{
  "slug": "hire-new-employee-vs-overtime-cost",
  "title": "Hire New Employee vs Overtime Cost Calculator",
  "heading": "Hiring vs Overtime Cost Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/hire-new-employee-vs-overtime-cost",
  "summary": "Compare the fully-loaded cost of hiring another worker against paying existing staff overtime.",
  "description": "Covering extra workload with overtime avoids hiring costs but pays a 1.5x premium and risks burnout, while hiring a new employee costs more upfront in recruiting, onboarding, and benefits but spreads the workload sustainably. This tool compares the annual cost of overtime hours against the fully-loaded cost of a new hire so you can see which is cheaper at your current volume of extra work.",
  "formula": "Overtime Total = OT Hours per Year × Base Rate × 1.5. New Hire Total = Salary + Benefits Load + Onboarding Cost (amortized).",
  "dateModified": "2026-09-06",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=hire-new-employee-vs-overtime-cost",
  "inputs": [
    {
      "id": "otHoursPerWeek",
      "label": "Overtime hours needed per week",
      "kind": "number",
      "hint": null,
      "default": 15,
      "unit": null,
      "min": 0,
      "max": null
    },
    {
      "id": "baseHourlyRate",
      "label": "Base hourly rate of existing staff",
      "kind": "number",
      "hint": null,
      "default": 28,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "newHireSalary",
      "label": "New hire annual salary",
      "kind": "number",
      "hint": null,
      "default": 55000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "benefitsRate",
      "label": "Benefits + payroll tax load",
      "kind": "number",
      "hint": null,
      "default": 28,
      "unit": "%",
      "min": 0,
      "max": 60
    },
    {
      "id": "onboardingCost",
      "label": "One-time recruiting + onboarding cost",
      "kind": "number",
      "hint": null,
      "default": 4500,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "winner",
      "label": "Lower first-year cost option",
      "format": "raw",
      "hint": null,
      "primary": true
    },
    {
      "id": "overtimeTotal",
      "label": "Overtime annual cost",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "newHireTotal",
      "label": "New hire first-year cost",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "diff",
      "label": "Annual difference",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "breakevenHours",
      "label": "Breakeven OT hours/week",
      "format": "decimal",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Overtime hours needed per week: 15",
      "Base hourly rate of existing staff: 28 $",
      "New hire annual salary: 55000 $",
      "Benefits + payroll tax load: 28 %",
      "One-time recruiting + onboarding cost: 4500 $"
    ],
    "outputs": [
      "Lower first-year cost option: Overtime",
      "Overtime annual cost: $32,760",
      "New hire first-year cost: $74,900",
      "Annual difference: $42,140",
      "Breakeven OT hours/week: 34.3"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter overtime hours needed per week.",
      "Enter base hourly rate of existing staff ($).",
      "Enter new hire annual salary ($).",
      "Enter benefits + payroll tax load (%).",
      "Enter one-time recruiting + onboarding cost ($).",
      "Read your lower first-year cost option on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "otHoursPerWeek": 9,
        "baseHourlyRate": 17,
        "newHireSalary": 33000,
        "benefitsRate": 17,
        "onboardingCost": 2500
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "otHoursPerWeek": 15,
        "baseHourlyRate": 28,
        "newHireSalary": 55000,
        "benefitsRate": 28,
        "onboardingCost": 4500
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "otHoursPerWeek": 24,
        "baseHourlyRate": 45,
        "newHireSalary": 88000,
        "benefitsRate": 45,
        "onboardingCost": 7000
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Does this account for onboarding costs disappearing after year one?",
      "a": "Right — a new hire looks more expensive in year one because of onboarding, but in year two onward the comparison usually tilts further toward hiring if the overtime need is ongoing."
    },
    {
      "q": "What about burnout and error rates from sustained overtime?",
      "a": "Not quantified here, but sustained overtime above 10-15 hours/week is linked to rising error rates and turnover risk, both real costs beyond the wage premium."
    },
    {
      "q": "Is overtime ever the clearly better choice?",
      "a": "Yes, for short-term or seasonal spikes in workload — hiring for a temporary need often costs more in severance or idle capacity once the spike ends."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/overtime-pay-calculator",
    "https://www.revenuelab.fyi/toolbox/w2-employee-vs-1099-contractor-cost"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Hire New Employee vs Overtime Cost Calculator (https://www.revenuelab.fyi/toolbox/hire-new-employee-vs-overtime-cost)"
}