Employee Cost Calculator
See the true cost of hiring — salary is just the starting point.
Employee Details
True Cost of This Employee
| Cost Category | Annual | % of Total |
|---|---|---|
| Base salary | $65,000 | 78% |
| FICA (employer share) | $4,973 | 6% |
| FUTA + SUTA | $252 | 0% |
| Health insurance | $8,400 | 10% |
| 401(k) match | $2,600 | 3% |
| Workers' compensation | $975 | 1% |
| Other benefits | $1,200 | 1% |
| Total cost | $83,400 | 100% |
Cost by Salary Level
| Salary | True Cost | Multiplier | Added Cost |
|---|---|---|---|
| $40,000 | $55,112 | 1.38x | $15,112 |
| $60,000 | $77,742 | 1.3x | $17,742 |
| $80,000 | $100,372 | 1.25x | $20,372 |
| $100,000 | $123,002 | 1.23x | $23,002 |
| $150,000 | $179,577 | 1.2x | $29,577 |
Employer Tips
- 1.Your $65,000 employee costs $83,400 total — that's 1.28x the base salary
- 2.Employer FICA (7.65%) is unavoidable — it's 6.2% Social Security + 1.45% Medicare on every dollar you pay
- 3.Independent contractors save you FICA, benefits, and unemployment tax — but misclassification has severe IRS penalties
Costs vary by state, industry, and company size. Workers' comp and SUTA rates vary significantly — consult your insurance broker and state agency for exact rates.
The True Cost of an Employee
When you hire a $65,000 employee, your actual cost is $78,000–$95,000 depending on benefits. The multiplier ranges from 1.2x to 1.4x base salary for most businesses. The largest add-ons are employer FICA taxes (7.65% of salary), health insurance ($8,400–$17,400 per employee), and retirement contributions. Understanding these costs is essential for budgeting, pricing, and deciding between employees and contractors.
Employer Cost Breakdown — $65,000 Salary
| Cost Category | Annual Amount | % of Salary |
|---|---|---|
| Base salary | $65,000 | 100% |
| Social Security (6.2%) | $4,030 | 6.2% |
| Medicare (1.45%) | $943 | 1.45% |
| FUTA + SUTA | ~$252 | 0.4% |
| Health insurance (individual) | $8,400 | 12.9% |
| 401(k) match (4%) | $2,600 | 4% |
| Workers' comp (~1.5%) | $975 | 1.5% |
| Other (training, supplies, etc.) | $1,200 | 1.8% |
| Total | $83,400 | 128% |
Employee vs Contractor Cost Comparison
| Cost Element | Employee | Independent Contractor |
|---|---|---|
| FICA taxes | Employer pays 7.65% | $0 (contractor pays their own) |
| Health insurance | $8,400–$17,400/yr typical | $0 |
| 401(k) match | 3–6% of salary | $0 |
| Unemployment taxes | $250–$500/yr | $0 |
| Workers' comp | 1–3% of payroll | $0 |
| Typical premium | 1.25–1.40x salary | 1.0x rate (but rate is often higher) |
Frequently Asked Questions
What is the typical multiplier for total employee cost?
For most businesses, the multiplier is 1.25x to 1.40x the base salary. A $65,000 employee costs $81,000 to $91,000 total. Companies with generous benefits (family health insurance, high 401k match) may see multipliers of 1.4x to 1.5x. Companies offering minimal benefits may be closer to 1.2x.
Is it cheaper to hire contractors instead of employees?
Contractors eliminate FICA, benefits, unemployment tax, and workers' comp costs — saving 20–40% compared to an equivalent employee. However, contractors typically charge 15–30% more per hour to cover their own taxes and benefits. The IRS also strictly limits who can be classified as a contractor — misclassification triggers back taxes, penalties, and potential lawsuits.
See also: Payroll Calculator and LLC Cost Calculator.