Labor Burden Rate Calculator
Know your real cost per hour before you price any job. Underbidding labor is the #1 reason contractors lose money.
| Cost component | Annual | Per hour |
|---|
What is the Crew Labor Burden Rate Calculator?
The Crew Labor Burden Rate Calculator computes what an employee truly costs per productive hour — wages plus payroll taxes, workers’ comp, insurance, benefits, PTO, and non-billable time — the number every bid should use instead of the base wage.
How is it calculated?
Enter the base hourly wage, payroll tax rates, workers’ comp premium, benefits and PTO costs, and non-productive hours (travel, shop time, training). The calculator spreads total annual cost across truly productive hours to reveal the loaded rate and burden percentage.
Worked example: what does a $28/hr crew member really cost?
- Start with annual base wage
Wage times paid hours: $28/hr × 2,080 hrs = $58,240 in base pay for the year.
- Add employer payroll taxes
FICA 7.65% + FUTA 0.6% + SUTA 2.7% = 10.95% on wages: $58,240 × 10.95% = $6,377.
- Add insurance and benefits
Workers’ comp $2,000 + health insurance $3,600 + other benefits $500 = $6,100 per year.
- Total the real annual cost
$58,240 base + $6,377 taxes + $6,100 insurance/benefits = $70,717 all-in for the year.
- Convert back to an hourly rate
$70,717 ÷ 2,080 hrs = $34.00/hr — the burdened labor rate.
- Verdict: bid on $34, not $28
That $28 wage actually costs $34.00/hr — a 21% burden. Bidding at the wage loses ~$6/hr on every crew member.
Where does the extra $6.00/hr come from?
| Cost component | Annual | Per hour | % of base wage |
|---|---|---|---|
| Base wage ($28 × 2,080 hrs) | $58,240 | $28.00 | 100% |
| FICA (7.65%) | $4,455 | $2.14 | 7.65% |
| FUTA (0.6%) | $349 | $0.17 | 0.6% |
| SUTA (2.7%) | $1,572 | $0.76 | 2.7% |
| Workers’ comp | $2,000 | $0.96 | 3.4% |
| Health insurance | $3,600 | $1.73 | 6.2% |
| Other benefits | $500 | $0.24 | 0.9% |
| Total burdened cost | $70,717 | $34.00 | 121% |
Frequently Asked Questions
What is labor burden and how is it calculated?
Labor burden is everything an employee costs beyond gross wages: employer payroll taxes (~7.65% FICA plus unemployment), workers’ comp, liability insurance, benefits, PTO, training, and small tools. Total those annual costs, add wages, and divide by productive hours — burden typically adds 25–40% to the wage.
Why divide by productive hours instead of paid hours?
Because you can only recover costs through billable work. An employee paid 2,080 hours who spends 300 on travel, shop time, and training has 1,780 productive hours carrying the full cost. Skipping this adjustment understates your real labor cost by 10–20% on every bid.
What does a $25/hour employee actually cost?
Typically $33–38 per productive hour. Payroll taxes add about $2.50, workers’ comp $1–3 in the trades, benefits and PTO $3–5, and the productive-hours adjustment adds another 10–15%. Bidding that employee at $25 guarantees a loss before materials are counted.
Is workers’ comp part of labor burden?
Yes — and in construction it’s often the largest component after taxes. Rates run from under $2 per $100 of payroll for finish work to over $15 for roofing. Because rates vary by trade classification, calculate burden separately for each crew role rather than using one blended number.
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