How to Calculate Your Labor Burden Rate
Your labor burden rate is what an employee actually costs you per hour — wage plus payroll taxes, workers’ comp, benefits, and the hours you pay for but can’t bill. A $25/hour installer typically costs you around $35–$40/hour burdened. Estimate jobs at the wage instead of the burdened rate and you’re quietly losing 30–50% of your labor cost on every bid.
This is the number that decides whether your estimates make money. Most contractors price labor off the hourly wage they pay — and that number is a fiction, because it ignores everything else it costs to put that person on a job site.
What goes into labor burden
- Base wage — the obvious part.
- Employer payroll taxes — Social Security + Medicare (FICA) is 7.65%, plus federal and state unemployment (FUTA/SUTA).
- Workers’ compensation — varies a lot by trade and state; for installation trades it can run several dollars per $100 of payroll.
- Benefits — any health, retirement, paid time off, bonuses.
- Non-billable time — drive time, shop time, loading, training, rain days. You pay for these hours but can’t bill them, so they raise the cost of every billable hour.
A worked example
| Component | Amount |
|---|---|
| Base wage | $25.00 |
| Payroll taxes (FICA + unemployment) ~10% | $2.50 |
| Workers’ comp + liability | $3.00 |
| Benefits / PTO | $2.00 |
| Non-billable time adjustment (~15%) | $5.00 |
| Burdened cost | ≈ $37.50/hr |
That’s a 50% jump over the $25 wage. Estimate a 16-hour install at $25 and you’ve buried $200 of real cost; do that across a year of jobs and it’s the difference between profit and break-even.
Labor Burden Rate Calculator (free) → Flooring Estimate Calculator Pro
Get your real number in 30 seconds with the free Labor Burden Rate Calculator, then estimate jobs at that rate with the Flooring Estimate Calculator Pro — it prices labor per square foot at your burdened cost automatically.
How to use it in estimates
Once you know your burdened hourly cost, convert it to the unit you bid in — usually cost per square foot at your crew’s production rate — then add markup to hit your target margin. Run your true rate through the calculator, plug it into the estimating method, and your bids stop leaking money on labor.
Trade Templates Co. builds back-office templates for solo trade businesses, QA’d against real job numbers before they ship. Rates are illustrative — your comp rate and benefits set your real burden.
Frequently asked questions
What is a labor burden rate?
The all-in hourly cost of an employee — wage plus payroll taxes, workers’ comp, benefits, and non-billable time — not just the wage you pay.
What’s a typical burden on top of wage?
Commonly 30–50% over the base wage for trades, driven largely by workers’ comp and non-billable time. A $25 wage often lands near $37–40 burdened.
Why does non-billable time raise the rate?
You pay for drive time, loading, and rain days but can’t bill them, so those costs get spread across the hours you can bill — raising the cost of each billable hour.
Do I use burden for my own labor too?
Yes — even as an owner-operator, price your own time at a realistic rate so the business (and your pay) is covered, not just the job’s hard costs.
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