Lets consider an employee whom you pay $25 per hour. That employee is actually costing you much more. Considering the direct costs of that employees actual burden will allow you to calculate how much their time is actually costing you.
Consider these labor burden costs:
FICA 7.65% (15.3% for self-employed workers)
FUTA/SUTA 1% (Federal and State Unemployment Tax)
Workers' Comp 10% (varies widely by state and trade classification)
Health Insurance 12% (based on $5,000 per year per employee)
Vacation 4% (two weeks paid vacation)
Holidays 2% (6 major holidays)
Personal/Sick Pay 2% (5-6 days)
Tool Allowance 1% (based on $450 allowance per year)
Escalation 2.5% (Assumes a $1 pay raise for 6 months of the year)
Therefore this type of employee’s total Burden is 42.15%
This means that an employee who is being paid $25 per hour should be billed at $35.54.
But that is for an employee who does not have an office, recruiting costs, perks, retirement, etc. An employee with all those “standard” costs cost much more. Another calculator which takes those additional factors into account is tough to find. However, you can try the below software employee as a starting point:
http://bit.ly/lq9AS
In general though, most industries can expect that for mid-level management on up, 100% additional total cost more closely reflects what an employee costs.
With those considerations, a $100,000 per year employee all-in costs are roughly $200,000 per year or roughly $100 per hour. (50 weeks times 40 hours per week = 2,000 hours per year.)
