On the economics of the leap day

In case you haven't got enough to occupy your brain cells, here's a question for the moment:

Is this extra day of February profitable or not?

Here's my thinking. Some revenues and expenses are monthly, so they're the same in a regular February, a 29-day Feb, and in regular 30 and 31-day months. Other items are hourly or daily or usage-based, and therefore earn or cost more in leap Februaries than in regular ones. Let's stipulate that February 29 does not fall on a weekend, or at least that it's a business day.

For most people and businesses, rent and payroll are the biggest budget items. Rent is pretty much always monthly and the same every month. Ditto mortgage payments, assuming interest is compounded in equal months, which I think it is. That makes February, leap or not, more expensive on a daily basis, but makes a leap-Feb a little cheaper. For example, $1,000 in rent is $32.26/day in 31-day months, $33.33 in 30-day months, $34.48 in a leap-year February and $35.71 in a regular February.

Payroll is more interesting. Those on annual salaries see the same effect as rent - you earn a little more per day in February compared to other months, but a little less per day if there are 29 days in the month. If you work an hourly job, you earn one an additional day of pay in a leap year. Of course, you also work one more day. If you earn commission, you have one more selling day in February to make your number.

Back on the expense side, some monthly charges are constant - insurance, cable TV, tuition - but others are more use-based and will cost more in a leap-Feb - food, electricity, gas - although they should still be cheaper than in 30 and 31-day months.

So, as a business, should you open or close on 2/29, and as a worker, should you bother to go to work on leap day? We'll restrict our analysis to comparing a leap-year February to a regular one, and not compare any February to any other month.

As a businessperson, my biggest expenses (rent and payroll) are monthly constants, and the leap day gives me an extra selling day, so I should be happy to open on 2/29. Even with hourly workers, the extra selling and constant rent should make the leap-Feb more profitable than a regular one. Unless, of course, the business is operating at a loss - in that case, the leap year February is more UNprofitable than the regular one.

As an hourly worker, the leap day is a small windfall. I get paid for another day's work, maybe earn more tips or commission, and my biggest expense, rent, is constant for the month.

As a salaried worker, my calculus is trickier. If there's commission at stake, I'm more like the hourly worker and should consider 2/29 a good deal. If not, then all my large expenses - and my monthly pay - are constant, and it goes to the small stuff to decide. For example, if I have a commute using expensive gas, the marginal profit on the day starts to slip away. On the other hand, staying home on a cold February day could run up your home heating bill compared to enjoying free heat at work.

On balance, I find that the leap day is marginally profitable and will not advocate for its abolition on economic grounds, nor will I incite leap-day strikes. In fact, I rather like the leap day. It's an example of the uneasy truce between the human desire to put rational order to things and the universe's insistence on being just the way it is, a reminder that our planet zips along at its own pace no matter what the pope or the IRS says.

Happy leap day.

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