Do You Know What Your Employer Pays for You?

This week, especially today, has been a treasure-trove for good career and business related articles. I tend to watch cnn.com for career news. They hit the jackpot today.

I read an article titled Why a $14 an hour employee costs $20. www.cnn.com

So many people don’t realize how much it costs to keep them on board. They only think in terms of what they get paid. Unless you are in management or otherwise have had to wear the numbers hat in an organization you may be oblivious to the costs involved with hiring, training and firing people.

Smart companies involve employees in the greater understanding of how things work- how they keep afloat. When employees know and understand how the numbers benefit or detriment them they can be more productive.

I hear people often complain about the cost of an item. They only consider the value it may have in their life. They assume it has a 300% mark up- and maybe it does. But do you know why or how that price was determined? It’s a very similar process.

How much rent does your employer pay on their office or warehouse space?
How much of your benefits do they pay?
How much insurance do they carry for their product, people, space, etc…?
What are their costs to do business (everything from the fax equipment they have, the technicians who service it, the materials they use to make their goods, etc…)?
What profit margin are they running on? What makes it fluctuate?
If they pay you $15 how much do they also pay to have you as an employee in taxes (and the above items)? *I usually tell a company to expect 35% overhead per employee.

Now, that $15 book doesn’t seem so high does it? That vet visit for $65 seems pretty fair when you realize what it has to support to be there another year, right? Paying $8 for a car wash doesn’t seem so outrageous does it?

To break even, Also Known As making ZERO profit, some companies have to make thousands each day.

No wonder they say business is tough.