🔍 Read the full analysis: IT Staff Augmentation And Full-Time Hiring: A Practical Cost Test on ThorstenMeyerAI.com
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TL;DR
A Nov. 6 analysis from ThorstenMeyerAI.com calculates employee costs per hour actually worked and offers a break-even formula for comparing full-time hiring with staff augmentation. Its examples put a U.S. median-wage software developer at about $95 an hour before recruiting costs and about $98 after a one-year hiring-cost allocation; at 50% utilization, the estimated break-even outside rate rises to about $197 an hour. The figures are calculations from cited public data, not market-rate comparisons, and depend on stated assumptions.
The calculation draws on the U.S. Bureau of Labor Statistics (BLS), which reported a $135,980 median annual wage for software developers in May 2025, and employer-cost figures for June 2026. For the BLS group “management, professional, and related,” employer costs averaged $78.88 per hour worked, including wages and benefits. The analysis uses the group’s benefit load and an estimated 1,830 hours worked annually to calculate an annual employer cost of roughly $175,000 for a median-wage developer, or about $95 per hour worked. That hourly figure is the author’s calculation, not a directly published BLS software-developer cost.
For Germany, the article cites Destatis figures showing that an hour worked in the information and communication sector cost employers €58.50 on average in 2025. This is a sector-wide average across IT and telecommunications occupations, not a developer-specific figure. The author says it includes holiday pay and employer social contributions, and cautions that the German sector average and U.S. occupation-specific estimate are not directly equivalent.
To account for recruitment, the analysis uses a SHRM 2025 average cost per non-executive hire of $5,475, drawn from a survey of 2,371 member organizations. Assuming a one-year tenure, the author allocates that cost across work hours, adding roughly $3 per hour and bringing the U.S. estimate to about $98. The article reports a $1,200 median hiring cost as well, noting that the average is higher; its calculation uses the average. It excludes comparisons with agency prices because the author found no published rate survey with a clear methodology.
Infographic 01 · The true cost of a hire
A salary is not the cost
Before you compare a hire with an outside specialist, convert both into the same unit: cost per hour of real work.
What a median US software developer costs the employer per hour actually worked. Our calculation from BLS wage and employer-cost data.
From salary to hourly cost
Calculation, each input published by the BLS
- Median salary, US software developer (May 2025)$135,980
- × 1.28 employer costs on top (benefits, insurance, retirement, payroll taxes)$174,600
- ÷ hours actually worked (2,080 paid, about 12% paid leave)1,830 h
- Cost per hour actually worked≈ $95
Sources: BLS Employer Costs for Employee Compensation, June 2026, Table 4 · BLS median wage, software developers, May 2025 · Destatis, 29 Apr 2026 · Destatis non-wage labour costs · SHRM 2025 benchmarking. Load factor = total compensation ÷ (wages + paid leave) = $78.88 ÷ $61.43. German sector figure covers all jobs in the sector, not only developers.
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How Utilization Changes the Cost
The analysis’s central point is that the cost comparison depends on how much useful work a hire will have. If an employee is needed for only half of available working hours, the author’s model says the cost per useful hour doubles. On that assumption, the U.S. break-even outside rate rises from about $98 to about $197 per hour. This is a modeled result, not a quoted staffing-market rate, and it does not establish what a particular employer will pay.
That distinction can matter when work is short-term, uncertain or highly specialized: a company may avoid paying for unused employee capacity by bringing in outside expertise for a defined period. A full-time hire may be more economical when there is enough sustained work to keep the person occupied. The article also identifies retained organizational knowledge as a reason to keep some expertise in-house, even when a contractor appears cheaper on an hourly comparison.
The figures are a decision aid, not a universal answer. Employers need to compare their own outside quotes with a consistent estimate of employee costs, expected productive hours, hiring expenses and the value of continuity. The article expressly says it is not legal, tax or financial advice.
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Public Data Behind the Estimate
The U.S. calculation combines figures from different BLS releases: a May 2025 software developer wage median and June 2026 employer-cost data for a broader professional occupational group. The author applies the group’s benefit load to the developer wage, then estimates annual hours actually worked. That method produces an illustrative cost rather than a BLS-published figure for the total cost of employing a median-wage software developer.
The German comparison uses a different measure. Destatis reported €29 in non-wage labor costs for every €100 of gross earnings in 2025, while the €58.50 hourly figure covers the information and communication sector. SHRM’s hiring-cost benchmark covers non-executive roles across occupations, not only technology positions. These scope differences limit direct comparisons, and the author presents the numbers as starting points for employers to apply to their own circumstances.
The article also considers AI-assisted development. It says evidence about how much coding agents increase developer speed remains unsettled. Its argument is that AI may change the kinds of short, specialized projects companies need, while also giving employers another reason to retain expertise and knowledge internally. Those points are the author’s analysis, not a measured productivity finding in the cited cost calculation.
““A salary is not the cost.””
— Thorsten Meyer, ThorstenMeyerAI.com
Assumptions That Can Shift Results
The break-even numbers depend on assumptions that vary by employer, including actual utilization, tenure and benefit costs. The U.S. example applies benefit data for a broad professional group to a software developer’s median wage, while the German figure is an average across an entire sector. The SHRM hiring-cost figures also cover non-executive roles generally, not technology hires alone.
The source does not provide a measured staffing-agency rate comparison or a published method for estimating market rates, so it cannot establish whether augmentation is cheaper in a specific contract. The 50% utilization scenario is an illustration; the article does not show that half utilization is typical. It also does not quantify the financial value of retained knowledge, project delays, contractor onboarding, employee turnover or differences in output quality. Its comments about AI productivity remain qualified, and the source gives no settled estimate of the effect.
Apply the Test to Local Quotes
The next step for employers is to use the method with their own compensation costs and outside quotes. They would need to estimate the employee’s full annual cost, realistic hours spent on productive work, likely tenure and recruiting expenses, then compare the resulting hourly cost with a contractor’s rate and the project’s duration. A different utilization assumption can materially change the outcome.
The source does not announce a follow-up study, new dataset or additional milestone. The AI productivity question remains open, and any later assessment would need evidence that separates changes in coding speed from other project work and quality. For now, the published figures offer an illustrative calculation rather than a definitive market verdict.
Key Questions
What does the article estimate a U.S. developer costs per hour?
It calculates about $95 per hour actually worked for a median-wage software developer before recruiting costs, using a May 2025 BLS wage figure, June 2026 employer-cost data and an estimated 1,830 hours worked annually. This is the author’s calculation, not a BLS-published developer-specific total-cost figure.
How does recruiting cost affect the estimate?
Using SHRM’s 2025 average non-executive cost per hire of $5,475 and assuming one year of employment, the analysis adds roughly $3 per hour, raising its estimate from about $95 to about $98. Actual hiring costs and tenure can differ.
Why does utilization change the break-even rate?
A full-time employee’s cost is spread across the work they actually perform. In the article’s model, if the employee is needed for only 50% of available hours, the cost per useful hour doubles and the U.S. break-even outside rate rises to about $197. That is a scenario, not a claim about typical utilization.
Does the analysis prove staff augmentation is cheaper?
No. It provides a calculation method, not a universal conclusion or a comparison with published agency rates. The result depends on the employer’s costs, utilization, project length and the quotes available.
What does the article say about AI and developer productivity?
It says evidence on how much coding agents speed up developers is still unsettled. The analysis suggests AI could create more short, specialized projects while also increasing the value of retaining internal expertise, but it does not quantify those effects.
Source: ThorstenMeyerAI.com
