Act (ERISA), if a company offers a retirement benefits program, and an employee has worked 1000 hours for the company, the employee is eligible to participate in that program. 

The employees who are 21 years or older and have worked for at least 500 service hours every year for three consecutive years are also eligible to make elective deferrals to 401(k) plans under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.

Other Federal Acts such as the Service Contract Act (SCA), Davis Bacon and Related Acts (DBA) and Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors require contractors to provide fringe benefits to part-time employees. 

Apart from legal provisions, offering benefits to your part-time employees can be a good reflection of your business values since most of the part-time workers work under extreme conditions. It will also help you attract and retain top talent in your industry. 

Some of the benefits that you can offer under your Employee Assistance Program (EAP) are unemployment benefits, health insurance, health and wellness stipends, counselling services and financial consultancy services.

Some other reasons for businesses hiring part-time employees are:

To Hire Professional People On a Limited Budget. Startups and small businesses have small budgets, and they need an efficient workforce for their success. Through part-time employment, they are able to hire professional people who provide high-quality work while working for fewer hours. 

An experienced part-time employee will definitely be able to accomplish more than an inexperienced full-time employee and will also cost less.

To Check If The Employee is Right Fit For Them. Part-time employment is a great opportunity for the employee to get to know company policies, culture and whether they get along with their co-workers well. 

The company will also be able to gauge the interests and abilities of the employee and whether moving the employee towards full-time employment is worth it or not. 

To Have a Diverse Workforce. A diverse workforce is a valuable point on the company profile. It not only shows the client that the company values diversity and inclusivity but also results in increased productivity and creativity. 

Bringing in employees from different backgrounds can lead to better decision making by analysing different perspectives. 

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