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Q: Cost of minimum wage employee ( Answered 5 out of 5 stars,   1 Comment )
Subject: Cost of minimum wage employee
Category: Business and Money > Small Businesses
Asked by: msw-ga
List Price: $5.00
Posted: 05 May 2002 13:46 PDT
Expires: 12 May 2002 13:46 PDT
Question ID: 13244
I am a small business owner and am considering hiring someone to do
office work at minimum wage. Is there a way to calculate how much this
will cost me per hour factoring in social security, etc.? I am in
Oklahoma if it matters.
Subject: Re: Cost of minimum wage employee
Answered By: missy-ga on 05 May 2002 14:11 PDT
Rated:5 out of 5 stars
Hi there!

Joe Hadzima's article in MIT's Business Journal suggests the following
when calculating the actual cost of an employee (assuming basic wage
and employment taxes, no benefits.):

Start with the basic wage.  Then factor in:

- 6.2% of that for FICA/Social Security
- 1.45% for Medicare
- .3% (minimum for clerical) for Worker's Compensation
- 6.2% on $7,000 salary for Unemployment Compensation/FUTA

Mr. Hadzima also discusses the costs to factor in for benefits, space
and equipment in a latter portion of the article.

"How Much Does and Employee Cost?"
[ ]

For statistics and averages by state, and other information useful to
employers, have a look at the Bureau of Labor Statistics:

Bureau of Labor Statistics
[ ]

Good luck!

msw-ga rated this answer:5 out of 5 stars
Thanks. I had searched the web without results on my own. This is very helpful.

Subject: Re: Cost of minimum wage employee
From: lud-ga on 05 May 2002 14:19 PDT
In addition to exploring the information provided by missy_ga, you
might be interested in looking at federal tax credit programs:
A quick summary of such can be seen at 
  Welfare-to-Work and Work Opportunity Tax Credits

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