Every time you open your paycheck, it just hurts. Taxes, fees, insurance! Why do you have to pay it all yourself? It can feel like your company is just stingy. What's with your pay rate, anyway? Surely, they could kick it up a few bucks.
Actually, your company pays a ton of costs on top of you wages. While it looks like you only cost your hourly rate, your job is really pretty expensive.
Let's take a look at some of the costs involved with hiring and keeping employees.
Your first day on the job. Exciting! But before you step through the doors, your boss is already shelling out the dough. For example, remember your interview? Those hiring managers have jobs because someone has to hire and train. That means their salary is part of the cost of bringing you on board. That isn't the only cost, though! Think about other things like the people that process payroll or even supplies like your uniform. These all have to be paid to get you hired and started.
You're rocking at your job now. For every hour you rack up, your employer pays your wages. If you look at your paystub, you'll notice that a huge chunk of your pay is deducted for tax, social security, healthcare and health insurance purposes. Why doesn't your employer pay some of those? Well, actually, they do. You just pay your portion.
Surprise! You only pay about half of the taxes that get deducted from your check. Your employer picks up the other half of the tab. Part of your job’s employee cost is to pay for federal unemployment tax, plus half of your Medicare and social security taxes.
That’s only on a federal level, too. There’s also state unemployment tax and various state and local taxes to worry about as well.
Employee benefit costs
Benefits offered to employees vary wildly from company to company and job to job. Many companies pay for some (or all) of their employee's healthcare. Other paid benefits, like sick leave, time off, health savings accounts, 401k matching programs, retirement plans and wellness programs are also billed to your employer. These don't come cheap, of course, but hey! Time off!
Your loaded rate
So, if you pile up all those costs and figure them into your hourly base pay rate, that makes your loaded rate. That's what your boss is actually paying to have you on the clock per hour. Some say that your loaded rate is about 40% of your income. That's crazy, right?
The cost of turnover
Look, some jobs are just terrible. When you leave, especially if it's shortly after being hired, the company has to replace you. You know now that hiring a new employee isn’t cheap. Leaving means they have to pay for a job posting, the training, uniforms, supplies, payroll staff and everything in between for yet another new person. In fact, it's estimated that the average cost of a new hourly worker is about $1,500. Yikes!
So, the next time you open your check and feel salty about your pay rate, remember that your job also has to shell out cash left and right behind the scenes.