Bringing in a new employee to your organization is exciting, but it can also be more costly than you might expect. In addition to budgeting for the new joiner's salary and benefits, you also have to account for various other factors that can increase your total cost of hiring, such as employment taxes, training expenses, and equipment fees. For example, recent data from the U.S. Bureau of Labor Statistics shows that for civilian workers, wages and salaries averaged $33.45 per hour while benefit costs averaged $15.33 per hour.
Before you proceed with a new hire, it's important to have a good idea of how much you'll have to spend. Keep in mind that these costs will vary depending on the country. In this article, we'll break down the expenses involved for hiring someone in the U.S.
Interested in Oyster but want more information about how the platform works? This product overview should help.
Key Components Of US Hiring Costs
US hiring costs fall into four main categories: recruitment expenses, onboarding costs, compensation and benefits, and mandatory taxes. Your total investment combines one-time hiring expenses with ongoing employment costs.
Think of the costs in these four stages:
Costs to account for during the hiring process
Here's what you can expect: The average cost to hire an employee in the U.S. is around $4,700. Your actual costs to hire a new employee will vary based on the role and other factors.
Beyond employee compensation, some of the costs you may have to account for in the hiring process include:
Two factors significantly impact your total investment:
Estimate these costs upfront to budget wisely.
You can use an employee cost calculator to get a general idea of your total hiring costs. Use Oyster's guide to hiring in the United States to estimate your employment costs for a new U.S. employee.
Factors That Affect Your Hiring Costs
So what affects your actual hiring costs? Several key factors can push your expenses above or below that $4,700 average.
How much do hiring costs vary in different states?
Average hiring costs vary significantly from state to state. If you're hiring for a minimum-wage position, for instance, you'd have to pay more to hire someone in Washington—the state with the highest minimum wage in 2023—than in any other state. Generally, employers in states with a higher cost of living will have to spend more on employee compensation.
Some states also charge more than others in employment taxes, which increases the hiring costs for employers. In Georgia, for example, the employer's total cost of employment for a worker with a gross annual salary is $100,000 would be $123,999. In New York, the employer's mandatory costs are lower. The total cost of employment for the same worker would be $117,984, which is around $6,000 less.
Compare the cost of hiring in different states to make informed choices about your business.
What about the cost of hiring internationally?
Looking to hire internationally? Hiring an international employee typically costs more than domestic hiring. You'll face additional legal fees, including immigration filing fees for in-person workers.
These costs come on top of standard recruitment and onboarding expenses.
If you plan to hire internationally to take advantage of benefits like exploring new markets and expanding your talent search, you have to keep these factors in mind:
Managing international hiring complexity getting overwhelming? An employer of record (EOR) can handle the legal employment, compliance, and payroll responsibilities for you.
EOR services typically cost around 20% of your hiring costs, but many companies find the compliance peace of mind worth the investment.
Oyster enables you to hire in countries all over the world. Check out our global employment costs calculator to find out if you could save money by hiring a remote employee in another country.
Planning Your US Hiring Budget
Understanding the full cost of employment is the first step toward building a strong, sustainable team in the U.S. By accounting for recruitment, onboarding, compensation, and mandatory taxes, you can create a realistic budget that aligns with your company's growth goals. As your team expands, managing these complexities across different states and countries becomes a significant challenge.
A global employment platform can help you navigate these challenges, ensuring compliance and providing clear cost visibility. If you're ready to simplify your hiring process, you can start hiring globally with confidence.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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