What is labor burden?
Labor burden is everything you pay to employ a worker beyond the base wage: employer payroll taxes, workers comp, health insurance, retirement contributions, paid time off, training, and safety gear. Add those costs up as a percentage of the wage and you get the burden rate. Add the burden to the wage and you get the loaded labor cost, the number that actually belongs in your bids. This labor cost calculator does that conversion for you: enter hours, wage, and burden, and it shows your raw wages, the burden amount, and the true loaded cost per hour.
The gap between wage and loaded cost is where contractor estimates quietly fall apart. If you pay a worker $28 an hour but the loaded cost is $36.40, then every hour you bid at $28 loses $8.40 before you buy a single screw. The labor cost calculator exists to make that gap visible before you sign the bid, not after the job closes.
Why bidding without burden loses money
Bidding with the base wage is the most common pricing mistake in the trades, because the math feels right. The worker earns $28 an hour, so you price labor at $28 an hour. But the check you write is not the only cost. The employer side of Social Security and Medicare, state and federal unemployment taxes, the workers comp premium, the health insurance you chip in for, the vacation days you pay for: all of it scales with payroll, and all of it lands on the job's labor line whether you plan for it or not.
Here is the trap: the loss never shows up as a single bill. It shows up as margin that is thinner than your estimate said it should be, job after job. A job that "should" have cleared 20% clears 12%. A job that should have broken even loses money. The bid was priced with the wage; the cost arrived loaded. The difference comes out of profit, and eventually out of the business.
What goes into the burden percentage
The burden rate is a stack of costs that ride along with every paycheck. Not every shop pays every one, but most pay most of them:
- Employer payroll taxes: the employer share of Social Security and Medicare, plus state and federal unemployment tax.
- Workers compensation: the premium you pay for injury coverage, which varies by trade and by state.
- Health insurance: the employer contribution to medical and dental coverage.
- Retirement and benefits: matching contributions, life insurance, and other perks.
- Paid time off: vacation, sick days, and holidays, hours you pay for with no work done.
- Training and safety gear: certifications, classes, boots, harnesses, and other required equipment.
Some of these are legally required and some are choices you make to keep good people, but to the job cost they are identical: real money attached to every hour your crew works.
Worked example: a 4-person crew for a week
Say you run a four-person crew at $28 an hour with a 30% burden, and each worker puts in a 40-hour week. That is 160 hours of labor in the week. The raw wages are 160 × $28 = $4,480. The burden is 30% of that, or $1,344. Loaded labor for the week is $5,824, and the loaded rate is $36.40 per hour. If the same math runs for a single worker, 40 hours at $28 is $1,120 in raw wages plus $336 of burden, or $1,456 total, again $36.40 per loaded hour.
| Line | One worker (40 hrs) | 4-person crew (160 hrs) |
|---|---|---|
| Raw wages at $28/hr | $1,120 | $4,480 |
| Burden at 30% | $336 | $1,344 |
| Loaded labor cost | $1,456 | $5,824 |
| Loaded rate per hour | $36.40 | $36.40 |
Run the same inputs through the labor cost calculator and you get the identical result. The loaded rate is what you quote, what you budget, and what you track against. The $36.40 an hour is the number that keeps the job honest.
Typical burden ranges by situation
For most payrolls, a burden between 25% and 40% of the base wage is typical. That is a range seen across common industry practice, not a fixed figure from any official schedule, because your own rate depends on your state, your trade, and the benefits you offer. Use the ranges below as plainly illustrative starting points, then calculate your own from payroll records.
| Situation | Illustrative burden range |
|---|---|
| Small crew, no benefits, minimum workers comp | Lower end, often under 25% |
| Typical payroll: workers comp, some benefits, paid time off | 25% to 40% |
| Full benefits: health insurance, retirement match, generous PTO, heavy comp | Upper end, 40% and above |
A lone handyman with no employees has a very low burden. A framing crew with health insurance, a 401(k) match, and a workers comp class code that runs high sits at the top of the range. A burden under 15% is low for most payrolls, and above 40% is high but realistic for shops with rich benefits. The loaded rate, not the percentage, is what your bids should carry.
Using loaded labor in your bids
Once you know the loaded rate, use it everywhere labor appears. In the estimate, multiply estimated hours by the loaded rate instead of the wage. In the budget, carry the same loaded line item so actuals can be compared to plan. And in the job cost calculator, enter hours, wage, and burden and let the loaded labor flow into the full job cost automatically. That single change, using $36.40 instead of $28, can be the difference between a job that makes money and one that quietly gives it back.
The loaded rate also changes how you price change orders and extra work. Extra hours should be quoted at the loaded rate too, or every change order erodes margin by the same percentage. If you want to check the full picture, run the numbers through the job cost calculator with the loaded labor in place, or work backward from a target margin with the bid price calculator. When your burden changes, whether a comp class moves or you add a benefit, the loaded rate moves with it, and your bids should follow.
Doing this on paper for one job is one thing; doing it for every crew member on every job is another. That is where the software side comes in. See the plans on the pricing page, or read about construction job costing software to see how loaded labor flows into every estimate and budget automatically.
Labor cost calculator FAQ
What is a good labor burden percentage?
For most payrolls, 25% to 40% of the base wage is typical. Below 15% is low for most shops, and above 40% is common for employers with full benefits and expensive workers comp. What matters is not the percentage itself but using the resulting loaded rate in every bid.
How do you calculate labor burden?
Add up all employment costs beyond wages for a year, divide by the wages paid that year, and multiply by 100. For example, if a worker earns $28 an hour and the extra costs total 30% of that, the burden is $8.40 an hour and the loaded cost is $36.40.
What is loaded labor cost?
Loaded labor cost is the base wage plus the burden. It is what an hour of work actually costs you, including payroll taxes, workers comp, insurance, benefits, and paid time off. Your bids should price loaded labor, not the wage.
Does labor burden include workers comp?
Yes. Workers comp is usually one of the largest pieces of the burden, and it varies sharply by trade and state. A roofer in a high-comp state carries a much heavier burden than an office-based bookkeeper.
Why is my margin lower than my estimate predicted?
Most likely the estimate priced labor at the base wage while the job cost arrived at the loaded rate. The difference, often 25% to 40% of the wage, comes straight out of profit. Rebuild the estimate with loaded labor and the margin usually comes back.
Key takeaways
- Labor burden is everything beyond the base wage: payroll taxes, workers comp, insurance, retirement, paid time off, training, and safety gear.
- Loaded labor cost equals wage × (1 + burden%). At $28 with a 30% burden, the loaded rate is $36.40 an hour.
- For most payrolls, a 25% to 40% burden is typical, though small shops with no benefits run lower and full-benefit shops run higher.
- Bid, budget, and track with the loaded rate, including on change orders, or the gap between wage and cost quietly eats your margin.
Conclusion
Labor burden is the cost hiding between the wage you pay and the cost you bid. This labor cost calculator turns hours, wage, and burden into the loaded rate your estimates actually need: $28 an hour becomes $36.40 once a 30% burden is applied, and a four-person week that looks like $4,480 of labor really costs $5,824. Price with the loaded rate, carry it into the job cost calculator and your bids, and the margin you plan for is the margin you keep. Skip it, and every job quietly pays the difference.