Cost of Employee
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What's Included in the True Cost of an Employee?

A $65,000 salary employee typically costs an employer $85,000–$100,000 per year when all costs are included:

• Employer FICA: 7.65% (Social Security 6.2% + Medicare 1.45%)
• Health insurance: avg $7,000–$12,000/year employer contribution
• 401(k) match: typically 3–6% of salary
• PTO & holidays: 15–25 paid days = 6–10% of salary in productivity cost
• Recruiting: 10–30% of first-year salary (one-time)
• Training & onboarding: $1,000–$5,000 first year
• Office space: $10,000–$20,000/year in major cities

Why this matters for pricing

If you're a consultant or agency, your billing rate must cover your loaded employee cost, not just salary. A $65k employee with a 1.6× multiplier costs $104k/year, or $50/hour in staff cost alone.