Introducing the SIA | Magnit Rate Intelligence Initiative

The SIA | Magnit Rate Intelligence Initiative is a joint custom research effort between Magnit and Staffing Industry Analysts.

The SIA | Magnit Rate Intelligence Initiative leverages Magnit’s workforce data to provide a broad sample of US pay rate data across industries, positions, and major metropolitan areas.

Through an analysis of the underlying data, SIA provides a bi-monthly deep-dive into topical subjects surrounding US pay rates. This month’s issue, titled “The Value of Real-Time Data in a Rapidly Evolving World,” presents the surprising extent to which recent wage increases differ by geography, industry, and skill level.

To use the tool, select an option for:

• Industry
• Job Title
• Location (choice of USA total or 10 major metro areas)
• Press “Preview”

The tool provides median, min, and max pay for a contingent worker with 3-5 years’ experience, as indicated by Magnit’s Level III designation. Suggested markup, bill rate, and rates for lesser or greater experience levels, are “greyed out” for this tool but are available, along other pay intelligence, from the full Magnit Pay Intel tool.

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SIA | Magnit Rate Intelligence Initiative Insights: August 5, 2023

Benchmarking Compensation – Beyond Traditional Employment

Getting the right talent for the right price is a key part of workforce planning, and there is no shortage of tools that allow companies to benchmark salaries for traditional full-time positions. Whether hiring a CFO in Las Vegas or an administrative assistant in New York City, companies can generally get the market information they need to set a reasonable salary range for a new job opening. 

But what about contingent workers assigned through temporary staffing agencies? Often, rate analysis for such workers is a black box. Some of the larger, more sophisticated companies may have their MSP (managed services provider) supply them with market information for temporary staffing assignments. For instance, they will see the market pay rate (what the agency pays the worker) and market bill rate (what the client company pays the agency) for a given job title for some locations. Even here, however, market information on contract assignments often comes from a separate tool from market information for traditional employment, and different tools can have different methodologies, making comparisons less reliable.

For a company to have a holistic view and integrate its contingent workforce into its overall workforce planning, it is ideal to use one tool that can provide market information for a given role on both a contract and FTE (full-time equivalent) basis. 

Comparing contract and FTE labor for a given role

For example, using Magnit’s Rate Intelligence tool, we find that the median annual salary for a financial analyst in Atlanta is $66,754, as shown in Figure 1. On a contract basis, the median hourly pay rate is $46.36, and the median hourly bill rate is $64.94, as illustrated in Figure 2. Assuming a 40-hour work week, the annual equivalent of the hourly bill rate would be approximately $135,000. The company could have a model for estimating costs it would generally pay on top of an annual FTE salary (but not in addition to a bill rate) – such as the employer share of FICA, healthcare benefits, recruiting costs, etc. – to add to the $66,754 annual salary, along with the conveniences of flexible labor and the ability to “try before you buy.” Such a comparison would give the company a clearer picture of the agency premium the market is setting for a given role in a given location.

Figure 1 – FTE (traditional employment): Compensation for financial analyst

Figure 2 – Contract (worker assigned by temporary staffing firm): Compensation for financial analyst

Of course, the difference in costs is only one factor to consider in whether or not to use contingent labor or hire a full-time employee. If a project is expected to last only one month and requires a unique, specific skill set not required elsewhere in the company, then the company may be willing to pay a much higher premium for contingent labor to staff the project. If, however, a project could last several years and the skill set required is not that unique, the company may be more likely to consider hiring full-time employees to staff the project, and then repurpose them when the project ends.

Variance by Location

Not only can compensation for a given role vary by location, but the difference between rates for a contract worker and compensation for a traditional employee can vary by location as well. For example, Magnit’s Rate Intelligence tool indicates that the median annual pay for a software developer in Austin is $81,865 (Figure 3). In New York City, the median pay is $95,233, a difference of 16%. The median bill rate for a contract software developer in New York City is $100.41 (Figure 4), compared to $81.92 in Austin – a difference of 23%, which could be driven by greater statutory costs in New York City or a greater recruiting expense (higher cost of living not only means a software developer is more expensive, it also means the recruiter for the software developer is likely more expensive).

Figure 3 – FTE salaries for software developers

Figure 4 – Contract labor rates for software developers

Variance by Experience

Contingent assignments can be especially useful for entry-level roles. Temporary assignments can be a way for entry-level workers to get experience, and companies can “try before they buy” workers without an established résumé. Therefore, it is ideal that a rate intelligence tool capture contract labor rates by experience. Continuing with our example of software developers in New York City, Figure 5 illustrates pay rates, markup and bill rates from Magnit’s Rate Intelligence tool. The average bill rate for those with 1-3 years of experience is less than half of that for those with 7 or more years of experience.

Figure 5 – Contract labor rates for software developers by experience

Beyond Temporary Staffing

Not only do many companies turn to temporary staffing agencies for a significant piece of their workforce needs, the last decade has also seen the emergence of additional models of contingent work, such as talent platforms like Upwork and Toptal, where contingent workers are often selected and paid via the platform. Companies can use market bill rates for contract labor to get an idea of what they should be paying for similar roles via talent platforms.

As companies expand their workforce planning to account for new work arrangements, and as they take a more holistic view of their workforce, they will best be served by market intelligence tools with a holistic workforce view as well.

About the SIA | Magnit Rate Intelligence Initiative

The SIA | Magnit Rate Intelligence Initiative features an interactive tool providing real-time access to US pay rates nationally as well as within 10 major metro areas.

The tool draws from Magnit’s data ocean of over 205 billion transactional data points, incorporating proprietary, commercially available, and public domain pay rates. The Pay Tool can be used by enterprise buyers and staffing firms alike to select pay rates with confidence and succeed in attracting talent in today’s competitive market without overpaying.

The tool SIA | Magnit Rate Intelligence Initiative is a joint custom research effort between Magnit and industry advisor Staffing Industry Analysts.

Give Feedback Now. Let us know your experience with this tool.

For further information and technical notes, please refer to the methodology.