In limited circumstances** paying overtime is cheaper then hiring another employee. There are employer costs associated with staffing (recruiting and hiring new employees) and an additional employee actually costs the employer about 1.3 times the employees salary in total compensation (paid time off, additional employer paid taxes, workers compensations fees, benefits, etc.). So paying and existing employee 1.5 times their normal rate over 40 hours is really close to break even considering there are no additional paid time off, workers comp, and benefits considerations. And where the situation doesn't call for the addition of long term staff because of a short term need, overtime is actually useful to the employer.
**Limited circumstances being such things as:
- A co-worker is out sick, on vacation, or dealing with the death of a family member,
- Special project surge of a short duration,
- Time sensitive call back work that can't wait for a normal shift.
The downside of using overtime for long term solutions though is that the employer is in danger for two primary considerations. First employee burnout, where the employee continues to work but actually becomes less productive because of mental and physical stress. Secondly, the experienced employee is likely to look for work with another employer where they may receive better compensation (wages and benefits) without the stress of constant overtime requirements. That has a negative impact on the current employer because of higher than normal turn over of employees.
WW