Tel Aviv: One of the Most Expensive Cities for Employers and Less Profitable for Employees

When an Israeli company considers hiring employees abroad, the first figure that usually hits the table is the salary. But in practice, the amount appearing in the contract is only the starting point: mandatory payments, contributions, and taxes can significantly increase the cost to the employer — and simultaneously reduce the amount that remains in the employee's hands.

A new comparative study by Payoneer Workforce Management, the global workforce management division of Payoneer, examined the cost of hiring a mid-level marketing manager in six cities in the USA, six cities in Europe, and in Tel Aviv. The findings place Tel Aviv in an unusual position: one of the most expensive cities for employers, but not necessarily the most profitable for employees.

The issue becomes particularly significant for Israeli companies, and especially high-tech companies, that manage an increasing part of their operations overseas. According to the 2025 employment report of the Israel Innovation Authority, Israeli high-tech companies employ about 440,000 workers abroad, compared to about 400,000 workers in the industry in Israel.

In such a reality, the decision of where to open a new position does not depend only on the availability of skilled workers, proximity to customers, or the desire to enter a new market. It also requires understanding how much the employee really costs the company, and how much of their salary ultimately remains in the bank account.

75,000 dollars in salary, 103,000 in cost

The study was conducted in two scenarios. In the first scenario, the cost of employment was calculated based on a uniform annual salary of 75,000 dollars in each of the cities. The goal was to neutralize local salary gaps and examine how tax systems and mandatory payments affect the total cost.

In the USA, the cost to the employer ranged between 83,054 and 86,615 dollars per year. In the European cities examined, it was higher and ranged between 86,063 and 109,753 dollars.

In Tel Aviv, the cost of an employee receiving a gross salary of 75,000 dollars reached 103,161 dollars per year. This is an addition of 28,161 dollars — about 37.5% beyond the gross salary itself. However, a comparison based on a uniform salary does not necessarily reflect the prices at which employees are actually hired. Therefore, an additional scenario was conducted, based on the median salary accepted in each city. The average median salary in the six American cities examined stood at 91,833 dollars per year — about 38% more than the average in the six European cities, which amounted to 66,375 dollars. These salary gaps make hiring in the USA more expensive than in most European cities, but Tel Aviv managed to deviate from this trend as well.

The annual gross salary of a marketing manager in Tel Aviv was estimated in the study at 84,000 dollars. After adding the mandatory payments imposed on the employer, the total cost of employment climbed to 115,539 dollars per year.

This figure makes Tel Aviv the most expensive city among all the European cities examined, including Amsterdam, Paris, and London. In fact, only San Francisco was more expensive than it, with an annual employment cost of 118,720 dollars.

And the net for the employee? Among the lowest on the list

However, the high cost to the employer does not fully roll over into the employee's pocket. A marketing manager in Tel Aviv is expected to receive an estimated annual net salary of 56,339 dollars.

For comparison, a parallel employee in Nashville receives, according to the study, about 64,407 dollars net per year — 8,068 dollars more than the employee in Tel Aviv. This is even though the gross salary in Tel Aviv is about 5,000 dollars higher than that in Nashville, where the lowest salary among the American cities included in the comparison was recorded.

The study includes mandatory payments only. It does not take into account employee benefits, bonuses, stocks, recruitment costs, or commissions involved in hiring through an external registered employer. Therefore, in many cases, the actual expenditure may be even higher.

For Israeli companies expanding into new markets, the findings emphasize that it is impossible to base a hiring decision on the gross salary alone, nor to automatically assume that the USA is always more expensive or that Europe is necessarily cheaper.