Efficient Employment Planning in Public Utilities

L.J. Krajewski and H.E. Thompson

Bell Journal of Economics, 1975, vol. 6, issue 1, 314-326

Abstract: This paper introduces an aggregate employment planning model for making efficient employment decisions in a telephone company. Such a model can be used to prepare annual budgets as well as to provide monthly operating guidelines for more detailed employment scheduling decisions. A simplified example problem is presented and the model is used to address two questions of economic interest; (1) what are the tradeoffs between employment costs and service, and (2) what are the effects of the utility's considering the equity rate of return allowances on added rate base as an offset to expansion costs? It was found that when the firm is operating in an optimal fashion, (1) the tradeoff between costs and service results in cost changes which are small as a percentage of total employment costs and (2) the effects of making workforce expansion costs a function of the rate of return are that capital investment and workforce levels increase and rate payers must incur added costs.

Date: 1975
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