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Cost Analysis: Utilizing Online Staffing To Reduce Labor Costs

As veterans in the staffing world, we always hear, “I do not want to use a staffing company because it is more expensive.” The reasons businesses utilize staffing firms can range from convenience, reducing liability, to lowering their labor costs. You read that right, using staffing firms can actually REDUCE your labor costs. You might be asking yourself how that is possible when you pay more per hour to a staffing company than the hourly wage you would pay the employee directly. Let’s break down the true cost of an employee.

An employer, by law, pays the following:

FICA (Federal Insurance Contributions Act) This is what goes into Social Security and Medicare. Both employers and employee contribute to this. The current contribution rate for employers is 7.65%.

FUTA (Federal Unemployment Tax Act) Employers pay a federal unemployment tax on the first $7,000 of an employee’s wages each calendar year.

SUTA (State Unemployment Tax Act) State unemployment tax rates change annually based off of the previous year’s number of claims. Employers in North Carolina pay a tax on the first $25,200 of wages annually.

Other items employers are responsible for that contribute to cost:

Workers Compensation An employer’s claim history and job classification code impact this number.

Payroll/Administrative Costs An employer’s cost for the time to recruit, train, complete all paperwork, and process payroll for a company’s employee.

Health Insurance An employer’s expense for each employee’s health insurance.

Paid Holidays & Vacation An employer’s cost for paying wages plus taxes for non-productive working hours.

For the purpose of making the math easy, let’s just say ABC Manufacturing is hiring a Machine Operator with a $10.00/hour pay rate. Below we determine the true cost of having the Machine Operator on ABC Manufacturing’s payroll versus using Hire Scene.

 

*Based off industry averages. 

ABC Manufacturing’s Hourly Cost: $16.06

Hire Scene’s Hourly Cost: $14.00-$15.00

Hourly Savings per Hire Scene Employee: $1.06-$2.06

Annual Savings per Hire Scene Employee: $2,204.80-$4,284.80

Contact us today for a custom cost analysis.