Payroll per Employee Calculator: Wage Levels by Industry and Location (2022)

What if you could see that professional services workers in California earn $131,900 per year while those in Florida earn $88,200? This Payroll per Employee Calculator reveals exactly where wage levels are highest by industry and location—and how you can position yourself to attract top talent or control labor costs.

The data shows dramatic differences: professional services workers in top states earn 50% more than those in lower-wage states. This isn’t just about geography—it’s about understanding compensation patterns that directly impact your hiring strategy, location decisions, and competitive positioning.

Calculate payroll per employee to see wage levels by industry and location. This tool reveals compensation patterns that

This analysis examines County Business Patterns (CBP) data from the U.S. Census Bureau to calculate payroll per employee—average annual wages—by industry and location across all U.S. states and counties. You’ll discover which locations offer the highest wages by industry, how compensation varies by geography, and where you can optimize labor costs or attract top talent.

What You’ll Discover:

• State rankings by payroll per employee by industry
• Industry-specific wage patterns revealing compensation differences
• Location-specific wage levels impacting hiring and cost strategies
• Wage benchmarking data for competitive positioning
• Labor cost optimization opportunities by location

Why This Matters: Understanding payroll per employee helps you set competitive compensation, assess labor costs, and make strategic location decisions. Markets with higher wages may offer better talent but higher costs, while lower-wage markets may offer cost advantages but require careful talent assessment.

Wage Levels Vary Dramatically by State

The Numbers: Professional services workers in Massachusetts earn $144,600 per year, while those in Florida earn $88,200—a 64% difference. This means Massachusetts workers earn over $56,000 more annually than Florida workers in the same industry.

So What? High-wage states like Massachusetts and California offer premium compensation that attracts top talent but requires higher revenue to support. Lower-wage states like Florida and Texas offer cost advantages but need careful talent assessment. Your location choice directly impacts both talent quality and labor costs.

How to Use This: If you need top talent and can support higher compensation, target high-wage markets ($120,000+). If you’re optimizing costs, consider moderate-wage markets ($90,000-$110,000) that balance talent quality and cost efficiency.

Industry-Specific Patterns Reveal Compensation Strategies

The Numbers: Professional services shows the widest wage variation, with Massachusetts ($144,600) 64% higher than Florida ($88,200). Other industries may show different patterns, requiring industry-specific analysis.

So What? Different industries have different wage patterns by location. Understanding your industry’s specific wage levels helps you set competitive compensation and assess labor costs accurately.

How to Use This: Always analyze wage levels for your specific industry (NAICS code), not just overall averages. Industry-specific data provides accurate benchmarks for compensation and cost planning.

Location Strategy Must Balance Talent and Cost

The Numbers: The difference between the highest-wage state (Massachusetts, $144,600) and moderate-wage states (Texas, $102,200) is $42,400 per employee—meaning a 10-person team costs $424,000 more annually in Massachusetts.

So What? High-wage markets offer better talent but significantly higher costs. Lower-wage markets offer cost advantages but require careful talent evaluation. Your location choice should balance talent needs with cost constraints.

How to Use This: For businesses requiring top talent, high-wage markets may be worth the cost. For cost-sensitive businesses, moderate-wage markets often offer the best balance. Calculate total labor cost impact (wage × number of employees) to make informed decisions.

Red Flags

• Extremely High Wages ($150,000+): May indicate cost-of-living pressures that make markets expensive to operate in
• Rapid Wage Increases: Markets with rapidly increasing wages may signal cost inflation
• Wage-Cost Mismatch: Markets where wages are high but revenue potential is limited may be unsustainable

Green Lights

• Moderate-to-High Wages ($100,000-$130,000): Balanced markets with competitive compensation and manageable costs
• Wage Growth with Market Growth: Markets where wages are increasing alongside business growth signal healthy expansion
• Industry-Aligned Wages: Markets where wages match industry value and revenue potential offer sustainable compensation structures

How to Use This Data

Follow this step-by-step process to calculate payroll per employee and make data-driven compensation and location decisions:

Step 1: Identify Your Industry and NAICS Code

For Industry-Specific Analysis: Determine your NAICS code (North American Industry Classification System). This allows you to filter CBP data to see exact wage levels for your industry.

For Multi-Industry Businesses: If you serve multiple industries, analyze each relevant NAICS code separately to understand wage levels for each segment.

Action: Look up your NAICS code at census.gov/naics. Common codes include:

• 54: Professional, Scientific, and Technical Services
• 62: Health Care and Social Assistance
• 72: Accommodation and Food Services
• 44-45: Retail Trade

Step 2: Calculate Payroll per Employee by Geography

Compare wage levels across your candidate locations:

• State-level: Get broad wage comparison (e.g., Massachusetts $144,600 vs. Florida $88,200)
• County-level: Identify specific markets within states with varying wage levels
• Metro-level: Analyze metropolitan areas for urban wage patterns

Action: Create a spreadsheet with your top 10 candidate locations. Calculate payroll per employee (PAYANN ÷ EMP) for each. Rank by wage level.

Step 3: Assess Compensation Strategy

Match wage levels to your compensation needs:

• High Wages ($120,000+): Premium markets requiring competitive compensation to attract talent
• Moderate Wages ($90,000-$120,000): Balanced markets with competitive but manageable compensation
• Lower Wages (<$90,000): Cost-advantaged markets but require careful talent assessment

Action: For each candidate location, assess whether the wage level matches your compensation strategy and talent requirements.

Step 4: Calculate Total Labor Cost Impact

Multiply payroll per employee by your expected number of employees to assess total labor cost:

• 10 employees: $144,600 × 10 = $1.45 million (Massachusetts) vs. $88,200 × 10 = $882,000 (Florida) = $568,000 difference
• 50 employees: $7.23 million vs. $4.41 million = $2.82 million difference
• 100 employees: $14.46 million vs. $8.82 million = $5.64 million difference

Action: Calculate total annual labor cost for each candidate location. Compare cost differences to assess financial impact.

Step 5: Make Your Compensation and Location Decision

Combine wage analysis with other factors (talent availability, cost of living, business climate) to choose your location and set compensation.

Action: Create a decision matrix scoring each location on: wage levels (30%), total labor cost (30%), talent availability (20%), business climate (10%), and personal fit (10%).

Common Use Cases

Scenario 1: Setting Competitive Compensation → Use local payroll per employee data to benchmark your compensation. Target 10-20% above local average to attract top talent.

Scenario 2: Optimizing Labor Costs → Compare wage levels across candidate locations. Target moderate-wage markets ($90,000-$110,000) that balance talent quality and cost efficiency.

Scenario 3: Expanding to New Markets → Research wage levels in expansion markets. Ensure your compensation strategy matches local market conditions to attract and retain talent.

Scenario 4: Remote Work Strategy → Use wage data to inform remote work compensation. Consider location-based pay adjustments based on local market wages.

Questions to Ask Yourself

• What matters more: attracting top talent (high wages) or controlling costs (moderate wages)?
• Can my business model support high-wage markets, or do I need cost optimization?
• Does my industry require premium talent that justifies high-wage markets?
• How many employees will I have, and what’s the total labor cost impact?
• What’s my risk tolerance: proven high-cost markets or emerging lower-cost markets?

Action Items Checklist

• Identify your NAICS code and industry classification
• Calculate payroll per employee for your industry in top 10 candidate states
• Analyze county-level wage data for specific markets within target states
• Calculate total labor cost impact (wage × number of employees) for each location
• Compare wage levels to your compensation strategy and talent requirements
• Research talent availability and quality in candidate markets
• Assess cost of living relative to wage levels in each market
• Consult with Business Initiative for compensation and location strategy guidance

Industry-Specific Recommendations

Professional Services (NAICS 54): Target markets with $100,000-$130,000 payroll per employee. Professional services require skilled talent, and these wage levels attract quality workers while maintaining manageable costs.

Technology Services (NAICS 51): Prioritize markets with $110,000-$140,000 wages. Technology businesses need premium talent and can support higher compensation due to high-value services.

Health Care (NAICS 62): Look for markets with $70,000-$90,000 wages. Health care has more standardized compensation, and moderate-wage markets offer cost efficiency.

Retail Trade (NAICS 44-45): Focus on markets with $40,000-$60,000 wages. Retail typically has lower wage requirements, and cost optimization is critical.

Accommodation and Food Services (NAICS 72): Target markets with $30,000-$50,000 wages. Food service has lower wage requirements, making cost-sensitive markets attractive.

Common Mistakes to Avoid

Mistake 1: Ignoring Industry-Specific Data Using overall average wages instead of industry-specific data leads to inaccurate compensation planning. Always use NAICS-filtered data for your specific industry.

Mistake 2: Focusing Only on Wage Levels High wages don’t always mean best opportunity. Consider both wage levels (talent quality) and total labor cost (financial impact). A market with moderate wages but lower total cost may be better than high-wage markets.

Mistake 3: Not Calculating Total Cost Impact Individual wage differences seem small, but multiply by number of employees for total impact. A $20,000 difference per employee means $200,000 annually for a 10-person team.

Mistake 4: Ignoring Talent Availability Lower-wage markets may offer cost advantages but have limited talent availability. Always assess talent quality and availability alongside wage levels.

Mistake 5: Not Considering Cost of Living High wages may be necessary in high cost-of-living markets. Compare wage levels to local cost of living to assess real purchasing power and quality of life.

Optimization Strategies

For Maximum Talent Quality: Target high-wage markets ($120,000+) like Massachusetts and California. These markets attract top talent but require higher revenue to support compensation.

For Cost Optimization: Focus on moderate-wage markets ($90,000-$110,000) like Texas and Virginia. These markets offer quality talent with manageable labor costs.

For Balanced Approach: Choose markets with $100,000-$120,000 wages. You get competitive talent while maintaining cost efficiency relative to premium markets.

For Remote Work: Use wage data to inform location-based pay adjustments. Consider cost-of-living adjustments based on employee locations while maintaining competitive compensation.

Timing Considerations

Best Time to Enter High-Wage Markets: When you have strong revenue and can support premium compensation. High-wage markets reward businesses with competitive advantages and strong financial position.

Best Time to Enter Moderate-Wage Markets: When optimizing costs or scaling operations. Moderate-wage markets offer cost efficiency while maintaining talent quality.

When to Reassess: Review wage data annually when new CBP releases become available. Wage levels change, and what was optimal 2-3 years ago may not be today.

Resource Recommendations

For Compensation Research:

• Census Bureau County Business Patterns (official CBP data source)
• Bureau of Labor Statistics wage data (supplement CBP with BLS wage surveys)
• Industry association reports (industry-specific compensation data)
• Cost of living calculators (assess real purchasing power)

For Location Support:

• Business Initiative location strategy services
• Local chamber of commerce (county-level business information)
• State economic development websites (local market insights)

For Compensation Planning:

• Combine CBP wage data with BLS occupational wage data for complete picture
• Research local talent availability and quality through job market data
• Consult with Business Initiative for personalized compensation and location guidance

FAQs - Frequently Asked Questions About Payroll per Employee Calculator: Wage Levels

In Summary

Our comprehensive exploration of payroll per employee calculator: wage levels by industry and location (2022) has revealed critical insights into business patterns, market size, and industry distribution that can inform business strategy.

Calculate payroll per employee to see wage levels by industry and location. This tool reveals compensation patterns that

By understanding these statistics, you can make data-driven decisions about market entry, competitive analysis, and location strategy.

This analysis reveals important patterns and trends that inform business strategy and help identify opportunities.

Applying the insights from this article can have several practical benefits:

• Strategic Planning: Use this data to inform market analysis and competitive positioning.
• Competitive Analysis: Compare your market position against industry benchmarks.
• Risk Assessment: Understand market size and business density to assess opportunities.

By leveraging the information outlined in this article, businesses can gain a competitive edge and make more informed strategic decisions.

Ready to take action based on this data?

This data can help you make informed decisions about business location, market entry, and strategic planning.

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