47+ Cost of Hiring Statistics, Facts and Trends [2024]

October 18, 2023 0 Comments

Have you ever wondered how much it costs to hire an employee?

In the US, the average cost per hire is nearly $4,700.

If an employer is hiring for a job that pays $60,000/year, they might spend $180,000 or more to fill that role.

How much of this is direct and indirect costs?

Check out these cost of hiring statistics to find out!

Top Cost of Hiring Statistics- Editor’s Pick

  1. Only 30-40% of the hiring costs are hard or direct costs. [1]
  2. 53% of recruiting experts say that their recruiting budget will decrease or stay flat in the coming year. [2]
  3. It takes about 42 days to fill an open position. [3]
  4. According to the US Bureau of Labor Statistics, wages and salaries cost employers $29.86 per hour, while benefit costs were $13.39/hour. [4]
  5. It can take a company up to six months to break even on its investment in a new hire. [5]
  6. Even an $8/hour employee can cost a company around $3,500 in turnover costs. [5]
  7. Benefits can cost a company 1.25 to 1.4 times an employee’s base salary. [6]
  8. Avoiding a bad hire can save a company about $12,489. [7]
soft or indirect hiring costs

General Cost of Hiring Statistics

US companies spend about $4,000 to hire a new employee. But this is just an average. The cost of hiring can vary depending on different factors.

Here are some general cost-of-hiring statistics that can give you a good starting point for budgeting:

What is the average cost of hiring?

The cost of hiring can vary for each role, depending on the functional area, the size of the organization, and the job level.

In a company with less than 500 people, hiring costs can go up to $7,645. [9]

The benchmark cost of hiring is somewhere between $3000-$5000. [10]

75% of hires cost less than $4,500. [11]

Hiring an executive costs about $14,936. [11]

A vacancy costs a company $98 per day, and it takes an average of 39 days to fill that position, costing them $3,822. [12]

What are the indirect costs of hiring?

60% of hiring costs are indirect expenses. [1]

The time departmental leaders and managers spend to support the hiring process is part of the indirect or soft costs.

How much will a bad hire cost a company?

The cost of a bad hire in an entry-level position is about $15,000 on average. [12]

A bad hire can cost a business 30% of the employee’s first-year pay. [13]

The costs can go up from $240,000 to $850,000 per employee, depending on the job level. [13]

What Are the Costs Involved in Hiring?

From advertising to loss of productivity, there are various costs involved in hiring a candidate.

Check out the cost breakdown: 

Recruitment Teams

Most companies outsource recruitment to an external agency.

Based on the company they chose, they might have to pay a commission of 15-30% of the hired candidate’s first-year salary. [14]

Job Fairs

If job fairs are part of the recruitment strategy, it can cost around $100 to participate. [14]

Assigning employees to staff the booths is an additional indirect cost.

average cost of a job posting

Job Posting

Online job boards are a great way to meet potential employees.

The cost of advertising through job boards can vary depending on the platform, but the average cost will be around $300. [14]

Background Checks

Background checks can cost a company somewhere between $10-$100, depending on the complexity of the check. [14]

Testing Services

Online assessments are a big part of the hiring process for most companies.

A business can spend $50 to $100 to set up an account with a testing company. [14]

Employee Referral Bonus

On average, an employee referral bonus is between $1,000 and $5,000 per successful referral. [14]

However, the organization has the freedom to decide the right amount for the role. 

pay for successful employee referral

Relocation

Several firms offer to pay a certain amount to candidates who move from a different location. [14]

Relocation costs can go up to $25,000. 

Onboarding

Employee onboarding cuts into the production time of the new hire and their supervisor. 

It can cause a loss of up to $5000, depending on the number of days to onboard and the pay of the employees involved in onboarding. [14]

Training

Job training might take weeks, depending on the complexity of the role and the process of an organization. 

The average training cost is about $722 to $1,438 per employee, based on the industry and size of the company. [14]

Compensation 

Compensation is one of the highest costs of hiring. Benefits can cost up to 30% of the employee’s base salary. 

The average annual salary for a candidate with a high school diploma is $41,850. [15]

entry-level pay based on education

Here is some interesting data on average employee compensation based on education: 

Typical entry-level educationMedian annual wage
Doctoral or professional degree$114,020
Master’s degree$80,180
Bachelor’s degree$81,570
Associate’s degree$60,170
Postsecondary nondegree award$45,790
Some college, no degree$40,580
High school diploma or equivalent$41,850
No formal educational credential$31,380

How Does Technology Impact Hiring?

  1. 67% of HR professionals say that AI has a positive impact on the recruitment process. [16]
  2. 85% of recruiters believe that AI will replace some parts of the hiring process. [16]
  3. 77% of HR professionals say that soon people won’t have to be involved in the recruitment process. [16]
  4. 80% of recruiters claim that the quality of hire improved when they used an applicant tracking system. [17]
  5. ATS can improve a recruiter’s efficiency by more than 5% per month. [18]
  6. 94% of hiring professionals believe that the use of recruitment software has positively impacted their hiring process. [19]
  7. About 98% of Fortune 500 companies use recruitment software. [19]
  8. 75% of recruiters use applicant tracking software. [19]
  9. 86% of HR personnel believe recruitment software has helped them hire faster. [19]
  10. 42% of organizations claim that investing in tools to accelerate hiring is a top priority this year. [20]

Cost per Hire Based on Demographics

The cost per hire varies based on several demographics, including job level, location, company size, and more.

Let’s take a look at the cost per hire based on demographics.

What’s the difference between onboarding an entry-level employee and an executive?

Hiring and onboarding an executive costs 180% more than onboarding an entry-level employee. [21]

It is about 20% of an entry-level employee’s salary to hire them, but it’s about 1 to 1.5 times a mid-level employee’s salary to hire them.

How much does turnover cost?

The average turnover cost for an hourly worker is $1,500 per employee. [22]

For technical positions, the cost jumps to 100 to 150% of the salary. 

C-suite turnover can cost 213% of salary.

How long does it take to hire across different industries?

It takes about 45 days to hire in the health services industry. [3]

Here’s a sneak peek into the hiring durations of different industries: 

days to hire based on industry
Industries Days-to-hire
Construction13
Leisure and Hospitality21
Wholesale and Retail24
Warehouse, Transport, and Utilities25
Professional and Business Services25
Non-Farm28
Education29
Manufacturing31
Information31
Government33
Financial Services45
Health Services49

FAQs about the Cost of Hiring

What is the cost of hiring?

The cost of hiring is the total amount of money that a company spends to fill a vacant position. This includes both direct and indirect costs.

How do you calculate the cost of hiring?

The formula for calculating the cost of hiring is:

(Total internal recruiting costs + External recruiting costs) / (Total number of hires in a given time frame)

What are the factors that affect the cost of hiring?

Some of the factors that can affect the cost of hiring include:

  1. Industry: Industries, such as technology and finance, are more competitive and have higher salaries, which can lead to higher hiring costs.
  2. Company size: Larger companies have more complex hiring processes and may spend more on recruiting and onboarding.
  3. Role level: Higher-level roles have higher salaries and more complex hiring processes.
  4. Location: Hiring costs can vary depending on the location of the job, cost of living,  and the availability of qualified candidates.
  5. Demographics: Hiring costs can also vary based on demographics such as gender, race, and ethnicity.

What are the indirect costs of hiring?

Indirect costs can include the HR team’s salaries, benefits, office space, technology, loss of productivity, and administrative overhead.

How can we reduce the cost of hiring?

There are some things you can do to reduce the cost of hiring, such as:

  1. Streamline your hiring process: Identify areas where you can save time and money.
  2. Invest in diversity and inclusion initiatives: This will help you attract and retain a wider pool of candidates, which can lead to lower hiring costs.
  3. Partner with staffing agencies: Staffing agencies can help you find qualified candidates and manage the hiring process, which can save you time and money.

Summary

A bad hire can cost a company more than money. They can affect employee morale and the reputation of a firm. That’s why it’s important to understand the latest trends and hiring statistics to make a calculated decision.

These statistics would’ve given you an overview of the various factors involved in hiring the right candidate.

Keep an eye on our website to learn the latest statistics, facts, and trends on several topics.

Sources

  1. SHRM. The Real Costs of Recruitment
  2. LinkedIn. The Future of Recruiting 2023
  3. Workable. Time to fill and time to hire metrics FAQ
  4. Bureau of Labor Statistics. Employer Costs for Employee Compensation – June 2023
  5. Investopedia. The Cost of Hiring a New Employee
  6. Compport. How Much Should Employers Spend on Benefits | A Quick Guide
  7. World Economic Forum. How much are toxic workers costing your company?
  8. Glassdoor. How To Calculate Cost-Per-Hire
  9. LinkedIn. Why Losing the Best Talent is So Costly?
  10. Workable. Budget and Cost per Hire | Recruiting Metrics FAQ
  11. SHRM. SHRM CUSTOMIZED TALENT ACQUISITION BENCHMARKING REPORT
  12.  LeoForce. What does It really cost to recruit and hire a new employee?
  13. Business. How to Handle a Bad Hire
  14.  Indeed. What Is the Cost of Hiring New Employees?
  15. U.S. BUREAU OF LABOR STATISTICS. Employment Projections
  16. Tidio. AI Recruitment Statistics: What Is the Future of Hiring?
  17. The Happy Manager. Can Applicant Tracking Systems Improve the Selection Process?
  18. LinkedIn. Top 20 Benefits of Applicant Tracking System
  19. Medium. Top 5 Recruitment Statistics
  20. Finances Online. 101 Hiring Statistics You Must Read: 2023 Data Analysis & Market Share
  21. Insight Global. 6 Reasons to Hire Entry-Level Employees
  22. Builtin. The True Costs of Employee Turnover

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