How Much Should I Pay My First Employee: 4 Numbers

Nobody can tell you a number, and every page that gives you one is guessing.

What they can give you is a method. Your first employee's wage is not a market fact you look up. It is an output of four numbers you already have: what you bill for that person's hour, how much of their paid time you can actually bill, what the government adds on top of the wage, and what gross margin you need to survive.

For a typical Canadian trades helper the arithmetic says about $31 an hour, at a $95 billing rate, 75% utilization and a 50% target margin. Job Bank's median for the same role is $25.00. The gap between those two numbers is the whole point of this article.

The short answer, as a formula

Every page ranking for this question runs the calculation in the wrong direction. They start from a salary you have somehow already chosen and add taxes to it. That answers "what will this cost me," a bookkeeping question. It does not answer "what can I afford to offer," which is the question you actually have at 11pm before posting the job.

Run it the other way:

Maximum wage = (billing rate × utilization × (1 − target gross margin)) ÷ (1 + burden)

Worked for an Ontario helper:

$95 × 0.75 = $71.25 of revenue per paid hour. Half of that is your margin, leaving $35.63 for the fully loaded cost of the person. Divide by 1.13 and you get $31.53 an hour.

Change one input and watch it move. At a 40% margin target the same job supports $37.83. At 60% it supports $25.22, which is almost exactly the $25 figure operators name over and over in the trade subreddits. That convergence is a good sign: the formula reproduces what experienced people already do by feel.

Why every wage survey gives you a different number

Because they are not measuring the same thing, and mostly they are not measuring payroll at all.

In September 2026, four salary aggregators quoted essentially the same trades helper title:

That is a spread of $17.30 to $26.00 on one job title. A 50% disagreement. These sites are aggregating self-reported figures and scraped job postings across wildly different scopes of work, then averaging them into a number that describes nobody.

The two sources worth anchoring on survey employers directly:

Statistics Canada, via Job Bank (NOC 75110, construction labourer and helper, updated 19 November 2025, reference period 2023 to 2024):

US Bureau of Labor Statistics (OES 47-3019, Helpers, Construction Trades, All Other, May 2023): 10th percentile $14.75, median $19.34, 75th percentile $23.10, 90th percentile $27.72, mean $20.71.

The provincial low figures cluster tightly between $16 and $20 while the highs run from $26 to $42. The spread within a province is far wider than the spread between provinces, which means location explains much less of the wage than scope of work does.

What a first hire actually costs on top of the wage

Here the top-ranking pages are actively misleading, and the error is worth correcting because it stops people hiring.

The best of them, a Georgia CPA firm, walks through a $40,000 hire and concludes it costs $52,000 to $59,000 in year one, "roughly 30 to 47% more than the salary alone." That number gets repeated everywhere. But look at what is inside it: $3,600 of health insurance, a $1,200 retirement match, $1,538 of paid time off, plus amortized recruiting and equipment. Those are choices. The mandatory portion of their own table is $3,359 in payroll taxes plus $400 to $2,000 in workers' compensation, which on $40,000 is 9.4% to 13.4%.

The Canadian statutory number lands in the same place. Here is the full 2026 load on an Ontario helper at $25 an hour, or $52,000 a year:

Rates confirmed against the CRA's 2026 tables, WSIB's 2026 premium rate announcement and the Ontario Employment Standards Act guide. A few things fall out of that table that nobody tells first-time employers:

• You owe no Employer Health Tax and no CPP2. Ontario exempts the first $1 million of payroll. CPP2 applies at 4% only above the $74,600 maximum pensionable earnings, capped at $832 for 2026. A $52,000 helper triggers neither.
• Neither CPP nor EI will max out. The 2026 employer ceilings are $4,230.45 and $1,572.30. At $52,000 you pay $2,885.75 and $1,186.64, comfortably below both.
• The WSIB average is not your rate. The $1.23 figure averages all construction rate groups, and class-specific rates vary sharply by trade. Some run above $5.00 per $100. Confirm yours before you budget it. Outside Ontario, WorkSafeBC's 2026 average base rate is $1.55 and Alberta's WCB average is $1.46.

So the burden multiplier for a Canadian first hire is roughly 1.13, not the 1.30 to 1.47 the American content implies. That difference alone moves the wage you can afford by several dollars an hour.

The number that decides it is utilization, not payroll tax

Everything above is a rounding error next to this.

MEP Academy's costing work puts billable hours at roughly 23% below paid hours once drive time, supply runs, loading, cleanup and shop time are counted. Call it 75% utilization for a well-run one-truck operation. Now run the two scenarios:

Same wage. Same taxes. Same person. A $9.43 swing in what their hour costs you, purely from how the week is organised.

In annual terms the comparison gets brutal. Those 312 lost billable hours, at a $95 billing rate, are $29,640 of capacity you paid for and did not sell. Your entire annual WSIB premium on that employee is $639.60. The scheduling problem is worth roughly 46 times the payroll tax problem.

This is why "budget an extra 30% for taxes and benefits" is such poor guidance for a trades business. It points your attention at a line item you cannot control and away from the one you can. Two supply runs a day is a wage cut you are paying on your own behalf.

Hourly, day rate, or a percentage of the job

This comes up constantly and the percentage model is much more expensive than it looks.

An operator put the question to r/handyman: he had a capable guy he wanted to send out alone, and the guy wanted 85% to 95% of the job. The responses were blunt. "95%? Why should you? What's in it for you? It's your company dude, why hand it over to someone else." Another laid out what the split actually buys: "getting the jobs and the paperwork is half the work. Your liability, insurance, tools, name, marketing, equity, etc is also a factor. 60% is a more reasonable place to start."

Take that 60% and cost it properly. If an employee takes 60% of job revenue as wages, add 13% burden and labour consumes 67.8% of the job. Gross margin: 32%. Now the hourly version. $25 an hour burdens to $28.25 per paid hour, which at 75% utilization is $37.67 per billable hour against a $95 billing rate. Gross margin: 60%.

Same worker, same job, and the percentage model costs you roughly 28 points of gross margin. The split feels fair because it sounds like partnership. It prices like partnership too, which is the problem when only one of you carries the insurance, the truck, the marketing and the risk of the customer not paying.

The models operators actually reported using:

• Straight hourly, plus discretionary bonuses. "I also pay my helper $25 an hr. After completing large jobs, I send him additional money as a thanks when he's busted his ass."
• Hourly with structured review. A Phoenix commercial concrete owner starts zero-experience people at $25 an hour, provides PPE and safety training, and runs a quarterly review where the employee can earn more against defined criteria.
• Tiered by capability. One operator pays a low-skill helper $25 an hour, a skilled carpenter $65 an hour for complex work, and subs overflow at a 60/40 split, but only to someone with their own truck, tools and insurance.
• Day rate or apprentice bands. "$150/day to $500/day. Depends upon experience and whether they have certs/licenses." Another: "We pay our apprentices 21-27 dep on experience."

The pattern: a percentage split is something you offer to a subcontractor who carries their own overhead, not to an employee whose overhead you are already carrying. If you are weighing employee against subcontractor more broadly, that decision has its own arithmetic in our piece on when to hire your first employee.

The floor nobody publishes

Ask the trade subreddits what to pay and the benchmark that comes back is not a wage survey. It is retail.

"I always like to compare to your local McDonald's pay. Where I'm at people start out at 14 or 15 an hour at McDonald's. Starting out in construction should be a couple dollars more an hour than that." Another: "Walmart near me is starting at like $17. If I was told I'd be making less than $100 a day, I'd stay at home and mow lawns for $40 a pop."

This is the reservation wage, and it is more useful than any median because it is the actual alternative your candidate is choosing between. Nobody weighs your offer against the national average for construction helpers. They weigh it against the indoor job down the road that requires no tools and no early start. Your offer has to clear that, plus a premium for weather, physical wear and the risk of being sent home when it rains.

The corollary is uncomfortable: if you cannot beat retail, the problem is your pricing, not the labour market. As one commenter put it, "If you can't afford to pay a living wage, don't hire help. People on here are constantly baffled that they can't find good help but never post the wage." Another connected it to how those shops sell: "The ones that pay less probably do a lot of low-bid and/or low end work. It's the same companies that people are referring to when they say 'Bob said he could do it for 2/3 what you're quoting me.'"

Wage and price are the same decision viewed from two ends. Our breakdown of how much profit a contracting job should make works the margin side.

What paying above market actually buys

The most interesting evidence against lowballing came from an operator in Richmond who had run the experiment: "Everywhere I've worked and all my current competitors pay 6-10 less an hour than me. They can't find employees and work while I'm flooded with both."

Both. That is the part worth sitting with. Paying above the local rate did not just fix his recruiting, it correlated with winning more work, because a shop that can staff jobs can take jobs, and a shop with a full pipeline can hold its price. That loop only closes if the lead flow is there to begin with.

The other half of the ledger is what underpaying costs after the hire. One tradesperson described leaving over a move from $16 to $22 an hour and noted his old boss "couldn't fathom that the main reason I quit" was the money. Replacing him cost the shop far more than the $6 gap ever would have.

The trap in your second year

Here is the consequence of your first wage decision that nothing on page one of Google mentions.

The wage you set for your first hire becomes the anchor for everyone after. One tradesperson described watching it play out: "Last company I worked for raised their starting salary to around $20, but refused to give guys raises who have worked there for years... the experienced guys started leaving because they were still only making $22-25, but expected to act as foreman and teach the younger guys. Then the owners couldn't figure out why the experienced guys were leaving, so they started hiring anyone who claimed to have experience for $30."

That is wage compression, and it is the standard way a growing trades business destroys its own bench. Market entry rates rise every year. If your existing people are on a wage set two years ago and your new hires come in at today's rate, the gap between a competent second-year employee and an unproven new one closes to nothing. The competent one notices first.

The fix is cheap at the start and expensive later:

1. Write the bands before you write the offer. Helper, second-year, lead. A range for each, with what moves someone between them.
2. Set a review cadence and honour it. A review that happens on schedule is worth more than a larger raise that arrives after a resignation letter.
3. Re-anchor the bands annually against Job Bank and your local retail floor. Both move.
4. Never let a new hire enter above an existing performer. If the market forces it, raise the existing person first, the same week.

The checklist

Before you post the role:

1. Know your billing rate for that person's hour. Not your own rate. Theirs.
2. Estimate utilization honestly. Start at 75%, lower it if your jobs are scattered or your supply runs frequent.
3. Apply the burden multiplier. About 1.13 in Ontario at this wage level. Confirm your own WSIB class rate rather than using the average.
4. Pick your target gross margin on labour before you pick the wage, not after.
5. Run the formula. (Billing rate × utilization × (1 − margin)) ÷ (1 + burden).
6. Sanity check against Job Bank for your province and against local retail pay. If the formula lands below the retail floor, your price is too low to support a hire.
7. Write the bands and the review cadence for the next two people before you hire this one.
8. Confirm the pipeline. The calculation assumes the hours exist to sell.

The bottom line

"How much should I pay my first employee" has no market answer, and the 50% disagreement between wage aggregators on a single job title is the proof. It has a shop answer, and that answer is derived, not looked up.

The two numbers that decide it are your billing rate and your utilization. Payroll tax, the thing every ranking page organises its article around, is about 9% in Canada and mostly out of your hands. The scheduling gap between a 75% and a 60% week is worth roughly forty-six times as much, and it is entirely in your hands.

Pay at the top of what your arithmetic supports rather than the bottom of what the market tolerates. The operators who do report the same two outcomes: they can hire, and they can sell. The ones who do not spend their second year explaining to good people why the new guy makes more.