Per employee, per year, to administer payroll & HR in-house at a mid-size firm
Every employer compares a PEO fee against zero. That comparison is wrong. Running payroll, benefits, time, and HR administration in-house isn't free — it's one of the most expensive things a small company does, and most of the cost is invisible.
PwC has spent two decades measuring exactly how expensive. The finding is the reason this site exists.
Source: PwC, The Hidden Reality of Payroll & HR Administration Costs (2011), 279 organizations. Figures below are the study's, with 2026 inflation-adjusted equivalents noted.
The visible costs are easy: payroll software, the HR staffer's salary, the benefits broker. PwC found those are barely half the story. The rest is buried in time and friction nobody tracks.
The indirect labor line is the quiet killer. PwC pegged it at nearly $10 per paycheck — the cumulative minutes managers and staff spend on payroll and benefits tasks that aren't anyone's actual job. Multiply that across every pay period, every employee, every year.
This is the framing most PEO comparisons get backwards. The PEO fee isn't a new expense bolted onto your existing costs — it absorbs the administrative burden you're already carrying, the visible half and the hidden half both. The honest comparison isn't "fee vs. nothing." It's "fee vs. the fully-loaded cost of doing it yourself."
That's why the PEOnomics calculator now puts an in-house HR administration line in the standalone column. Built from PwC's per-employee figures, scaled to your headcount, it's the cost that was always there and never shown. Add it, and for most small and mid-size employers the comparison stops favoring the status quo.
PwC measured outsourcing to ADP — payroll and HR administration. A PEO goes further. Through co-employment it also consolidates the statutory and insurance layers: SUI rate management, workers' comp under a master policy, and benefits sourced through the PEO's pooled buying power. So the PwC finding is the floor of the PEO argument, not the ceiling — it quantifies the administrative savings without counting the SUI, WC, and benefits effects a PEO adds on top.
On the source. The PwC study (2011, 279 U.S. organizations) was sponsored by ADP, and "outsourcing" in the study specifically means outsourcing to ADP; PwC does not generalize its findings to other providers or to PEOs. We cite it for its structural findings — that in-house administration is expensive and that more than half the cost is hidden — which are robust and independently sensible. Dollar figures are 15 years old; where we use them in the calculator we apply a labeled inflation adjustment (~+43% CPI, 2011→2026) and flag the result as an estimate. The original is linked in our methodology.