Productivity Formula for New Citizens Wanting to Hire Workers

Day 1,493, 22:03 • Published in USA USA • by Gnilraps

Department of New Player Education
Day 1,493 of the New World
22 December 2011

Q6 WEAPONS INDUSTRY DICTATES JOB MARKET

Nearly every day I see at least one newer citizen post an offer to hire employees in a low Q company. I almost always take a few minutes to tap out a PM explaining (in 2000 characters or less) why hiring a worker will lose them money.

The most common error in judging profitability occurs when products produced working as manager are combined with hired worker production thus skewing the numbers.

As a member of the eUSA Economics Council, I'd like to publish the following information as a permanent reference point. If you see a new citizen trying to hire a worker for his Aluminum Mine, please link him to this article.

SNAPSHOT
(I am using round figures for ease of readability and because these figures are fluid anyway.
Terms: WRM = Weapons Raw Materials, FRM = Food Raw Materials, WM = Weapons Manufacturing, FM = Food Manufacturing, all monetary figures are in USD.)

Here are the current key factors which influence profitability.
Market Wage: 150
Current Q6 Weapon at retail: 31
Current Q5 Weapon at retail: 25
Current Q4 Weapon at retail: 20.5
Current Q3 Weapon at retail: 15.8
Current Q2 Weapon at retail: 10.2
Current Q1 Weapon at retail: 5.2
Current WRM per unit: .31

Q6 Food at retail: 5
Q5 Food at retail: 2.4
Q4 Food at retail: 2
Q3 Food at retail: 1.5
Q2 Food at retail: .95
Q1 Food at retail: .5
Current FRM per unit: .23

Weapons and Food VAT: 5%
WRM and FRM VAT: 0%

Current Weapons bonus: 80%
Current Food bonus: 60%

Using just these figures, I will show why it is nearly always impossible to profit from employing a worker in all but the highest Q Manufacturing Industries. Please reference this chart for help determining production values and bonuses.


WEAPONS INDUSTRY

Q6 WEAPONS
A worker costs 150.
WRM needed per worker is 1080 units costing 334.8.
Each worker produces 18 Weapons.
The cost per weapon is 26.94.
After taxes, each weapon yields 29.52 in revenue.
Each weapons yields 2.59 profit.
Each employee yields 45.57 profit.

Q5 WEAPONS
A worker costs 150.
WRM needed per worker is 900 units costing 279.
Each worker produces 18 Weapons.
The cost per weapon is 23.84.
After taxes, each weapon yields 23.81 in revenue.
Each weapons yields .03 loss.
Each employee yields .54 loss.

Q4 WEAPONS
A worker costs 150.
WRM needed per worker is 720 units costing 223.2.
Each worker produces 18 Weapons.
The cost per weapon is 20.74.
After taxes, each weapon yields 19.52 in revenue.
Each weapons yields 1.22 loss.
Each employee yields 21.84 loss.

The loss becomes larger as the Q level goes lower.

WRM
A worker costs 150.
A Q5/Rubber worker produces 450 units worth 139.5, netting a 10.5 loss.
A Q4/Cattle worker produces 315 units worth 97.65, netting a 52.35 loss.
A Q3/Fish worker nets an 80.25 loss.
and so on.

In the Weapons sector, only Q6 WM is turning any actual profits.

What about food?

Using the same formula with 60% bonus, the following is true:

Each Q6 Food worker nets a 390.4 profit.
Each Q5 Food worker nets a 7.6 loss.
Each Q4 Food worker nets a 25.2 loss.
Each Q3 Food worker nets a 10.8 loss.
Each Q2 Food worker nets a
Each Q1 Food worker nets a
FRM workers net a 38 loss at Q5/Deer. It gets worse from there.

REVIEW

I know this is not rocket science, but I hope to save a few newbs the mistake of trying to access the job market with anything less than a high Q Manufacturing company.

Remember, it does not change matters if you are harvesting your own RM. If you are producing more RM than you can manufacture, it is more profitable to sell them rather than hire a worker to convert them into finished products.


BASIC FORMULA

Calculate the cost of Raw Materials needed per worker (using this chart).
Add the cost of a daily wage. This is amount "A"
Calculate the post-tax price (take .95% of the current market price).
Multiply that amount by the number of products produced by one employee. This is amount "B".
If A is larger than B you're losing money if you hire an employee.


I hope this helps someone.



You may now return to your regularly scheduled clicking