Dec 10, 2010 - Business    1 Comment

The Cost of Having Employees

Hiring employees is getting more and more costly.  Recently, as I noted in a Seattle 2.0 post, the State of Washington is not making matters better.  They recently announced a 12% increase in Workers’ Comp rates, and Unemployment Insurance rates are set to rise by 40% or more in 2011.

While the state may be “nickle-and-dimeing” business owners with taxes and insurance premiums and other paperwork filing fees (like the 2% charge to pay state taxes with a corporate credit card), the real cost of having an employee is in the salary and benefits you give them.

Most people think in terms of hourly wages.  They understand that it costs more to pay someone $20 an hour than it does to pay them $10 an your.  But which is more expensive?  A contractor at $100k a year and no benefits, or an employee at $80k a year with full benefits?  (hint – the employee costs more).

To help me figure out these differences, I find it useful to convert salary, benefits, paid-time off and other “costs” of having an employee into an hourly rate.  Then I can compare apples to apples.  To help in this, I’ve used the following spreadsheet for years.  It’s not perfect, but it gives me a rough view of the cost of having an employe.

Hope you find it useful as well.

Updated 2010-12-15 – thanks Alan!

Download Employee Calculator v2

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