The Real Cost of Hiring a New Employee

The next time you’re thinking about hiring someone to help with routine data entry or maintenance tasks, consider this: The total yearly cost to employ that person may exceed 160% of their salary. Where’s the extra money go? We consulted Q2 data from the U.S. Bureau of Labor Statistics (USDLS) to find out.

First, some ground rules. We assume for the sake of argument that data entry worker or data processor will be paid $35,000, annually. We assume they will receive standard benefits like health care coverage and paid time off. Lastly, we assume that this position was filled then vacated, so an employer will incur some cost to find and train a new hire.

According to the USDLS, paid leave costs (6 percent of total compensation) and health insurance (8 percent of total compensation are among the most expensive for employers. However, it is the time and cost needed to fill the position – accounting for 12 percent of the total compensation cost – that can be the most difficult to bear. When added to a $35,000 salary, these add-ons drive the total cost of employment to over $57,000 annually. This figure does not account for the “soft” cost of lost productivity during the new employee’s onboarding time, which also increases the total cost of employment. In short, the cost of hiring a new employee, even for mundane tasks like data entry, reporting, or invoicing, can be much higher than many employers expect.

There is an alternative. Foxtrot software from EnableSoft is, essentially, a “digital” employee who performs just about any manual business process in your organization, just like a person would. In lieu of adding a human at nearly $60,000 per year to perform routine tasks in Excel, QuickBooks, or wherever, enlist the help of Foxtrot to handle the same jobs automatically.

Are we saying you should not hire people? Of course not. But the funds that would otherwise be used for everyday jobs can instead be earmarked for positions that create real value, like sales, marketing, or product development. How much better could you serve customers if instead of hiring a data entry clerk, you hired a customer service representative? It’s all about where we allocate our overhead. Now that you know what that next employee will really cost you, go forth and grow.