Do you know someone who earns a lot of money, but works a huge number of hours and is never home? Why don’t companies split these high-hour jobs into two? It seems insane (and maybe inhumane) to work someone 80 or 100 hours a week constantly, even if they are bringing home big bucks.
One reason these high-hour high-pay jobs exist is because of the Social Security system’s tax structure. Half of the Social Security tax is paid by the employee and half is paid by the employer. However, the tax applies only on income up to $113,700. If a company pays one person $250,000, this means that company owes Social Security taxes on about half their salary.
However, let’s assume the company did work or job-sharing and hired two people instead at $125,000 each, for a total of $250,000 in wages. If they hired two people, the business would owe Social Security tax on the entire $250,000 salary, instead of half. Hiring only one person saves the company thousands of dollars (about $7,050) compared to hiring two people.
Moreover, companies experience other cost savings beyond Social Security by hiring one very highly paid person, compared to two people. The company only has to pay one set of benefits. Hiring two people means the company needs to pay for two health plans, two dental plans and give two sets of paid vacations.
Benefits often comprise about 25% of a person’s compensation costs for high wage workers. This combined with Social Security and Medicare taxes means working one person 80 hours a week results in a company’s labor costs being about 1/3 lower than hiring two people to each work 40 hours a week. Job-sharing rarely happens for high paying jobs because it costs companies a lot of money.
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