Halsey Platt, of Walter H.B. Platt Builders and Cabinetmakers, estimates that at least 50% of his new hires have previously worked for him as subcontractors. But the Groton, Mass., contractor ran into a problem: Because of his extensive benefits program, he couldn't afford to pay the subs the same hourly rate they were used to getting. So Platt developed a "total compensation worksheet," which shows prospective employees the value of the package they'll receive. The example below shows how a carpenter who made $28 per hour as a sub receives the same total compensation at an hourly wage rate of $16 from Platt.
Health insurance is by far one of the biggest -- and most necessary -- expenses for self-employed carpenters. The dollar figure listed here is actually a little low: As an employer, Platt gets a better rate. The carpenter would have to pay more money for the same plan.
People who work for themselves often overlook items such as these when calculating expenses.
These costs take a huge chunk out of your bank account if you have to pay them yourself. The phrase "required by law" eliminates any argument or confusion over the numbers.
The form breaks down the compensation in two ways: hourly and yearly. The yearly figure gives the prospective employee the big picture, which is helpful in financial planning. The hourly rate is useful in showing the carpenter how $16 per hour as a full-fledged employee is the same as $28 per hour for a sub.
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