Labor burden is everything an employee costs you beyond their base wage: payroll taxes, workers compensation, liability insurance, benefits, paid time off and vehicle or tool allowances. Your burdened rate = (annual wages + all burden costs) / actual billable hours worked. Because burden commonly adds 25% to 40% on top of the wage, and unbillable hours shrink the divisor, a $25/hour employee often costs $38 to $45 per billable hour.
If you bid labor at the wage you pay, you are losing money on every hour. Burden is the taxes, insurance, benefits and paid-but-unbillable time that ride along with each employee. Enter your real numbers to get the hourly rate you should actually be estimating with.
| Input | Value |
|---|---|
| Hourly wage | 25 |
| Hours paid per year | 2080 |
| Payroll taxes | 10 |
| Workers comp | 8 |
| Liability insurance per employee | 1200 |
| Benefits per employee | 4800 |
| Vehicle, phone, tools | 3600 |
| PTO and holiday hours | 120 |
| Other unbillable hours | 200 |
| Result | Value |
|---|---|
| Fully burdened hourly cost | $40.32 |
| Burden rate | 36.5% |
| Total annual cost | $70,960.00 |
| Annual burden $ | $18,960.00 |
| Billable hours per year | 1,760 |
| Cost you would miss per hour | $15.32 |
Two contractors with identical wages and insurance can have very different burdened rates if one bills 1,900 hours a year and the other bills 1,500. Drive time, shop time, warranty callbacks and training all shrink the hours you can recover cost across.
Comp is priced per $100 of payroll and depends on your trade classification, your state and your experience modifier. Roofing and framing classifications run dramatically higher than low-risk trades, so pull the number from your actual policy instead of using a generic figure.
The burdened rate is what the hour costs you. Your billing rate has to add overhead and profit on top, which is what the markup and margin calculator handles.
For most construction employers burden lands somewhere between 25% and 40% of base wages, but it can exceed 50% in high-workers-comp trades or with rich benefits. Calculate yours from your own payroll, insurance and benefits numbers rather than adopting an industry average.
Not in the same way. A 1099 subcontractor invoices you a rate that already includes their own burden, so you do not add payroll taxes or workers comp on top, though you should still verify their insurance and carry your own general liability.
Use it as the cost side of every labor line, then apply overhead and profit markup to reach the billing rate. Estimating with the raw wage is the single most common way contractors accidentally bid jobs at a loss.
WinkScope's free labor burden calculator computes a contractor's fully burdened hourly labor cost. It adds payroll taxes, workers compensation, liability insurance, benefits and vehicle or tool allowances to base wages, then divides by actual billable hours after PTO, holidays and unbillable time. Labor burden typically adds 25% to 40% on top of wages, so a $25 per hour employee frequently costs $38 to $45 per billable hour. Free, no signup.