How Much Does It Cost to Create a Job?

November 15, 2011

Kelly Meeker

Inspired by a recent article in the Oregonian about the cost of creating a new job in Oregon, we decided to take a look at what resources are necessary to create a job at the national scale – and how much it costs. As a company focused on professional learning opportunities, we’re particularly interested in what it costs to prepare a person for success – in the job they’re currently in or in a job they might like to have in future.

Cost	Source	Total
Salary	The national average wage index for 2010 (Social Security Administration)	$41,674
Health Insurance	Based on average employer costs for health insurance per employee hour	$6,968
Paid Time Off	80 hours based on national average wage index	$3,952
Legally Required Benefits	Social Security, Medicare, unemployment insurance, and workers’ compensation, per the Bureau of Labor Statistics	$4,846
Hiring & Recruiting Costs	Assumption of 50 hours used per new person hired, at the national average wage index	$1,002
Training	Assumption 10 hours of new hire training (performed by other employee) plus average annual direct expenditure per employee (ASTD)	$2,510
	TOTAL	$60,952

(Assumption for all of these numbers is 2,080 work hours in a year.)

New employees are expensive beyond just the cost of compensating them – your time as a leader is valuable too, and training new employees isn’t simple. Beyond just showing the new folks where the water cooler is, you need to introduce them to company culture and their specific job duties from the beginning. And then you invest in their ongoing training to develop new skills and abilities.

Recruiting, hiring and training are sunk costs that must be reinvested in every new employee – not to mention lost production and productivity while positions are vacant and employees are learning their responsibilities. So how do you keep positions filled with engaged, satisfied employees?

Invest in opportunities for employees to grow. Boosting their skills improves your productivity and their engagement. In turn, you’ll see lower turnover and reduce investment in recruitment. Still need to be convinced? Improving employee engagement begets more satisfied customers, as Dan Pontefract explores in a recent blog post. Of course, elearning presents an excellent opportunity to offer high-quality training affordably throughout your organization.

More resources on the cost of hiring and training new employees: