Is it worth it to hire a ___? at Catch a Gideon

January 19th, 2007 by digerati

You hate cutting the grass, so you hire a gardener. Hate cleaning the bathroom? Hire a cleaning person.

Sound familiar? Many people hire these people and justify it by saying it is cheaper to pay someone to do it than spend the time doing the task themselves.

The common justification is to say “I earn $x dollars an hour, so if it costs $x-z dollars to pay someone to do a task, then it is worth it to do so.”

Not so. Here’s why:

You don’t make as much as you think you do. When you calculated your hourly rate, chances are you didn’t subtract taxes. That knocks off between 30 and 50% of your salary (you didn’t forget state and city taxes did you?).
You can’t necessarily make more money. Anyone on salary doesn’t get overtime, and their bonus is not based on the extra time they spend (at least not correlated to hours spent). Even someone who gets paid per hour (a lawyer, for one) can only get so much work at a time.
When you don’t do a task, you aren’t really getting paid for not doing it, but rather if you pay someone to do that task, you are paying for the opportunity to do something else.
Money isn’t worth the same everywhere. The Walker scale has been developed to try to mitigate the differences between different areas of the country.

Basically, the average person would say…”I make $40 an hour, the yard guy charges $25, so i make money by hiring him to cut the grass.” Really, you earn probably about $26 per hour and you likely won’t spend the extra hour a week working (assuming you get paid for that extra hour if you do). Instead you’ll watch TV. The calculation to determine instead is “it costs me $3 an hour to cut my own grass.” Yeah, you aren’t counting the opportunity cost of working in your normal job, but chances are you weren’t doing it anyway. SO, that means it costs you $22 an hour to have someone else cut your grass. And if you go to a movie every weekend instead of doing the chores, your hourly cost goes way up.
The point is, it isn’t cheaper to hire someone to do something for you, but it can certainly free up your time for things you’ll enjoy more. It’s more important to offset the costs of the service with the leisure time you’ll gain from it.