Burden Cost

W-2 vs. 1099

What is a W-2?

This person is hired to provide services to your business and is generally considered an employee.

What is a 1099?

This person is an independent contractor who provides services to your business and is generally considered self-employed.

U.S. Workforce Statistics

  • 36% – The percentage of 1099 workers – freelance, gig, and contract – that make up the U.S. workforce.
  • $10,000 – The average savings on real estate per full-time employee per year.
  • $600 billion – The amount businesses lose a year to workplace distractions.
  • 35% to 40% – The percentage of increased productivity for a remote worker when compared to an in-office counterpart.
  • 33% – The percentage of workers who would prioritize work-from-home arrangements over having a more prestigious role or more money.
  • 78% – The percentage of 1099s who forecasted doing the same or more gig work in 2021. 
  • 82% The percentage an average employer pays for a W-2 employee’s health care.
  • 50% – The percentage of 1099s forecasted for 2027 if the gig economy keeps growing at its current rate.

Know Your Employee
Burden Cost

Meet Amanda.

Her gross compensation is $17 per hour or $35,360 per year.

However, there are a variety of additional annualized costs attached to her position.

Employees cost far more than just the hourly wages or salaries they’re paid. How? Because what they actually cost an employer is their fully-burdened labor cost, which includes subsidized health insurance, annual bonuses, payroll taxes, 401(k)s, workers’ compensation insurance, and more. And shockingly, these fully-burdened costs can nearly double their initial salary or hourly wage.

  • $12,665 – Health Insurance
  • $1,415 – Annual Bonus
  • $2,755 – Payroll Taxes
  • $1,662 – 401K
  • $3000 – Workers’ Compensation Insurance

The costs don’t stop there. In fact, there are countless seemingly petty expenses incurred with employees. And those expenses can add up – and quickly.

  • $300 – Training and Professional Development
  • $150 – Coffee
  • $100 – Anniversary/Birthday
  • $750 – Phone/Internet
  • $6,000 – Equipment and Office Space
  • $300 – Office Supplies

But wait! There's more!

We need to determine how many hours Amanda is available for company work.

52 weeks/year x 40 hours/week = 2,800 hours

  • 6 holidays
  • 10 vacation days
  • 6 sick/personal days
  • 2 training days

24 days non-project paid time

*Subtract an estimated two hours from the 47 remaining work weeks for miscellaneous administrative meetings, problem-solving, prep time, etc. This reduces available production time by another 94 hours.

Amanda’s Available Annual Working Hours


Amanda’s Annual Cost


Amanda’s Fully Burdened Cost:

$30.87 per production hour

Know Your Contractor
Burden Cost

Meet Marquis.

His gross compensation is $17 per hour or $35,360 per year.

When we look at Amanda’s hourly pay rate of $17, we see that the additional cost to have her on the job is 82%.

When we look at Marquis’ hourly pay rate of $17, we see that the additional cost to have him on the job is 0%.