Employee Pay Scale

Discussion in 'Business Operations' started by Turtle II, Sep 30, 2004.

  1. Turtle II

    Turtle II LawnSite Member
    Messages: 152

    Is there a standard type of formula used to compute what you actually pay when you pay employes hourly saleries.

    Ie: If you pay a worker 8.00 per hour, by the time you pay SSN, and match their taxes, and workersman comp ins., etc.etc. it is really like paying 12.00 per hour. If you pay a man 6.00 per hour, you are really paying 10.00 per hour???

    Is there any kind of guide or rule of thumb to make a good guesstimate to find the true cost of an hourly employe?

    Thanks for all the great advice from this place..... :)

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    I don't know. I'm looking to hire my first employee for next year, but first I want to know what it will "cost" me. I figure an employee will boost my gross revenue by maybe 50%, but after all the expenses associated with an employee I want to make sure its worthwhile.
  3. J Haugner

    J Haugner LawnSite Member
    Messages: 51

    very simple rule of thumb. Charge at least double what you are paying them. Minimum rate per each man hour $25.00-$36.00 for maintenace and $32.00-$48.00 per man on installs. Get the free magazine Landscape Management it talks the bottom line $$$.
    Billing out a man at $25.00 per hr you are a little above breaking even.
  4. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Messages: 7,547

    You only have to match ss taxes, and medicare taxes. So add that, its about 8%, to the hourly rate, then add workmans comp cost. Workmans comp will vary depending on many things, but for this business its not cheap.
  5. fourseasonlawns

    fourseasonlawns LawnSite Member
    Messages: 52

    Talk to your CPA and your insurance agent. Then you will get a better idea. I would wager it will be double the hourly rate when it is said and done.
  6. MudslinginFX4

    MudslinginFX4 LawnSite Bronze Member
    Messages: 1,170

    Charging double will cover their pay and what it cost you to keep them as an employee... but isn't the whole reason of having an employee to make you more money? If YOU want to make more money you need to figure charging about $50-$55 per man per hour for maintenance and more on each employee doing landscaping. At least around here thats what works.
  7. jerryrwm

    jerryrwm LawnSite Bronze Member
    Messages: 1,274

    Those are just some of the costs associated with labor. You also need to figure in potential overtime, holiday and vacation pay, insurance, as well as non-productive time(rain days spent cleaning and repairing equipment) This is all figured as labor burden. Add that to your hourly rate plus FICA, SS, Med, etc. then add the profit markup to get the rate.
  8. J Haugner

    J Haugner LawnSite Member
    Messages: 51

    If you can get that most the time you are doing good. What is the cost of living in N.C. ? I have done well,not great charging $25.00 and now I'm up to the $30.00 range and doing a little better. I agree $55.00 is very nice but a lot of customers won't go for it. I'll hide that later in my bids as I build a reputation. I am still busting my ass at $30.00 per man at all times. But I am getting it every time. What does that say? :sleeping:
  9. Soupy

    Soupy LawnSite Gold Member
    Messages: 3,125

    In high school I was in a program that allowed us to earn credit while working. The teacher in this program said that an employee should generate 5-6 times their hourly wage to make the business they work for profitable. He said anything less and the employer is working for you. I don't know why, but I always remembered that.

    So an $8/hr employee should be generating at least $40 per hour.
  10. Soupy

    Soupy LawnSite Gold Member
    Messages: 3,125

    Here is the breakdown my accountant gave me. It is based on 20hrs a week, but the totals are for 4 weeks pay. You need to add in Workman's comp to this. Mine is $5.01 for every $100 in payroll. I live in Illinois. Hope this helps..

    Rate -- 20hr/wk -- SS/Medicare -- Unemployment

    $8/hr -- $640 -- $48.96 -- $25.60
    $9/hr -- $720 -- $55.08 -- $28.80
    $10/hr -- $800 -- $61.20 -- $32.00

    If you want the Excel sheet, so you can play with the #'s a little. Send me a PM with your email address.

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