It’s no secret to employers that bringing on a new full-time employee is expensive. Still, let’s consider some numbers to put it in perspective for those reading who might not be direct hiring managers.
For example’s sake, say you’re looking to fill an entry level position paying $40,000 per year. Add to that salary the average cost of recruiting a new employee yourself (about $4,000). Also, consider the time you invest in training them before they’re ready to perform, and health insurance when the average employer contribution is just under $13,000 for a family plan. Then there’s potentially retirement plan matching, and any other benefits you offer to remain competitive.
Costs for Hiring a 9-5 Employee Can Be Overwhelming
Just with our basic but very realistic example, we’re already sitting at more than $56,000 first year costs for an entry level employee. And those are only surface numbers. There’s are dozens of little and big expenses that add up quickly (sick pay, vacations, processing paperwork, etc.), and if you’re replacing an employee, the numbers can be even more staggering.
Now you can start to see why some employers are beginning to mix up their workforce and engaging freelancers for long-term contract work.
Contract Work Offers a Flexible Solution to Rounding Out Your Labor Force
Making the switch and incorporating some contractors in your workforce can provide you a degree of operating flexibility you’ve never had before. In addition to the substantial reduction in overhead, you will also have more internal financial flexibility to classify your labor costs. And hiring contractors in some instances can even give you access to a better talent pool who only take contract or contingent work because of the higher earning potential.
Lastly, when you hire contractors; yes, you will likely pay more per hour, but you won’t pay for healthcare, retirement plans, paid time off, or any of those other expenses that are the expectation for full-time workers.
The Number of Available Contract Workers Is Increasing Every Year
The gig economy or contract labor force, however, you like to think of it, continues to grow at a rapid rate. Many of the workforce’s best and brightest self-starters are making the transition to contracting. And you can access that talent pool just as easily as you can the broader, traditional full-time market. You just have to know where to look.