Glossary · Labor cost
Loaded labor rate
A loaded labor rate is the full hourly cost of a worker to the company: the wage plus labor burden such as payroll taxes, insurance and benefits. Bids and job cost reports use it instead of the wage because the company pays the whole amount for every hour.
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How is a loaded labor rate calculated?
A loaded labor rate is calculated by adding burden to the hourly wage. The simple version multiplies the wage by one plus the burden percentage. The careful version divides total yearly cost by the hours the company actually gets.
A pipefitter paid $45 an hour
- Wage
- $45.00
- Burden at 30%
- $45.00 × 0.30 = $13.50
- Loaded rate per paid hour
- $45.00 + $13.50 = $58.50
Illustrative numbers. Substitute your own burden percentage.
What is the difference between a paid hour and a productive hour?
A paid hour is any hour on the payroll. A productive hour is one spent on work the company can bill or cost to a job. A loaded rate per productive hour is higher, because the same yearly cost is spread over fewer hours.
| Measure | Calculation | Loaded rate |
|---|---|---|
| Per paid hour | $58.50 on every paid hour | $58.50 |
| Per productive hour | $58.50 ÷ 0.90 if 90% of paid hours are productive | $65.00 |
Hours by worker and jobsite are what turn a loaded rate into a real job cost. See job costing.
