KAPC, a pharmaceutical company located in rural Kansas, is finding it difficult to retain its employees who frequently leave after just six months of working at KAPC for jobs at pharmaceutical companies paying higher wages in Chicago. To address its problem with labor turnover, human resource officers at KAPC decide to run an experiment. Of their next 100 newly hired employees, 25 will randomly be selected to receive a housing voucher worth up to $4,000 per year to offset property taxes. To take advantage of this program, the employee must not only be randomly selected into the program but she must also purchase a home. Of the 25 employees selected into the housing voucher program, 7 leave KAPC within 12 months of starting. Of the 75 employees not selected into the program, 37 leave KAPC within 12 months of starting.
(a) Provide an estimate of the effect the housing voucher program has on retention at KAPC.
(b) Suppose KAPC spends $10,000 in hiring costs each time a position is vacated. Would you endorse expanding the housing voucher program to all new employees? Justify your decision.