How Much Do Your Employees Really Cost You?
GM workers have gone on strike. Nothing new here. The auto workers periodically do this. They employees pay into a strike fund from their weekly paycheck and when there is a ton of money in there they tend to consider striking. It is their way of getting some of that back. Oh, and they usually gain from the strike, iron out many problems and make life better for everyone who is not a GM shareholder.
This column is not on the benefits of striking, but on a basic financial point I read about. The average full-time worker at GM earns around $30 per hour. They have some newer employees who make less than that, but they are working their way to the $30 number. The whole point of this column is that the $30 worker costs GM $62 per hour when adding in the benefits package. How can that be? Read on and then do the math for your team.
You pay half of the social security benefit. Workers comp insurance, which in our industry is heavy. Unemployment tax. The cost of vacation. The cost of the daily coffee break. Sick days. Employee holiday bonuses. Profit sharing, if you have that. The cost of training time and/or meetings. Time away from work for special education. OK, you get it.
The average $30 worker at GM costs the company $62 per hour.
When I ran our fabricator, we figured our employee costs at about 70% extra over exact wages. Underestimating these costs is one of the biggest reasons that companies, in any business or industry, fail. You need to understand these costs and teach and explain them to your team. Let them know what their benefits cost the company. At the same time, though, most employees don’t care. They want to know what is in their paycheck and nothing more. By teaching your team a little bit of how your finances work you will draw them together. They will realize that safety really is important financially, as well as for the health of their fellow employees. The lower your comp costs become that leaves more that can go into the employee pool.
So, work on these numbers, know them, teach them and you and your team come out ahead.