Labor Burden Calculator
A $28/hr employee doesn't cost $28/hr. Add payroll taxes, workers' comp, insurance, benefits and the hours you pay for but can't bill, and see what the hour actually costs.
One employee, one year
What the hour really costs
You pay $28.00/hr and it costs you $45.68/hr for every hour that can actually be billed — a burden of 38.0% on top of wages, spread across 1,760 billable hours. Estimate with the left-hand number and you lose the difference on every job.
Bill at $70.28/hr to make 35.0%on this employee's time.
The rate is a guess until the hours are real
This assumes 1,760billable hours a year. The actual number is whatever your crew's time cards say, and it's almost never the one in the spreadsheet. SiteAnchor tracks clocked hours against each job, so your burden and your billable rate come from what happened rather than what you assumed last January.
The two numbers most estimates get wrong
The first is the cost side. Wages are the visible part of employing somebody and rarely more than three-quarters of the real figure. Payroll taxes, workers' comp, liability, benefits and the truck are all costs of having that person on the job, and if they aren't in the labor line they come out of profit instead — quietly, on every job, all year.
The second is the denominator, and it's the one that gets missed even by contractors who do burden their labor. You pay for 2,080 hours; you bill for maybe 1,760 of them. The other 320 — holidays, PTO, loading the truck, driving between jobs, the safety meeting — are real hours you write cheques for, and the only place they can be recovered is inside the rate charged for the hours that do bill.
Workers' compensation deserves its own look. It's quoted per $100 of payroll, so an $8.50 rate is 8.5% of wages, and the classification code matters more than almost anything else on this page: the same wage carries wildly different burden for a roofer than for a finish carpenter. Use your actual policy rate, not an average.
Common questions
What is labor burden?
Everything an employee costs you beyond their wage: the employer half of FICA, federal and state unemployment, workers' compensation, general liability tied to payroll, health insurance and retirement contributions, and the truck, phone, tools and training that come with putting a person on a job site.
How do you calculate labor burden rate?
Add every one of those annual costs to the employee's annual wages, then divide by the hours you can actually bill — not the hours you pay for. Dividing by 2,080 when 320 of those hours go to PTO, shop time and travel understates the real cost by around 18%.
What is a typical labor burden percentage in construction?
Most contractors land between 25% and 45% on top of the base wage. The spread is driven mostly by the workers' compensation rate, which is quoted per $100 of payroll and varies enormously by trade and state — roofing and framing classifications can run several times what a finish carpenter's does.
Should labor burden include unbillable hours?
The hours themselves aren't a cost line, but they change the denominator, which matters just as much. Unbillable hours don't disappear — they get recovered inside the rate you charge for the hours that do bill. Leave them out and every estimate is light.
Is burdened labor cost the same as the rate I charge?
No. Burdened cost is what the hour costs you; your billing rate is that cost plus overhead recovery and profit. This calculator shows both — set your target gross margin and it works out the rate that gets you there.
Burdened cost is only half the price. Once you have it, decide what margin the labor line has to carry — markup vs. margin is where that gets decided — and build the estimate on both with the free construction estimate generator.
The assumption worth checking is the billable-hours one. See how crew time tracking and job costing in SiteAnchor replace it with what the time cards actually say, or check pricing.
More free tools
All free, all no-signup. See every free tool →
- Estimate GeneratorBuild a branded construction estimate with line items, markup and tax, and download it as a PDF. No account, no email.
- Change Order GeneratorTurn a scope change into a signature-ready change order PDF with the cost breakdown and revised contract total worked out for you.
- Payment ApplicationFill in a schedule of values and get an AIA-style G702/G703-format application for payment — continuation sheet, retainage and payment due all calculated.
- Markup vs. MarginConvert between markup and gross margin, and see what a job has to sell for to actually hit the margin you want.