👥 Employee Cost Calculator
Calculate the true cost of hiring an employee — beyond the salary. Include payroll taxes, benefits, and overhead to see the real cost and cost multiplier (typically 1.25–1.4× salary).
Base Compensation
Employer Payroll Taxes
Benefits (Monthly Cost)
Overhead Costs (Annual)
| Cost Component | Annual Amount | % of True Cost |
|---|
Cost Composition
True Employee Cost Formula
What Goes into the True Employee Cost?
Social Security (6.2%), Medicare (1.45%), FUTA (up to $42/yr), SUTA (varies by state 0.1–5.4%).
Employer typically covers 70–80% of health insurance premiums. Average employer cost: $6,000–$10,000/yr per employee.
Every PTO day costs you a day's salary. 15 PTO days on a $75K salary = ~$4,300/yr in paid non-work time.
Office space, equipment, software, IT support, HR administration — rarely tracked but real and significant.
Frequently Asked Questions
Beyond salary, employers must pay 7.65% in FICA taxes (Social Security + Medicare), unemployment insurance (FUTA/SUTA), workers' compensation, and often provide health insurance, retirement contributions, and PTO. Add overhead costs like office space, equipment, IT, and HR administration, and the true cost is typically 1.25–1.4× the base salary.
Federal law requires: Social Security and Medicare (FICA) contributions, Federal and state unemployment insurance (FUTA/SUTA), Workers' compensation insurance (state-mandated), Family and Medical Leave (FMLA) for qualifying employers. Health insurance is required only for businesses with 50+ full-time employees under the ACA. 401k, PTO, dental, and vision are all optional.
The U.S. Department of Labor estimates a bad hire can cost up to 30% of the employee's first-year earnings. SHRM estimates the average cost of recruiting and onboarding is $4,000–$7,000. When you factor in lost productivity, management time, training, and the cost of replacing the person, a bad hire can easily cost $25,000–$100,000+ depending on the role.
Contractors save on payroll taxes (~7.65%), benefits, and overhead, but typically charge 20–40% higher rates to compensate. They also offer flexibility — you pay only for work done. Employees build institutional knowledge, culture, and loyalty. IRS rules strictly define the classification; misclassifying employees as contractors carries significant legal and financial risk.
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