001-Lazy. No Judge! It is Economics!

John and Peter are two employees working in the same restaurant. Both of them are receiving a $5 per hour wage for example.

I am sure you know everyone has different talent. Someone is good at doing something; another someone is good at doing another thing. In other words, you may or may not do a job better than others.

In the example here, if no one considers selfish and will work whole-hearted, John works in a restaurant is better than Peter. It means that John can bring up more income for the restaurant than Peter does. In terms of the Potential Performance Curve (PPC), John has a higher Potential performance than Peter. Let’s say, John brings $10 per hour to the restaurant and Peter brings $8. The company earns $8 per hour ($5 from John and $3 from Peter) as profit (I should use “economic rent” here but “profit” is easier to be understood in typical terms).

In the real world, “Selfish” does exist. Peter brings $8 per hour to the restaurant but he gets only $5 per hour wage. Why would Peter continue to work like that? Why won’t Peter just works less hard (Shrunk) to bring only $5 per hour to the company? He may just work slower on his job. Since the restaurant does not lose money on hiring Peter, Peter is still safe on his job.

What about John? John saw Peter works lazy and still be employed, John will shrink on his job also and try to bring only $5 per hour to the restaurant. As a result, the restaurant will not earn any profit from hiring John and Peter.

It sounds like the laziness of employees makes the company’s profit decrease. Don’t make me wrong, however, I don’t judge working lazy. “Working Lazy” is neutral in Economics. It is a choice for people. It is the employers’ or managers’ responsibility to lead employees to work harder and to bring more profit to the company. Employees have the right to choose their lifestyle. Employees could choose how lazy they work on the job. In the example, the bottom line for John or Peter is to bring at least $5 per hour to the restaurant or they would be fired. If the company wants employees to work harder, the company will need to pay the price. That is a fair trade.

Of course, there are a lot of ways for employers and managers to encourage employees to work close to PPC and earn more profit. It will be another topic then. I will cover it in the future.