Labor Burden Calculator
The wage on a timesheet is not what an hour of labor costs. Between the base rate and the real number sit employer payroll taxes, workers’ compensation premium, general liability, fringe benefits, paid time off, training, small tools and a share of company overhead. The gap is routinely 25–60% of base wage and understating it is one of the most common ways a construction claim, a change order or a bid loses money quietly.
This calculator builds a fully burdened hourly rate from the components you enter, shows each one as a dollar figure and a percentage of base wage and converts the total into a cost per productive hour after non-productive time is removed.
Runs entirely in your browser. Your figures and any documents you add are never uploaded and your report is built on your own device.
True Labor Burden & Overhead Recovery Calculator
Reveals the fully burdened hourly cost of every field employee and the markup required to recover indirect overhead, so bids stop leaking profit. Payroll tax and workers' comp inputs above are blended defaults; the real numbers are state-specific: SUTA rates and wage bases vary widely, most states rate workers' comp through NCCI but several run their own independent bureau. Roughly half the states layer a prevailing-wage law on top for public work. Check your state's labor-burden rules ↓
Step 1: Is This Prevailing Wage Work?
Step 2. The four numbers we need
Example figures. Edit them or clear them.
This state: payroll burden rules
Step 3. Refine this estimate. 0 fields, all with defaults applied. These change the result significantly.
Fully Burdened Hourly Rate
Overhead Recovery Markup
Cost Stack Chart
Full Line-Item Breakdown
| Line Item | Amount |
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How the fully burdened labor rate is built
A bill rate that gets challenged usually falls apart in one of three places: a burden percentage nobody can source, an overhead pool divided by the wrong hours, or margin applied as a markup when the contract says otherwise. The build-up here separates those steps so each can be defended on its own.
Start with the base hourly wage, then add the percentage loads that scale with it: payroll taxes (FICA, FUTA and your state's SUTA rate), workers' compensation at your experience-modified rate, paid time off and any other indirect load. These are proportional to wage, so they belong in one group. Per-hour fixed costs, typically health insurance and tools or equipment, are added as dollar amounts rather than percentages, because they do not vary with the wage rate.
That gives the fully burdened cost rate: what an hour of that person actually costs you before any recovery of office overhead. Overhead recovery is the annual overhead pool divided by annual billable hours. The most common error in the whole calculation happens here: the pool is company-wide, so the divisor must be company-wide billable hours, not one employee's annual hours. Dividing a $240,000 pool by 1,650 hours produces an overhead rate of $145 per hour and a bill rate no reviewer will accept.
Margin is then applied by dividing by (1 − margin percentage), not by multiplying. Dividing yields margin measured on the bill rate; multiplying yields a markup on cost, which is a smaller number and a different contractual term.
How to cite this calculation in a brief or demand letter
When supporting a rate in a claim, audit or rate-sheet negotiation, the sources a reviewer will ask for are:
- Your workers' compensation policy declarations and current experience modifier, substantiates the workers' comp percentage
- State unemployment (SUTA) rate notice for the period, substantiates the payroll tax load
- Trial balance or income statement covering the overhead pool period, substantiates both the pool and the billable-hour divisor
Attach the source documents alongside the rate build-up. A rate with its backing documents survives review; the same rate asserted without them does not.
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Why productive hours, not paid hours
A worker paid for 2,080 hours a year is not on a job for 2,080 hours. Holidays, vacation, sick leave, training and shop time all get paid but are not billable to a project. Dividing annual cost by paid hours understates the real rate; dividing by productive hours gives the number that belongs in a claim, an estimate or a change order.
Where the burden components come from
FICA and Medicare are fixed federal percentages. Federal unemployment applies to a capped wage base. State unemployment insurance rates and wage bases vary by state and by employer experience rating and workers’ compensation varies by state, by class code and by experience modifier. Prevailing wage work adds a further layer. The state rules reference covers the state-level inputs; your own SUTA rate notice and workers’ comp declarations page carry the rest.
Using a burdened rate in a claim
Where labor cost is a component of a delay, inefficiency or extra-work claim, the burdened rate is what gets applied to the disputed hours. Carrying the burden calculation as a separate, cited exhibit, rather than folding an unexplained multiplier into a total, is what makes the figure reviewable. The labor burden document checklist lists what backs up each component.
Worked example: a fully burdened labor rate
A carpenter paid $35.00 an hour. These are the calculator’s starting figures, worked through by hand so each step can be checked.
| Step | Working | Per hour |
|---|---|---|
| Base wage | Straight-time pay | $35.00 |
| Percentage burden | $35.00 × (9% payroll tax + 8% workers’ comp + 12% PTO + 5% other) = $35.00 × 34% | $11.90 |
| Benefits and tools | $3.25 health insurance + $1.10 tools and equipment | $4.35 |
| Fully burdened labor rate | The true cost of an hour of this worker | $51.25 |
| Overhead recovery | $360,000 overhead pool ÷ 20,000 billable hours | $18.00 |
| Cost basis | $51.25 + $18.00 | $69.25 |
| Bill rate at a 12% margin | $69.25 ÷ (1 − 12%) | $78.69 |
The figure most often got wrong is billable hours: the total hours the whole field crew will bill in a year, which spreads the overhead pool. If the year bills 10% fewer hours than planned (18,000), overhead per hour rises to $20.00 and the bill rate needed becomes $80.97. If it bills 10% more (22,000), the rate falls to $76.83. Plan on the hours your crews actually bill, not the hours you pay. A loaded labor rate, a burden rate and a fully burdened rate are the same idea under three names; this calculator shows the cost (the burdened rate) and the price (the bill rate) separately.
Frequently asked questions
What is a typical labor burden percentage in construction?
It varies too widely for a single benchmark to be useful. Workers' compensation alone can range from a few percent of payroll for low-hazard trades to well over 20% for high-hazard ones and state unemployment rates differ by state and by employer experience rating. The right approach is to calculate from your own rate notices rather than apply a rule of thumb.
Should overhead be included in the labor burden?
It depends on what the number is for. A burden rate used to price work usually includes an allocated share of company overhead and profit. A burden rate used in a damages claim is often limited to direct employment costs, with overhead claimed separately, to avoid recovering the same overhead twice. The calculator lets you include or exclude the overhead component.
Does this handle prevailing wage or certified payroll?
The calculator accepts whatever base wage and fringe figures you enter, including prevailing wage rates and the fringe portion paid in cash or to a plan. It does not generate certified payroll reports.
Can I get the calculation as a spreadsheet?
Yes. A paid report exports a live-formula Excel workbook where every burden component remains editable, plus matching Word and PDF versions. See pricing.