Labor Burden Calculator: Build Your Fully Burdened Rate Line by Line

What is labor burden?

Labor burden is every cost of employing someone that isn't the wage itself: employer payroll taxes, unemployment taxes, workers compensation, liability insurance tied to payroll, benefits and paid time off. Labor rate is the wage; the fully burdened labor rate is the wage plus all of that, per hour actually worked.

It matters for pricing because a quote built on the wage understates every hour of labour on it. I'm not a contractor; I build pricing math, and the build-up below shows each line so you can replace my assumptions with your payroll figures.

How to calculate labor burden, line by line

Total a year of burden costs for one employee, add the wages, and divide by the hours they actually work. Two lines are federal and fixed; the rest vary by state, carrier and policy, so treat those figures as placeholders.

The wage line is $26.00 per worked hour, not $25, because 80 of the 2,080 paid hours are assumed holidays and vacation. That is paid time off doing its work: you pay for hours no customer pays for.

The add-ons (every line except wages) total $13,410, which is 25.79% of wages. Include paid time off and the fully burdened rate is $65,410 / 2,000 = $32.71 an hour: $32.71 / $25 - 1 = 30.82% burden.

The two federal lines, sourced

The IRS Topic 751 page sets the employer share at 6.2% for Social Security and 1.45% for Medicare, and says Social Security applies only to wages up to $184,500 for 2026. The IRS Topic 759 page sets FUTA at 6.0% on the first $7,000 of wages, falling to 0.6% after the maximum 5.4% credit for state unemployment tax paid on time. 0.6% x $7,000 = $42 per employee.

Labor burden calculator: price a job with the burdened rate

Put your burden percentage into the calculator below. It loads the wage, adds materials and overhead, and returns break-even and the price to quote.

With a 30.82% burden, 8 hours of labour costs $261.64. Add $180 of materials and $66.00 of overhead and break-even is $507.64; the price at a 35% margin is $780.98. The calculator also lives at the free job pricing calculator page.

What pricing off the bare wage costs you

Leaving burden out doesn't just shave the labour line; the missing cost also misses its margin. On this job the price drops by $94.83.

At 0% burden, labour is $200.00 instead of $261.64, break-even falls to $446.00, and the 35% margin price is $686.15 instead of $780.98. The quote looks profitable on paper, but the real cost of the labour is still $261.64. At three jobs a week for 52 weeks the shortfall is $14,793.48 a year.

The other common slip is burdening the wage but then applying the margin as a markup. That gap is covered in the markup vs margin guide.

What is an average labor burden percentage?

I don't quote an average, because the variable lines (workers comp class rates, state unemployment rates and wage bases, benefits, paid time off) differ so much by trade and state that an average can be wrong for almost everyone. Build yours from the table; it takes ten minutes with last year's payroll reports.

Two things move burden the most. Workers comp, because rates depend on job classification and claims history. And paid time off, because it shrinks the worked-hours denominator. In the example, 80 hours of time off alone moves the wage line from $25 to $26.00 per worked hour.

State matters too. A "California labor burden calculator" is the same formula with California's unemployment rate, wage base and comp rates in the assumption rows. Swap your state's figures into those rows.

Labor burden formulas for Excel

Lay out one employee per column: wage in B2, paid hours in B3, paid-time-off hours in B4, then the rates and yearly costs below. These formulas return the burdened hourly rate and burden %.

Excel percentages: type 6.2% with the percent sign, or 0.062. The MIN() in the FICA and FUTA formulas applies the wage-base caps, so the sheet stays right for high earners.

Labor burden vs overhead: what goes where

Burden follows the employee; overhead follows the business. Payroll taxes, comp, benefits and paid time off go into the loaded labour rate. Trucks, office rent, software and admin go into overhead per hour.

Keep them separate and neither gets counted twice. The overhead and profit calculator guide turns the overhead side into a per-hour figure.

Labor burden calculator, spreadsheet or custom build?

Build the burden percentage once a year in a spreadsheet, then use that one number in every quote. The free tools cover most of this.

• Free calculator: type the burden % and see the effect on break-even and price.
• Free Job Pricing Starter: the loaded-cost prompt, overhead, break-even and margin in one Excel or Google Sheets file.
• Custom build ($497): labour rate, overhead, margin and tax set once and fed into every estimate.

What to put in the burden sheet: wage, paid hours, time-off hours, each tax rate with its wage base, comp rate, insurance and benefit costs, and the two outputs: fully burdened rate and burden %. For how the rate then flows into a quote, see how to price a contractor job.

Step-by-step: Labor Burden Calculator: Build Your Fully Burdened Rate Line by Line

1. Total the wages paid. Hourly wage x paid hours for the year, including holidays and vacation you pay.
2. Add the federal payroll lines. Employer FICA at 7.65% of wages (Social Security capped at the wage base) and FUTA at 0.6% of the first $7,000.
3. Add state and insurance lines. State unemployment at your state's rate and wage base, workers comp at your class rate, and liability share.
4. Add benefits. Your share of health insurance, retirement match and any other per-employee benefit.
5. Divide by hours actually worked. Total yearly cost / (paid hours - paid time off hours) gives the fully burdened hourly rate.
6. Convert to a burden %. Burden % = fully burdened rate / wage - 1. Enter it in your pricing calculator.

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