Labor Burden Calculator
Calculate the true cost of an employee: wages + FICA + unemployment taxes + workers comp + benefits + overhead.
Default 2,080 = 40 hrs × 52 weeks
Employer share: 7.65% (SS 6.2% + Medicare 1.45%)
Federal unemployment: typically 0.6% after credit
State unemployment — varies by state and history
Varies by industry and state — check your policy
Health, dental, vision, retirement — total monthly cost
Tools, uniforms, training, HR overhead per hour
What Is Labor Burden?
Labor burden is the total cost of employing a worker beyond their base wage or salary. It includes mandatory payroll taxes, insurance, and any benefits you provide. Knowing your true labor cost is essential for accurate job pricing, workforce budgeting, and understanding profitability — because billing only at base wage leaves money on the table.
What's Included in Labor Burden
- FICASocial Security (6.2%) + Medicare (1.45%) = 7.65% of gross wages, paid by the employer
- FUTAFederal Unemployment Tax — 0.6% on the first $7,000 of wages per employee per year (after state credit)
- SUTAState Unemployment Tax — varies by state and employer experience rating (typically 1–5%)
- Workers' CompVaries by industry and state — often 1–10% of payroll; higher in hazardous trades
- BenefitsEmployer contributions to health, dental, vision, and retirement plans
- OverheadAllocated costs: rent, equipment, tools, admin time, and other indirect expenses
Formula
Total Labor Cost = Base Wage + FICA + FUTA + SUTA + Workers Comp + Benefits + Overhead
Burden Rate % = (Total Labor Cost − Base Wage) ÷ Base Wage × 100
True Hourly Cost = Total Annual Cost ÷ Annual Hours Worked
Worked Example
Employee earning $25/hr, working 2,080 hours per year:
| Base wages | $52,000 |
| FICA (7.65%) | $3,978 |
| FUTA (0.6% on $7k) | $42 |
| SUTA (3%) | $1,560 |
| Workers comp (2%) | $1,040 |
| Health insurance | $6,000 |
| Overhead allocated | $5,000 |
| Total annual cost | $69,620 |
Burden rate: 34% | True hourly cost: $33.47/hr (vs $25/hr base)
Why It Matters
If you price a job or set a bill rate using only base wage, you lose money on every hour worked. A 25–40% burden rate is typical for US employers. Contractors often need to set a labor rate that covers the burdened cost plus their markup. Use the Contractor Markup Calculator to build from a burdened cost to a final bid price.
Assumptions
FUTA rate assumes full state unemployment tax credit. SUTA varies significantly by state and employer history — enter your actual rate. Workers' comp rates vary widely by industry classification and state. Overhead allocation method varies by business. Results are estimates for planning purposes, not payroll calculations.
Frequently Asked Questions
What is a typical labor burden rate?
25–40% above base wages for most US employers. Higher in industries with expensive workers' comp (construction, manufacturing). Lower for office roles with minimal benefits.
Should overhead be included in labor burden?
Some employers include allocated overhead in their labor burden rate; others track it separately. The important thing is consistency — make sure your pricing method accounts for overhead somewhere.
How do I use this for job pricing?
Use the burdened hourly rate (true cost) when estimating labor in job bids. Then apply your markup to arrive at the customer price. See the Contractor Markup Calculator.
What's the difference between labor burden and labor rate?
Labor burden is what it costs the employer to have an employee work one hour. Labor rate is what a contractor charges a client for one hour of labor — it includes burden plus overhead and profit.