Does switching to non-unionized labor help reduce labor costs? Can you technically pay them less?
do depreciation costs increase YoY in general? Since each asset will depreciate more over time?
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- Yes, non-unionized labor is cheaper:
Bureau of Labor Statistics data indicates that in 1983, 20.1% of employed Americans were members of a union. By 2019, that share had decreased by roughly half to 10.3%. ... The BLS reports that on average, in 2019, union workers earned roughly $1,095 per week, while nonunion workers earned closer to $892.
- Depreciation generally does not increase yoy. It typically either stays the same (often 10-yr straight line, meaning 10% of original asset book value) or decreases (e.g. if tax authorities allows for higher depreciation in first years as a tax incentive)
Agree with the other tutor's comments. On point 1 - typically, labor unions have collective bargaining power which generally can push up wage costs.
yes, non unionized labor is usually cheaper.
yes, depreciation generally increases yoy. that's because you often incur in capex each year (maintenance or stand-in capex) and this capex would be depreciated, thus increasing the depreciation expense. a good metric to watch out is revenue over depreciation.
Hi there,
Yes, non-unionized labor is cheaper. That said, the switch is easier said than done. Moreover, you may experience productivity decreases if you're bringing in fresh, inexperienced labors.
Depreciation costs do not increase YoY. Most companies employ straight line depreciation. Please read up on depreciation - it's an accounting technique to write off the costs of an upfront purpose over several years.
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