How Much Does It Actually Cost To Hire A New Employee In Ame...| MENAFN.COM

Wednesday, 05 October 2022 09:55 GMT

How Much Does It Actually Cost To Hire A New Employee In America?


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Despite fears of a recession in America, the US labor market created 372,000 new jobs in June 2022. While hiring new talent can seem like a daunting expense, how much does it actually cost to hire a new employee in America?

Tipalti has taken a look at salaries, taxes, and benefits around the country to find the average cost of employing new workers in every state.

So, how much would it cost you to hire a new employee?

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America's Top 10 Most Expensive States To Hire A New Employee
Rank State Average Annual Salary Social Security Medicare Health Insurance Average Retirement Plan Contribution Total Annual Cost
1 Alaska $63,480 $3,936 $920 $7,301 $1,904 $18,991
2 New York $70,460 $4,369 $1,022 $6,493 $2,114 $18,946
3 New Jersey $67,120 $4,161 $973 $5,518 $2,014 $18,647
4 Washington $68,740 $4,262 $997 $6,305 $2,062 $18,349
5 California $68,510 $4,248 $993 $5,931 $2,055 $18,330
6 Massachusetts $72,940 $4,522 $1,058 $5,894 $2,188 $18,207
7 Hawaii $59,760 $3,705 $867 $6,188 $1,793 $17,859
8 Connecticut $66,130 $4,100 $959 $5,761 $1,984 $17,222
9 Rhode Island $62,120 $3,851 $901 $5,795 $1,864 $17,124
10 Maryland $65,900 $4,086 $956 $5,749 $1,977 $16,942
America's Top 5 Least Expensive States To Hire New Employees
Rank State Average Annual Salary Social Security Medicare Health Insurance Average Retirement Plan Contribution Total Annual Cost
1 Mississippi $42,700 $2,647 $619 $4,995 $1,281 $12,273
2 Alabama $48,110 $2,983 $698 $4,717 $1,443 $12,943
3 Arkansas $46,500 $2,883 $674 $4,944 $1,395 $12,996
4 Louisiana $47,740 $2,960 $692 $5,047 $1,432 $13,146
5 Tennessee $49,330 $3,058 $715 $4,935 $1,480 $13,337

According to the research:

Alaska is the most expensive state to hire a new employee, costing $18,991 every year. Interestingly, the majority of this cost is health insurance , which accounts for over a third of employee expenses.

The state of New York is the second most expensive state to hire a new employee, costing $18,946 per year.

On the other end of the spectrum, employers in The Magnolia State of Mississippi, have the lowest annual cost per employee at $12,273 a year, as the state has the lowest average income, making federal taxes cheaper for employers.

Further findings from the study:

  • Massachusetts is America's most expensive state for everything from social security and Medicare to federal unemployment tax and average retirement plan contributions; with employers contributing a combined $12,144 annually, per employee on these costs alone.
  • New Jersey is America's most expensive state for disability insurance tax, with employers paying $940 annually per employee.
  • Employers in Hawaii are paying America's highest state unemployment tax of $1,422 annually per employee.
  • Healthcare in Alaska is the most expensive in the country, with health insurance contributions from employers amounting to $7,301 annually. Interestingly, Alaska has a very wide margin compared to the rest of the country, with employers paying over $800 more than New York in second place.

Tipalti's employee cost calculator is a useful tool to see the average cost of an employee in your state. See the calculator here .

Updated on Aug 10, 2022, 10:53 am

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