Salary Is Just the Starting Point
Ask most business owners what their receptionist costs, and they will give you the salary number. But salary represents only 60% to 70% of the true cost of an employee. Here is how to calculate what you are really spending.
The True Staffing Cost Formula
True Annual Cost = Base Salary x 1.3 to 1.5
That multiplier of 1.3 to 1.5 accounts for all the costs that sit on top of salary. Here is what is hiding in that multiplier:
Breaking Down the Multiplier
- Payroll taxes (7.65%): Social Security and Medicare. You match what the employee pays.
- Unemployment insurance (2% to 4%): Federal and state unemployment taxes.
- Workers compensation (0.5% to 3%): Varies by industry and state.
- Health insurance (10% to 20%): Average employer contribution in New York is $7,800/year for individual coverage.
- Paid time off (5% to 8%): Vacation, sick days, holidays. Time you pay for but get no work.
- Equipment and supplies (2% to 5%): Computer, desk, software licenses, phone line.
- Office space allocation (3% to 10%): One workstation's share of your rent. Higher in Manhattan, lower in Suffolk County.
Example: Your $45,000 Admin Assistant
Base salary: $45,000. Payroll taxes: $3,443. Unemployment insurance: $1,350. Workers comp: $675. Health insurance: $7,800. PTO: $2,600. Equipment: $1,500. Office space: $4,000. True cost: $66,368.
That is 47% more than the salary alone.
Now Compare to a VA
A full-time virtual assistant at $8.99/hour: $18,699/year. No hidden multiplier. No benefits. No desk. No payroll taxes. What you see is what you pay.
Run this formula on your own team. The gap between what you think you are spending and what you are actually spending might surprise you.