Lesson 024 min read

Why That $20/Hour Hire Actually Costs $27/Hour

You post a job at $20/hour thinking that's what you'll pay. By the time you add taxes, insurance, equipment, and training time, the real number is much higher.

35%

hidden costs on top of every wage.

That $20/hour employee? They actually cost $27/hour when you factor everything in. Most owners don't realize this until they're already committed to a paycheck they can't cover.

Where the Hidden Costs Come From

7.65%
Payroll Taxes

FICA — Social Security and Medicare. You match what the employee pays. Non-negotiable.

1-5%
Workers Comp

Insurance for workplace injuries. Varies by industry. Contractors and restaurants pay more.

2-4%
Unemployment Insurance

State and federal. Your rate goes up if you lay people off. Stays with you for years.

3-8%
Equipment & Supplies

Computer, desk, uniform, tools, software. Everything they need to do the job.

5-15%
Training Time

They're not productive day one. You're paying full wage for partial output for months.

3-8%
Your Time Managing

Supervision, feedback, questions. Your time has value too. Factor it in.

The Questions Most Owners Don't Ask

1

Can I pay them for 6 months even if they produce nothing?

New hires take months to become productive. You're paying full cost for partial output the whole time.

2

What's my slow month revenue?

Can you still cover this cost when business dips? If not, you're building a financial time bomb.

3

What will I do with the freed time?

If a support hire doesn't free you to generate more revenue, it's just an expense — not an investment.

The Desperation Trap

The worst time to hire is when you're desperate. When you're drowning, you'll hire anyone who can fog a mirror. That leads to bad fits who cost you more through poor work, customer complaints, or quick turnover. Then you're hiring again in 3 months — paying the hidden costs twice.

See the real number before you commit.

True Cost of Hiring Calculator

Enter the role details. See what you'll actually pay.

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Real Questions, Real Answers

Everything you might be wondering about the true cost of hiring.

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