How Much Should I Pay My First Employee?

Elizabeth Larkin, Michael Kelly, and Eric Dollinger

So you want to hire a new employee for your small business but you’re not sure how much to pay them? You’re in luck, because in episode 64, hosts Elizabeth Larkin and Gene Marks answer the question:

“I’m thinking of hiring my first employee, how do I set their salary?”

Listen now:


Download Our Free eBooks

Submit Your Question


Gene: Wait, Elizabeth. You’re going to start this podcast right now? And I got a question I gotta ask you. Can I just jump in here and ask you? You’re a dog owner right? We all know that Elizabeth owns a dog by now, right? Elizabeth has a very close relationship with her dog. Say just hypothetically you go away on vacation… And lets say a friend is looking after your dog and you’re away for a week. Completely hypothetically, you know friend. So question number one is, you check in on the dog?

Elizabeth: Yes. So I have left my dog with a friend and she sends me pictures of what the dog’s doing.

Gene: Sending you pictures of what the dog’s doing!

Elizabeth: But the thing is… Here’s the thing though, I don’t check in that much because I don’t want to be like one of those dog parents that’s like a pain… Like first of all it’s not a kid, and I don’t want to be a pain in the butt.

Gene: What do you mean by not that much, once a day maybe? “Hey, how’s so-and-so?”

Elizabeth: No, like every couple of days.

Gene: Okay.

Elizabeth: I don’t want to be like, “Stop your life and let me know what my dog is doing right now.”

Gene: But even your friend kind of knew to send you pictures of the dog.

Elizabeth: Yeah, what we did was we downloaded WhatsApp because I was like when I am traveling internationally and then when she feels like it she sends me a couple of pictures of what the dogs doing.

Gene: Fantastic.

Elizabeth: And I’m like, “I miss my dog so much!”

Gene: When you got home from your vacation.

Elizabeth: Yeah.

Gene: How long did it take from the time you got off the plane to the time you got your dog back?

Elizabeth: So I live in Hartford, Connecticut. My friend that usually watches her- Hello, Michelle if you’re listening, lives in Boston.

Gene: Oh.

Elizabeth: So I will take the day after I get back off if it’s a work day, so lets say I get back at like midnight, I’ll go home, I’ll go to bed and then I’ll get up and I’ll get on the road and go get my dog.

Gene: First thing in the morning you’re running and getting the dog the next day. So my mom goes away on vacation to Cuba… Which by the way she didn’t like very much.

Elizabeth: What?

Gene: I could’ve told her in advance, she’s like a 74 year old woman, she should be going to you know a resort somewhere.

Elizabeth: I just went… So my friend just went to Cuba and she loved it! She said it was like the most beautiful country.

Gene: Because your friend has culture and you know appreciates other… my mom appreciates a good drink and going to a casino somewhere. So she went to Cuba, she left her dog with us. Tito, named after her favorite vodka because that says enough. The entire week we heard nothing from my mom, nothing. Not a text, not a call, nothing. They have phones in Cuba believe me, she was there.

Elizabeth: That’s just strange, and she’s really attached to this dog, right?

Gene: Yeah, she lives with this dog. I mean this dog is kind of a crazy dog, a very cute dog, but its like a nutty dog. And so my mom gets home. She arrives home and she figures she’ll pick up the dog the next day. Like she got home at seven o’clock on like a Friday night.

Elizabeth: And she lives near you?

Gene: Two minutes away. And she’s at home, and I called my mom. I was like “Wait a minute, I think my mom’s getting home,” I called her up at like eight o’clock and she had already been home like an hour. And I’m like “Mom, we got the dog here. Do you want…” And she’s like “Oh no, I figure I’ll pick him up tomorrow morning.” I’m like “We’re here, you know, I got the dog here and you’re at home drinking martinis without the dog.” Who does that? Anyways so I really, I felt bad afterwards.

Elizabeth: So your daughter could have just walked her around the garage door.

Gene: Yes, my daughter could’ve taken her over in two minutes and whatever and by then, didn’t occur to my mom to take the dog back. We had the dog for the extra night.

Elizabeth: Even so, anything having to do… I think we’ve talked about this before. Anything having to do with animals, that’s a good business to start.

Gene: It is.

Elizabeth: Because people are crazy about their animals now.

Gene: I agree. I agree.

Elizabeth: And there was one time where I just went to Paris earlier this year and I was so intent on seeing my dog that- My flight was getting in at like five and the pet place closes at six. She was staying, she was boarded this time. And I had my mom go there at four to pick her up.

Gene: Right.

Elizabeth: Just so…

Gene: You can have the dog when you get home!

Elizabeth: I didn’t want to pay for another night, that’s another part of it.

Gene: You want to see the dog. You really… You missed your dog. My mom apparently not so much.

Elizabeth: Well maybe she didn’t want to have to like, she lives in an apartment?

Gene: Yeah.

Elizabeth: Yeah so she’s like, “I don’t want to have to go downstairs and walk the dog before I go to bed and then get up tomorrow and walk the dog.”

Gene: Oh my god, alright, let’s move on with this podcast. You’re making me angry.

Elizabeth: Okay, we are going to me right back. We are going to talk about paying your first employee.

Our Sponsor

This podcast is brought to your by The Hartford. When the unexpected strikes, The Hartford strikes back for over 1 million small business customers with property, liability and worker’s compensation insurance, check out The Hartford’s small business insurance at

QUESTION: How Much Should I Pay My First Employee?

Elizabeth: Okay, we are back with our question, it is from Harriet H. in Stowe, Vermont. I love Vermont.

Gene: Yeah, Vermont is very nice. Stowe is very, very nice as well. Yeah, Stowe is right next to Ben and Jerry’s by the way. Have you ever been to Ben and Jerry’s? You go for the whole tour, it’s fantastic.

Elizabeth: I haven’t been there.

Gene: Oh it’s great! It’s a really fun tour they do.

Elizabeth: I’ve spent a lot of time in Vermont.

Gene: You know Ben and Jerry’s is owned by Unilever, just to let you know.

Elizabeth: I know.

Gene: Like it’s not what you think, you know, it’s not two peace… from the sixties and you know world whatever, it’s like a multi-nation conglomerate but okay.

Elizabeth: But when did they sell it?

Gene: I don’t know, like ten years ago.

Elizabeth: But it’s still delicious.

Gene: It is great. And the tour of Ben and Jerry’s in Vermont is actually like, it’s a really, really fun time. Stowe is great.

Elizabeth: Yeah, beautiful. So Harriet writes:

“I’m thinking of hiring my first employee, how do I set their salary?”

And she doesn’t tell us what kind of business she’s in. So I’m going to take a stab at this.

Gene: Please, please. I’m curious to hear what you have to say, because I have no idea how to answer this, but go ahead.

Elizabeth: Based on some, something that you’ve said before.

Gene: Okay.

Elizabeth: Which is how much money can you make from this employee?

Gene: Yeah. True, that’s true. That’s a good place to start from, But also there’s just market rates to consider. I mean, I don’t know what kind of employee she’s looking to hire. Is she looking to hire… Does it say what she does? Do we not know what.

Elizabeth: She doesn’t say.

Gene: So, if you’re looking to hire an administrator, if you’re looking to hire a receptionist-type person, a back-office person, if you’re looking on hiring an accounting person, if you’re going to hire a salesperson. There’s just market rates that you would be expected… you know right, so you go to CareerBuilder or you go to Glassdoor, or any other employment site and look for salaries of people of a certain job title. So number one, come up with a job title, okay. So, this is I am looking for and administrative assistant. I am looking for a bookkeeper, like a job title. And then go online, ask the internet, and find out what is the average salary for a bookkeeper that will then take you to sites that do salary comparisons.

Elizabeth: How much do you pay your bookkeeper again? It’s hourly right?

Gene: It’s hourly, she contracted, so she’s just hourly. And I think it’s like 20 bucks an hour or something like that. So you find out what it is and then let them know, you’ll find out an average rate. That’s pretty much where you have to start. I like the concept of how much money you can make off of them, that’s true. That depends if the person providing services to customers and it’s a billable situation. But also I think it’s what the going rate is. Why would somebody want to work for her if they can make money somewhere else? You know what I mean?

Elizabeth: Yeah, and I think in a state like Vermont, they probably have a minimum wage of about 15 dollars an hour.

Gene: At least.

Elizabeth: So you’re going to have to start there. And then, what if it’s not a traditional title though? What if she’s not looking for a bookkeeper, an administrative assistant? What if she’s looking for like someone who’s gonna make quilts with her or something?

Gene: Elizabeth, its 2017 right? Trust me, nobody’s coming up with a new job now right? We’ve had small businesses in industries since the time of human existence.

Elizabeth: I’ve got to try to stump you Gene, come on.

Gene: Yeah, but we’re not going to come up with anything new so… Even if it’s like a quilt designer or whatever okay, so that’s like an artisan. That’s like a production person. You can find an equivalent job somewhere.

Elizabeth: So you would say Glassdoor, CareerBuilder, what about her local business association or something?

Gene: Yeah you can ask, those people are no offense on the local business association, I’m not quite sure how… If you go to a site like Glassdoor and you know we should put a few sites up in the show notes as well.

Elizabeth: We will. We’re also going to put a picture of your mom’s dog.

Gene: Okay, that’s fine, lets do that and the bottle of Tito’s Vodka next to it. Depending on the site you go to, they are quite good nowadays that provide regional, and also depending on the company size. So like you know a bookkeeper believe it or not, that works at a company with 100 employees makes more money than a bookkeeper working at a company with three employees.

You know, so those sites will give you some sort of barometers to be… But I don’t think there’s any super unique kind of job that you’re going to come up with that hasn’t already been done before.

Elizabeth: Okay, we’re going to be right back with our Word of Brilliance from Gene.


Elizabeth: We’re back with Gene’s Word of Brilliance.

Gene: So the Word of Brilliance for today, Elizabeth, is loyalty. It has to do with a piece I wrote for The Hartford called “The Worst Travel Advice I’ve Ever Received.” When people tell you- Well first of all, I am a frequent traveler right, and I travel for business, so I travel a few times a month.

Elizabeth: Yeah, you’re like an elite qualifying whatever.

Gene: Yeah, all that stuff so I do… That’s the point of what I wrote about because I do travel frequently, as do a lot of business people around. In most small and large companies, and I have to say, people have given me advice about like how to save money on airfares you know or on rent-a-cars or hotels. “Oh you can only buy the best airfares on Tuesdays.”

Elizabeth: Yeah, that’s not true actually.

Gene: That’s right. Nobody knows but whenever I hear that advice, “Oh you know Tuesdays is the best place”, or you know, “Last minute hotel rooms is the time to get the best rate.” Believe me these companies they’re huge. They have algorithms, they have developers, they figure this all out. They’re not… You know they’re not, there’s no secret to getting good, not anymore. By the way they’re watching each other, Americans offering this, trust me Delta’s going to offer similar, within seconds you know. So, trying to cheap out on travel, it’s tougher and tougher. And if you’re a frequent business traveler it’s time-consuming. Now a lot of the traveling that I do is reimbursed by the way, by other people. People hire me to like speak or whatever. However, it’s still important for me to keep travel costs as low as possible, because people would not hire me if travel costs are like, “Well, it’s too expensive to bring this guy out with the travel and all of that.” So it is to my best interest.

Okay so, here’s what I’ve learned, the worst travel advice I’ve ever received is to find the lowest cost, no. The worst… That is terrible travel advice. The best travel advice that I can give to anybody is to be loyal. I am loyal to American Airlines, I’m loyal to Marriott, I’m loyal to Avis. I’m not saying they’re the three best brands or not, there’s many other great brands out there.

Elizabeth: But you’ve kind of thrown in with them.

Gene: Right, I’m drinking their Kool-Aid, I’ve picked them as the poison and that’s who I’m doing with. And after a while you bring… You build up the relationship so I will fly on American, even if there might be a slightly cheaper flight on Southwest or whatever, I’ll go with American. Because here’s what it does, over time you grow in your relationship with those companies. And the time savings, because time is money that they have afforded me to be more productive, I can’t even value it. I mean a perfect example is like with American because I’m in a certain status, if a flight gets canceled, which happens right? Within minutes I’m getting a text message they’ve rebooked me on another flight. I’m not like sitting there with everyone else waiting in some customer service line because I bought the cheapo ticket of the day. I get upgraded to like first class once in a while, which means I get on quicker I get off quicker. It’s more comfortable I can snooze a little bit, I have room to work.

With the Marriott hotels there’s the mobile check-in before… We were talking before, the least amount of interaction with human beings, the better. So like you know I grab the card and say this is me, show my drivers license, no small talk. Avis, when I arrive there I get the text you’re preferred, your car is waiting for you its whatever. It’s time, time, time, time, time. Which means money, money, money. And I think those savings long-term save you way more than you’d save 50 bucks on a plane ticket.

Elizabeth: I also happen to be an American Airlines member…

Gene: And it’s not a commercial for American Airlines.

Elizabeth: This is not sponsored by Tito’s Vodka or American Airlines. Or Gene’s mom’s dog. None of that. They will always price match. All of these airlines. We just got from Hartford to Dublin, they started a new direct route on Aer Lingus and the day they opened all of the other airlines dropped their prices to match theirs.

Gene: Of course.

Elizabeth: So when I go to travel now, instead of trying to spend tons of time on what’s… I’m like well I already have points on American. I have my status on American, I’m just going to use that.

Gene: And I didn’t even bring that up by the way, that’s the most obvious thing that I forgot to mention. If you’re loyal of course you get the points. And then you get free nights, or free cars, or free airline trips. And that of course saves tons of money as well.

Elizabeth: This just happened with my mom. We were flying, we were going to a family wedding in Mexico. We flew on American, and I said “I wonder how many points you have?” Because my brother lives in Dallas and there is a direct flight from Dallas to Hartford on American. And she takes it three or four times a year. She’s like “Oh I didn’t put my frequent flyer number in, I don’t really know.” I’m like “Please call American.” So she called American, it turned out she had over 100,000 points.

Gene: Oh my goodness.

Elizabeth: So her next like three trips to Dallas are going to be free.

Gene: That’s amazing, that’s amazing.

Elizabeth: It’s just so much easier.

Gene: It is.

Elizabeth: So she just always prefers to fly with American as well. Again, this is not sponsored by American. I have a coworker…

Gene: They’re all like this. All the airlines are competitive with their programs.

Elizabeth: The other thing you can do is if you decide “You know what, I’ve been with United for a while I’m kind of sick of United.” You can call an airline and say “I have this status, I have these many frequent flyer points” And they’ll match your status.

Gene: That’s interesting.

Elizabeth: So you can move over if you wanted to move to Delta you can do that.

Gene: That’s good to know. That’s good to know. One final thing, I also forgot to mention. The airlines are all like this. I switch flights all the time. I get to an airport and I’m so early at the airport that there’s another flight to Philly or whatever, and they’ll just swap me. There’s no charge, there’s no whatever. Anyway, the worst travel advice I ever received was save money get the cheaper flights, always get the cheapest, that’s terrible advice. The best advice you can get when you’re traveling is be loyal.

Elizabeth: Be loyal. Okay, great. We’ll talk to you in a couple days everyone. Thanks for joining us.

Leave a Reply

Disclaimer: Comments are subject to moderation and removal without cause or justification and may take up to 24 hours to be seen in comments. Your email address will not be published. Required fields are marked * Please do not include personal policy information; if you have questions or concerns regarding your policy with The Hartford, please log into your account or you can speak directly to a Customer Service Representative.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.