Labor burden calculator

Calculate your labor burden

Change any number below. The defaults are labelled example assumptions for a $35 an hour worker, not industry averages. Replace each one with your own rate sheet, your state notice and your policy documents. The calculator runs in your browser and sends nothing.

What formula does the calculator use?

The calculator adds five cost lines to annual wages, then divides the total by paid hours and by productive hours. Every step is below so you can check it by hand.

1. Annual wages = base hourly wage x paid hours per year.
2. Employer FICA = annual wages x FICA rate. The default rate is 7.65 percent: 6.2 percent Social Security plus 1.45 percent Medicare.
3. FUTA = the smaller of annual wages and the FUTA wage base, x the FUTA rate. The defaults are 0.6 percent on the first $7,000.
4. SUTA = the smaller of annual wages and the state wage base, x the state rate. The defaults are 3.0 percent on the first $10,000, which is an example and not any state's rate.
5. Workers' compensation = annual wages divided by 100, x the premium per $100 of payroll. The default is $8.00.
6. Benefits = the employer-paid dollars per year you enter, such as health insurance and retirement match.
7. Total burden = FICA + FUTA + SUTA + workers' comp + benefits. Burden rate = total burden divided by annual wages.
8. Loaded cost per paid hour = (annual wages + total burden) divided by paid hours per year.
9. Productive hours = (paid hours minus paid time off hours) x (1 minus the non-productive share). Cost per productive hour = (annual wages + total burden) divided by productive hours.

What does each tax and cost line assume?

Employer FICA is a statutory rate: the IRS lists the employer share as 6.2 percent for Social Security and 1.45 percent for Medicare, each matched by the employee. The calculator applies 7.65 percent to all wages and ignores the Social Security wage base ($184,500 for 2026 per the IRS), which only matters for earners above it. Medicare has no wage base.

FUTA is federal unemployment tax. The IRS states the rate is 6.0 percent on the first $7,000 paid to each employee, with a credit of up to 5.4 percent for state unemployment tax paid on time, which leaves 0.6 percent. The credit is reduced in credit reduction states, so a company in one of those states pays more. See IRS Topic 759.

SUTA is state unemployment tax. Each state sets its own wage base, and each employer gets an assigned rate that depends on state rules and the company's history. Look at your state unemployment notice and type in that rate and base. The 3.0 percent on $10,000 default is only a placeholder.

Workers' compensation

Priced per $100 of payroll by class code and your experience rating. Take the rate for your worker's class from your policy, not from a general table.

Benefits

Whatever you pay in cash toward health, dental, retirement match and similar. Enter the employer share only.

Paid time off

Included in paid hours, so the wages already cover it. It lowers worked hours, which raises the cost per productive hour.

Non-productive share

Paid hours that are not billable to a job: shop time, drive time, training, supply house runs. Your timesheets show your real share.

What does the default example work out to?

With the default inputs, a $35 an hour worker paid 2,080 hours costs $93,535.20 a year, or $44.97 for every paid hour. The same worker costs $50.83 for every hour that can be billed to a job.

How do you use the result?

Use the loaded cost per paid hour to compare people and to price anything paid by the hour, and use the cost per productive hour to price work you bill by the hour. The gap between the two is the cost of the hours you pay for but do not bill.

• Bidding labor: use cost per productive hour, then add overhead and profit on top. Bidding at the base wage leaves the burden unpaid.
• Comparing a raise with a benefit: put both through the calculator, because a wage increase also raises FICA, SUTA and workers' comp, while some benefits do not.
• Testing the non-productive share: change it from 8 percent to your own number. Drive time and shop time that never reach a job are a cost even when nobody sees it.
• Job costing: apply the loaded rate to each worker's hours per jobsite so job cost reports show real labor cost, not wages.

The non-productive share is the input most contractors guess at. If hours are recorded by jobsite, in transit and other, the share comes from the record. See construction labor cost tracking.