How to Decide How Much to Pay Your Employees

The wages you pay your employees will likely impact the success of your business. You need to strike a balance between higher wages, which may help you attract and retain better employees, and lower wages, which may give you more money to use for other business expenses. This guide can help you think through pay considerations and set the right amount.  

Decide What Employee Pay Will Be Based On 

How do you pay employees? Most employees are either paid a salary, paid hourly or paid a commission.  

If you’re hiring someone to ring up purchases and stock shelves in your farm stand, you’ll probably pay them hourly. If you’re hiring a full-time farm manager or professional, a salary is most likely your best choice. And if sales is a big part of the job, you may want to motivate your employees by paying part or all of their compensation in commissions. 

Find Out What Comparable Employees Make 

With online salary calculators, you can enter a job title and geographic location and find out the salary range for your area. For example, the pay for an executive assistant in Boise, Idaho, ranges from $26.56 to $32.42 per hour, with an average of $26.56. 

You might also consider hiring remote employees, depending on the position. If you live in a high cost of living area, you may be able to cut expenses without sacrificing quality by hiring someone who lives in a less-expensive area. 

Remember That Wages Are Only Part of the Cost 

When you’re calculating what percentage of budget should be dedicated to wages, keep in mind that the amount you pay an employee doesn’t represent the full cost. According to the Small Business Association, on top of wages, you need to pay: 

• The employer share of FICA, which in 2025 is 6.2% for Social Security and 1.45% for Medicare.
• The federal unemployment tax (FUTA), which is generally 0.6% for employers who are paying into state unemployment funds.
• The state unemployment tax, which varies by state.
• Workers’ compensation, which varies by state.
• Other insurance coverage you may need depending on your business and the position you’re hiring for.

To attract and retain good employees, you may also want to offer a benefits package. These packages may offer health insurance, disability insurance, life insurance, vision and/or dental coverage, retirement savings, paid time off, raises and bonuses. Costs will vary based on what you choose to offer. 

See if Adding to Your Team Makes Sense for Your Business 

If you’re looking at how to figure out wages, you almost certainly think that hiring will increase your bottom line. But you’ll need to make sure your business can afford your new hire. According to business.org, it’s a good idea to be able to cover six months’ worth of operating expenses with savings.  

Make sure you have enough revenue to cover: 

• Your own salary
• Your business expenses, like rent, utilities and inventory
• The compensation for your new employee
• The costs of hiring, such as background checks, training, uniforms or equipment
• Any fluctuations in profit

Talk About Your Options With a Pro 

A lot of factors go into deciding how much to pay a new employee. If you’re a small business owner, you might be new to the process of hiring and determining pay. Reach out to a Farm Bureau professional to talk through your options.