Is your organization looking to hire? If so, keep in mind there are costs associated with adding talent to your organization. Hiring employees costs more than the salary you pay them, sometimes it even costs twice that amount. Our expert team at High Profile has designed this post to help you understand the true cost of hiring.
Employment taxes are going to cost organizations when it comes to new employees. Make sure your organization allots for Social Security, Medicare, and unemployment insurance as part of the personnel budget. Currently, companies pay 6.2 percent of each employee’s 12.4 percent social security tax, and half of the employee’s 2.9 percent Medicare tax. Unemployment insurance will vary by employee type, ranging from 0.3 to 7.5 percent.
Another cost to consider when hiring a new employee is the cost of benefits. Benefits can include life insurance, health coverage, disability insurance, tuition reimbursement, or retirement plans. These are benefits that the employer typically pays for, but some companies do have self-funded options. For example, some companies have 401(k) savings plans where part of the employee’s salary is withheld and put into the fund. The cost of benefits is not outrageous, but can be between 1.25 and 1.5 times the employee’s base salary. This means that an employee with a salary of $50,000 per year is really costing between $62,500 and $75,000 per year.
Where the employee is physically located is another cost to take into consideration. Aside from some associates who may work from home, most employees are sitting at a desk somewhere within an office. This space will cost the company rent that will vary by square footage and other building features. Plus, the employee’s space will need to be furnished, with the average work cubicle costing around $2,000. This cost doesn’t include basic office equipment such as a computer, software, and telephone.
Hiring is an important part of any growing business, but it’s important to consider all aspects of the process and cost before hiring new employees. These are some of the top ways in which employees cost employers extra money. If you want more information on other costs associated with hiring, contact one of our recruiters today.