And you thought you knew how to do arithmetic

This manufacturing outfit decides it's time to cut headcount in IT -- and despite management promises, it's payroll employees who get the ax while contractors are kept on, according to a pilot fish on the scene.

"Management even explained to the staff how contractors were cheaper," grumbles fish. "While the direct cost per hour was higher for contractors, they were cheaper in other ways, including pension, medical and -- most important -- office costs.

"It seems that office space is free for contractors.

"Turns out the corporate real estate office takes the total cost of space in the area, divides it by the total number of employees, and charges each department that rate times the number of employees on each department's payroll.

"It gets worse. Some of the real estate space with very few employees has a very high cost, such as the clean-room assembly floor. As a result, the attributed costs for office space are higher than in other local companies, and so is the cost per employee.

"But even though the actual office costs for a contractor -- desk space, heat, light, utilities -- were the same as for an employee, contractors were treated as being free."

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