Salary is only part of what an employee costs. Plan headcount by role to see the fully loaded cost per FTE, including employer taxes, benefits and other per-employee costs, and the effect of next year’s merit increases.
How it works
Plan labor cost by role: base salaries, employer payroll taxes, benefits and other per-employee costs, with the fully loaded cost per FTE and the effect of merit increases.
Base salary = FTEs × Salary per FTE
Payroll taxes = Base salary × Employer tax rate
Benefits = Base salary × Benefits %
Loaded cost = Base salary + Payroll taxes + Benefits + Other cost per FTE × FTEs
Next-year cost = Base × (1 + Merit) × (1 + Tax % + Benefits %) + OtherCommon uses
- Annual headcount and compensation budgets
- Evaluating new positions and staffing changes
- Department cost allocation and pricing
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Roles | Financial analyst | 4 | 78,000 Senior accountant | 3 | 86,000 Accounts payable specialist | 2 | 48,500 FP&A manager | 1 | 118,000 Controller | 1 | 145,000 |
| Employer payroll taxes | 7.65% |
| Benefits (% of salary) | 22% |
| Other cost per FTE (annual) | $3,500 |
| Merit increase next year | 3.5% |
| Fully loaded annual cost | $1,244,245 |
| Average loaded cost per FTE | $113,113 |
| Loaded cost multiplier | 1.34× |
| Monthly labor cost | $103,687 |
| Total FTEs | 11.00 |
| Next-year cost with merit | $1,286,446 |
Payroll taxes are applied to full salary; wage-base caps reduce Social Security and unemployment taxes for higher earners.
Interpreting the results
- Loaded multipliers of roughly 1.25× to 1.45× of base salary are common; benefit-rich employers run higher.
- Budget merit increases from their effective date; a mid-year increase costs about half its annual amount in year one.
- Add a vacancy factor when planning large teams, since some positions are always open.
Frequently asked questions
What is a fully loaded labor cost?
The fully loaded cost is everything an employer spends on an employee: base salary plus employer payroll taxes, health and retirement benefits, and other costs such as equipment, software, training and recruiting.
What is a typical loaded cost multiplier?
Loaded costs commonly run about 1.25 to 1.45 times base salary, depending on the benefits package and overhead included. Organizations with generous health and retirement plans run toward the high end of that range.
Should payroll taxes be applied to the full salary?
Not always. Social Security tax and unemployment taxes stop at annual wage-base limits, so the effective rate is lower for higher earners. Applying the full rate is a conservative simplification for planning.
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