Business

Why a $14/hour employee costs $20

interns Contributor

You probably cost your boss a lot more than you think you do.

For Jim Garland, who owns a corporate aircraft cleaning and support services company, a $14 per hour worker has a true cost of $19.63 per hour, or about 40% more than base pay. This so-called “loaded rate” includes fixed expenses — federal and state taxes, health insurance, workman’s compensation, uniforms, and paid time off — along with soft costs like the time spent training a new hire.

Washington’s lawmakers are throwing a lot of ammo at reducing the jobless rate, including a new tax break for hiring the unemployed. But for business owners, employees are often the most investment they make.

“Our entire existence revolves around two numbers: revenue and payroll,” Garland said of Sharp Details, in Dulles, Va., which he launched out of his car trunk in 1991. Payroll for 60 workers accounts for around 70% of his firm’s operating costs.

Garland outsources his entire human resource department. Joe Sherrier, director of human resources for Employment Enterprises — the company that manages Garland’s HR — said that as a general rule, business owners should to expect an employee to cost an additional 25% to 30% on top of base salary each year.

Full story: Why a $14/hour employee costs $20 – CNN