Calculate the true total cost of an employee including salary, taxes, insurance, retirement, PTO, and overhead. Know what each hire really costs your business.
A common rule of thumb is that an employee costs 1.25x to 1.4x their base salary. For construction and field services, it can be 1.4x to 1.6x due to higher workers' comp rates and equipment costs.
The true cost of an employee goes far beyond their salary or hourly wage. Employers must account for payroll taxes, insurance premiums, retirement contributions, paid time off, and various overhead costs. Understanding this total cost is essential for budgeting, pricing services, and making informed hiring decisions.
Total Cost = Salary + Payroll Taxes + Insurance + Retirement + PTO + Overhead
Cost Multiplier = Total Cost / Base Salary