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The Costs of Hiring New Employees

Cost of hiring new employees training employees growth

Even when new workers are needed, small businesses with cash flow issues often hesitate to hire because there are so many costs of hiring. Some business owners mistakenly think that the cost of hiring a new employee is their salary. However, there are other costs of hiring, including recruiting, training, and more.

In this article, we’ll go over the various costs of hiring new employees.

Let Orcutt & Co handle your accounting, bookkeeping, payroll, and tax prep for your Cincinnati-based business. We can help you keep your finances in order so that you can make well-informed hiring decisions.

Costs of Hiring

There are several costs of hiring new employees:

  • Recruiting
  • Training
  • Salary/benefits
  • Workplace integration


When it comes to costs of hiring, recruiting can be expensive. Some of the expenses include placing an ad for the position, the cost of an internal recruiter, the cost of an assistant to review resumes and complete other recruitment-related tasks, the cost of the interviewer, background checks, drug screens, pre-employment assessments, and more.

It is important to note that not every new hire will go through the same process. However, even minimum-wage employees may cost $3,500+ in direct and indirect turnover costs.


Recruiting is the first step. Once you have the right person for the position, your business must provide training so they can do the work that is expected of them. This is one of the biggest costs of hiring.

In 2020 to 2021, experts believe that companies spent $92.3 billion on training and employees spent an average of 64 hours in training. This isn’t just the new hires that need orientation and initial job training, along with the same training/continuing education as current employees.


One of the more obvious costs of hiring new employees is their salary and the benefits that go along with it. These benefits range from minor things such as coffee in the break room to the more significant ones such as tuition reimbursement, life insurance, health insurance, and so much more.

If the new hire gets injured on the job, these costs may unexpectedly increase- which can be particularly expensive for small businesses.

Workplace Integration

Another one of the costs of hiring that shouldn’t be ignored is workplace integration, which involves assigning them a desk and placing them with the right peers. There’s more to this than providing them with a desk chair and a computer. There is also the physical space, software, travel, special equipment/resources, cell phone, and more- basically, anything required to do the job.

How Much Does it Really Cost to Hire New Employees?

As you can see, there’s much more to the costs of hiring than salary. Other costs, including benefits and other compensation, along with the time investment employers make when hiring. In many cases, it may be 6 months or more before the employer is able to see a positive return on their investment.

How to Calculate the Costs of Hiring New Employees

In order to determine the costs of hiring, employers need to consider the base salary and benefits, payroll taxes they must pay, equipment needed by the employee to perform the job, training materials required by the employee, and loss of productivity while the employee is in training. The truth is, even skilled workers need time to become acclimated to the processes and supervisors. All of this is done on company time and the company must pay for it.


Since it does impact the company’s bottom line, hiring new employees is not something that should be taken lightly. That being said, if you don’t have workers, the work is not getting done. Therefore, the potential returns may be worth the costs.

If your business is based in Cincinnati, let Orcutt & Co. handle your accounting needs including general accounting, day-to-day bookkeeping, payroll, and even tax prep. They can help you better understand your financial position as you consider hiring new employees.