The markup looks like pure profit, but a good part of it pays costs the agency must carry for each worker. These ranges are rules of thumb; only a written quote tells you your real price.
What the Markup Pays For
- Employer payroll taxes: Social Security and Medicare at 7.65% of wages, plus federal and state unemployment taxes
- Workers' compensation, which is much higher for a warehouse than an office
- Benefits the agency offers or must provide, such as paid sick leave where required
- Recruiting, screening and overhead
- The agency's profit
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A Worked Example
A worker paid $20 an hour at a 50% markup bills at $30. That $10 is not all margin: if payroll costs take about 15% of wages ($3), the agency has about $7 for recruiting, overhead and profit. The 15% here is an example, not a benchmark. Run your numbers.
Why Quotes Differ
- Workers' compensation class and state
- How hard the role is to fill, and the shift
- Volume and length of the assignment
- Screening needed (drug tests, background checks)
How to Compare Fairly
Ask every agency for the same role, pay rate, shift and duration. Compare the markup and the pay rate: a low bill rate often means low pay and more no-shows. Line them up in the agency quote comparison.
Other Fees to Check
- Overtime billing (is the markup applied on top of time-and-a-half?)
- Conversion fees if you hire the worker
- Minimum hours per shift or assignment
- Screening passed through at cost, or marked up