Labor Burden Calculator
A $25/hour employee doesn't cost $25 an hour. Enter the wage plus taxes, insurance, benefits and non-billable time to see the fully burdened hourly cost you should be using in every estimate.
Burdened hourly = Total annual cost ÷ Billable hours$65,160.00 ÷ 1,764 = $36.94HVAC: where the number comes from
An HVAC company pays an installer $25/hour and needs the true hourly cost before it prices any service call.
| Input | Value |
|---|---|
| Base wage | $25/hr × 2,080 paid hrs |
| Payroll taxes | 12% |
| Workers' comp | 6% |
| Benefits | 5% |
| Other annual | $1,200 (training, uniforms, EPA cert) |
| PTO | 120 hrs |
| Non-billable | 10% |
Result: $36.94/hr true cost — a 25.3% burden on the wage
Every hour of installer time the company sells must be priced at $36.94+, not $25. At 500 service hours a month, quoting at the bare wage under recovers roughly $6,000/month.
Load this example into the calculatorThe calculation
| Base pay | $25 × 2,080 = $52,000 |
| Taxes | $52,000 × 12% = $6,240 |
| Workers' comp | $52,000 × 6% = $3,120 |
| Benefits | $52,000 × 5% = $2,600 |
| Total annual | $52,000 + $6,240 + $3,120 + $2,600 + $1,200 = $65,160 |
| Billable hours | (2,080 − 120) × 90% = 1,764 |
| Burdened rate | $65,160 ÷ 1,764 = $36.94/hr |
How this calculator works
Every result comes from the formulas below — the math shown is the math used. Change any input and results update instantly in your browser; nothing is sent to a server.
- Annual base pay:
Base = Hourly Wage × Paid Hours per Year - Fully burdened annual cost:
Burdened = Base + Taxes + Insurance + Benefits + Other Costs - Burdened hourly cost:
Hourly Cost = Burdened Annual Cost ÷ Billable HoursBillable hours are paid hours minus PTO, training and non-billable time — using paid hours here understates the true rate. - Burden rate:
Burden Rate % = (Burdened − Base) ÷ Base × 100Labor burden in construction and trades commonly falls between 25% and 40% of base wages.
What the result means
The burdened hourly cost is what one hour of this employee's billable work truly costs the business: wage, taxes, insurance, benefits and non-billable time all spread across the hours that actually produce revenue.
When to use it
Use it before any estimate that includes employee labor, to find the hourly cost you should actually be quoting.
Common mistakes
- Dividing total cost by paid hours instead of billable hours — PTO and admin time quietly inflate the real rate.
- Guessing workers' comp instead of checking your actual class code rate.
Frequently asked questions
What is labor burden?
Labor burden is everything an employee costs you beyond their wage: payroll taxes, workers' compensation, unemployment insurance, health benefits, retirement contributions, and paid time they spend not on billable work. It is typically 25–40% on top of base wages for trades businesses.
Why divide by billable hours instead of paid hours?
If you pay for 2,080 hours but only 1,800 are billable, the employee produces revenue for 1,800 hours while costing you 2,080 hours' worth of wages and burden. Dividing total cost by billable hours spreads that gap into the rate you must recover on the work you sell.
What is a typical labor burden percentage?
For construction and field service businesses, total burden commonly lands between 25% and 40% of base wages, driven mostly by workers' comp class codes, benefit generosity and paid time off. The only number that matters for pricing is your own — which is what this calculator is for.
Related tools and guides
Labor Burden Calculator is part of RateCraft, a set of free pricing and estimating tools for contractors and service businesses. Results are calculated entirely in your browser and are estimates for planning purposes — see our disclaimer and methodology.