The True Cost of an Employee

What is the true cost of an employee? When looking to hire in a new addition to your staff, there are many things to consider. A common misconception among employers is wondering why they should pay a staffing service extra when they could potentially save employee cost by hiring on my own. But when you break down the numbers, a staffing service could actually save you employee cost, along with time and other expenses overall.

First, let’s look at an employee cost breakdown, according to the US Department of Labor.

U.S. Department of Labor’s Bureau of Labor Statistics

Employee Cost

Cost per Hour

% of Total Costs

Wages and Salaries

$18.32

70%

Paid Leave Benefits*

$1.77

7%

Supplemental Pay

$0.78

3%

Insurance Benefits

$1.97

8%

Retirement and Savings

$0.88

3%

Legally Required Benefits**

$2.21

9%

Total

$25.93

100%

* Paid leave benefits include vacations, holidays, sick leave, and other leave.
** Legally required benefits include Social Security, Medicare, unemployment insurance, and workers’ compensation.

The above table emphasizes what an employee costs after they are hired into your staff, which = $7.61 over their hourly rate. This total doesn’t include the expense of recruiting, hiring, training, book-keeping, payroll or severance pay. Not to mention the amount of time and energy it takes to physically find that perfect addition to your staff.

Let’s take a look at another table that highlights the pre-employment screening & hiring process.

Work Required

Time

Money

Place a $50 ad in the local classified section.

7 days

$350.00

If 20 people respond to the ad

3 min/person,1 hr

$18.50

If those same 20 people apply

5 min/resume, 1.7 hrs

$31.45

Interview 8 potential employees

30 min/interview, 4 hrs

$74.00

Drug tests, criminal background test

$100.00

Minimal time your office spent on applicants

6.7 hrs

Minimum total spent before employee begins

$573.95

Keep in mind, the above table’s total employee cost is only accurate if your new hire actually works out. You can double or even triple that number if the employee doesn’t fit into your company appropriately and you have to go back to repeat all of the above steps, wasting more of your time and money, without fully knowing if the next employee will truly fit into your company environment.

Using a staffing service like RG Staffing helps you avoid many of the above employee costs. We do all the legwork, saving your company time & money, allowing you and your current staff of employees to stay productive and your business remains cost-effective. Contact us today at (972)434-9626 or drop by our offices at 1132 West Main Street in Lewisville, Texas to discuss how your company can get started with RG Staffing today!

About RG Staffing, Inc.

We are a full service staffing company. Serving businesses throughout the Dallas - Ft. Worth Metroplex. Contact us today at 972-434-9626.