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Labor burden calculator

Labor burden is what an hour of labor costs you beyond the wage: payroll taxes, workers' comp, payroll-rated insurance, benefits, and the pay for paid hours you never bill. Your fully burdened rate is the wage × (1 + burden %).

Enter one employee's numbers for a year. The calculator runs in your browser; nothing you type is saved or sent.

Example values, not benchmarks. Replace them with your own.

Wage and hours

2,080 = 40 hours × 52 weeks.

Holidays, vacation and sick days, 8 hours each.

Paid hours never estimated into a job: shop time, training, travel.

Payroll taxes and insurance

Employer share: 6.2% Social Security + 1.45% Medicare, as a % of all wages. Social Security stops at the annual wage base, so for pay above it enter a lower effective %.

As an effective % of all wages. Both apply only to the first part of each employee's pay, and your state sets its own rate.

Your rate for the class code, after your experience mod.

General liability or any other policy rated on payroll.

Benefits

Employer share of health insurance, retirement and the like.

Per paid hour, such as a union fringe package. 0 if none.

Billable rate

Overhead and profit on top of the burdened rate.

Labor burden
45.0%
Fully burdened rate
$58.01
Billable rate at 15%
$66.71
Labor burden per employee, by line
Burden, per employeePer yearPer billable hr
Social Security + Medicare $6,365 $3.39
Unemployment tax $1,664 $0.89
Workers' comp $4,160 $2.21
Other insurance $1,664 $0.89
Benefits $12,000 $6.38
Hourly fringes $0 $0.00
Paid time not billed $8,000 $4.26
Total burden $33,853 $18.01

The formula, with your numbers

billable hours = paid hours − time off − non-billable
               = 2,080 − 120 − 80 = 1,880

burden %       = burden per year ÷ (wage × billable hours)
               = $33,853 ÷ ($40.00 × 1,880) = 45.0%

burdened rate  = wage × (1 + burden %)
               = $40.00 × 1.450 = $58.01/hr

billable rate  = burdened rate × (1 + markup)
               = $58.01 × 1.150 = $66.71/hr

In TakeOn, enter 45.0% as the Bid Summary's Labor burden % and the bare wage as the labor rate. Use one or the other: a burdened rate plus a burden % counts the burden twice.

How is labor burden calculated?

Labor burden % is a year's employer cost beyond the wages for billable hours, divided by those wages. The calculator works it out per employee in four steps: 

billable hours = paid hours − days off × 8 − non-billable hours
burden         = payroll taxes + workers' comp + insurance
                 + benefits + fringes + pay for unbilled hours
burden %       = burden ÷ (wage × billable hours)
burdened rate  = wage × (1 + burden %)
billable rate  = burdened rate × (1 + markup %)

Payroll taxes, workers' comp and payroll-rated insurance are figured on every hour paid, including paid time off. The divisor is the wage for billable hours only, because the burden % gets applied to estimated hours. That is the method in our guide, what is labor burden, with one addition: the guide treats only paid time off as unbilled, and the calculator also counts paid non-billable hours (shop time, training, travel) as burden. Set non-billable hours to 0 to get the guide's number.

Worked example

This is an example, not a benchmark. These are the calculator's starting values, chosen as round numbers. Only the 7.65% employer share of Social Security and Medicare is a statutory rate.

Worked example inputs
Base wage$40.00/hr
Paid hours per year2,080
Paid days off15 days (120 hrs)
Non-billable hours80
Social Security + Medicare7.65%
Unemployment tax2%
Workers' comp$5.00 per $100
Other payroll-rated insurance2%
Benefits$12,000/yr
Markup15%

That employee is paid for 2,080 hours and billable for 1,880. A year of burden comes to $33,853 on $75,200 of wages for billable hours, a labor burden of 45.0%. The fully burdened rate is $40.00 × 1.450 = $58.01 an hour, and at a 15% markup the billable rate is $66.71 an hour.

The 45.0% belongs to this made-up employee. Yours comes from your payroll reports, insurance audits and benefit invoices. For how overhead and profit then stack on the burdened cost, see markup vs margin in an electrical bid.

Questions

Frequently asked

Can't find an answer? Email contact@takeonbid.com — we read every one.

  • What is a fully burdened labor rate?

    A fully burdened labor rate is what an hour of billable labor actually costs the employer: the wage plus payroll taxes, workers' compensation, payroll-rated insurance, benefits, and the pay for paid hours that are never billed to a job. It equals the wage multiplied by one plus the labor burden percent, or a year's total employer cost divided by the year's billable hours. Overhead and profit are not in it yet.

  • What's a typical labor burden for electricians?

    There is no single typical figure worth using, because labor burden depends on your state's unemployment rate, your workers' comp class code and experience mod, whether you pay union fringes, your benefits, and how many paid hours go unbilled. Calculate your own from a year of payroll records: add up the employer costs beyond wages for billable hours, and divide by those wages. Put the year's numbers into the calculator above to get it.

  • Why does the calculator divide by wages for billable hours, not all wages?

    Because the burden percent gets applied to estimated hours, and nobody estimates vacation or shop time into a job. Dividing by billable wages makes the pay for paid time off and non-billable hours part of the burden, so the percent recovers it on the hours you do bill. Dividing by all wages paid gives a smaller percent that leaves that pay out of your bids.

  • Is labor burden the same as overhead?

    No. Labor burden rises and falls with the labor hours on a job, so it belongs in the job's direct labor cost. Overhead is the cost of keeping the business open regardless of any one job, such as office rent and office salaries, and is recovered with a separate markup.

  • Does this calculator save or send what I type?

    No. The calculator runs entirely in your browser. Nothing you enter is saved or sent anywhere, and no account is needed.

  • How do I use the result in TakeOn?

    Enter the labor burden percent as the Labor burden % on TakeOn's Bid Summary, or once as the workspace default under Settings → Workspace → Estimating, and keep the bare wage as the labor rate. The Bid Summary then shows base labor, the burden and the burdened labor cost as separate lines, with overhead and profit calculated on the burdened figure. If you enter a burdened rate as the labor rate instead, leave Labor burden % blank, or the burden is counted twice.

From burden % to bid

Price the burden into every bid.

TakeOn's Bid Summary carries your labor burden from base labor to sell price. No credit card needed.

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