What You Actually Cost Your Employer (It Is Not Your Salary)
Behind a $70,000 salary sits roughly $85,000 to $100,000 of employer spending — payroll taxes, insurance, benefits, and overhead. Where the extra goes, and why the number matters in negotiations and freelance pricing.
Published · Paycheck & Income · 2 min read
Your salary is what you see; it is not what you cost. An employer budgeting a $70,000 role plans for something closer to $85,000–$100,000 once the mandatory and customary extras stack up. Knowing the composition of that gap is useful leverage — in raise conversations, in benefits decisions, and above all in pricing yourself as a freelancer.
The employer's stack
- Payroll taxes — the matching 7.65% of FICA, federal unemployment (FUTA), and state unemployment insurance, which varies by state and the company's layoff history. Call it 8–10% of wages.
- Health insurance — employers typically pay the large majority of the premium; several hundred to well over a thousand dollars a month depending on coverage tier.
- Retirement match — commonly 3–6% of salary for participating employees.
- Workers' compensation — modest for office roles, substantial for physical ones.
- Paid time off — vacation, holidays, and sick days are salary paid for non-work; three weeks plus holidays is roughly a tenth of paid days.
- Overhead — equipment, software seats, space, training. Not compensation, but part of what the role must justify.
Why the number is worth knowing
In negotiations: a $5,000 raise costs the employer roughly $5,500–$6,000 with loadings — but against a $90,000 fully-loaded position cost, it is a ~6% increase to retain someone whose replacement would cost months of that figure in hiring and ramp-up. Framing helps both sides.
In benefits decisions: employer-paid premiums and match are invisible compensation. A job change that raises salary $8,000 but moves you from a rich benefits package to a thin one can be a net pay cut — the total-compensation comparison catches this.
In freelance pricing: the fully-loaded cost is the honest baseline a contract rate must clear — the reason the 1099 multiplier lands near 1.4 rather than 1.0.
The employer cost calculator assembles the whole stack — FICA match, FUTA, state unemployment, benefits — from a salary and shows the true cost of the position, from the side of the table employees rarely see.
Run your own numbers
More on paycheck & income
- Raise or Bonus? Why $5,000 Is Not Always $5,000
- Why Your First January Paycheck Looks Different Every Year
- Setting a Freelance Rate: Start From the Salary You Are Replacing
This article is general education, not tax, legal, investment, or financial advice. Figures used in examples are illustrations, not quotes or predictions. For decisions that depend on your full situation, talk to a qualified professional.