Carragee Consulting

When I was traveling a lot for work it used to drive me crazy that my employers expense approval system tried to prevent booking non-stop flights if an alternative with a connection was available for > $50 less.

Very often you’d miss an entire day of productivity flying to a customer location in each direction, but you still had 40+ hours of work to do.

In the sample Memphis to SFO itinerary the company can save $211 by forcing the employee to waste 6 hours and 45 minutes of their life and risk that their baggage is lost on the transfer or that they get stranded in the intermediate city.

Very likely the employees wage (if calculated hourly) is more than the cost savings to the company and so in theory even a salaried employee should be willing to pay the difference to fly non-stop.

In reality though a good manager will bend the policy to approve the extra cost of the nonstop because they want to maximize the consult’s available billable hours and mental/physical health.

When you work for yourself you get to decide where you want to penny pinch and sometimes I’m highly irrational.

I’m selling a duplex and I balked at the $60 wire transfer fee to get the proceeds into my business checking account immediately upon closing. I can have the title company snail mail me a check which will likely take 5+ days to arrive.

The value of the check is sufficient that the lost interest the proceeds could accrue in an interest bearing account, or especially a CD at 5% is more than the wire transfer fee.

None-the-less the fee feels exorbitant and predatory in the age of ubiquitous electronic payment methods and in light of another bank I’m dealing with charging $30 for a wire transfer the prior week.

You’d probably quit your job for a low travel, lower paying job before you’d pay part of the cost of your business travel, subsidizing your employer to minimize the time in transit.

You could even incur extra explicit costs (e.g. pet sitting or childcare costs) and definitely implicit and opportunity costs (not going to the gyms, less sleep).

When calculating opportunity cost the formula isn’t as simple as your avg hourly wage. The time of day matters and the next best alternative use of your time has to be what you’d realistically have done instead.

I wonder when expense approval systems will start to optimize based on contributions to employee churn costs as part of the optimization algos?