Home > General > How Much Does It Cost To Pay Employees?

How Much Does It Cost To Pay Employees?

With all of the federal programs in place to stimulate hiring, it is baffling that the unemployment rate is so stagnant. A recent CNN Money story sheds light on the tough situation that employers are facing. Basically, employers do not see hiring a single $14/hour employee as just taking on the obligation to pay the employee that rate. Instead, other factors such as tax treatment and insurance jack the price up to around $20/hour. To top it off, the new employee is not nearly as useful during the first few weeks since he is being trained.

Employers must, therefore, make a huge initial investment in the new employee which will only pay off if the employee remains with the company long term and does good work. Otherwise, the employer has lost out on this initial investment in human capital and must begin again, already in the red. Clearly, it is a difficult decision. Though President Obama has tried to create different federal incentives to push employers into making this investment, Congress has derailed many of them. Eventually, when business picks up, employers will feel safe in taking on new employees. But this begs the question: Will business pick up if employment is still in a slump or do people need work in order to drive business?

  1. cmh
    March 31, 2010 at 12:12 pm

    It would also be helpful if Republicans in Congress would stop putting holds on unemployment benefits and funding for food stamps, two programs that help stimulate the economy.

    Unfortunately, it seems that 10% unemployment is not a big deal to many in the federal government. The Fed seems more concerned about inflation than anything else, which is just mind blowing in the face of massive unemployment.

    I really don’t see when Congress is going to get around to passing an effective jobs bill to really stimulate the economy. The $15 billion jobs bill that is about to be passed is really a paltry sum that may help stem further job losses, but it’s not going to address the huge unemployment problem.

    The lack of willpower in Congress is truly staggering. Is 10% unemployment the new norm?

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