RHACOVA

Free contractor tool

Labor Burden Calculator

An employee costs far more than their wage, and they cannot bill every hour you pay for. Enter your own numbers to see the true employer cost per productive hour.

Your numbers

The fields start with example figures so you can see how the math works. They are starting points to replace with your own payroll numbers — not industry benchmarks and not advice.

Hours

Paid hours are every hour you pay for. Non-productive hours are the paid hours that cannot be billed — PTO, holidays, training, shop time.

Your result

True cost per productive hour$42.10
Cost per paid hour$38.86
Burden percentage29.54%
Productive hours per year1,920 h

Annual cost

Base wage cost$62,400.00
Burden cost$18,432.00
Total employer labor cost$80,832.00
Why this number?

productiveHours = paidHours - paidNonProductiveHours; total = wage * paidHours + burden; costPerProductiveHour = total / productiveHours

Inputs

Base hourly wage
$30.00
Paid hours per year
2080
Paid non-productive hours per year
160
Payroll taxes
$6,240.00
Workers' compensation
$4,992.00
Benefits
$6,000.00
Other employer-paid costs
$1,200.00

Results

Annual base wage cost
$62,400.00
Annual burden cost
$18,432.00
Total annual labor cost
$80,832.00
Burden percentage
29.54%
Productive hours per year
1920
Cost per paid hour
$38.86
Cost per productive hour
$42.10

Formula labor.costPerProductiveHour · engine shared.labor@1.0.0 · burden-per-productive-hour · rounding half-even to 2 decimals.

Save as my default loaded labor rate

Use this labor cost in your estimates

Save it as your default loaded labor rate, then build an estimate on top of it. The calculator itself never needs an account.

Start an estimate

Why a wage is not your labor cost

The hourly wage on a paycheck is only part of what an employee costs you. On top of it you pay payroll taxes, workers' compensation premiums, benefits, tools, uniforms and training. Together these are the labor burden. Add them to the wage and you get the total amount your company spends on that employee in a year.

Paid hours vs productive hours

You pay for every hour on the clock, but you can only bill some of them. Paid time off, holidays, training, shop time and travel are paid, non-productive hours. Spreading the full annual cost over paid hours understates what an hour on the job really costs — the cost has to be recovered over the hours you can actually bill.

Paid time off is never added as a separate dollar amount here. The wage for those hours is already inside the annual wage cost, so charging it again would double-count it. Instead, non-productive hours reduce the hours the total cost is divided by.

The formulas this calculator uses

  • Annual base wage cost = hourly wage × paid hours per year
  • Annual burden cost = percentage-based costs (× annual wage) + flat yearly employer costs
  • Total annual labor cost = annual base wage cost + annual burden cost
  • Burden percentage = annual burden cost ÷ annual base wage cost
  • Cost per paid hour = total annual labor cost ÷ paid hours
  • Productive hours = paid hours − paid non-productive hours
  • Cost per productive hour = total annual labor cost ÷ productive hours

Every result is produced by the same calculation engine RHACOVA uses internally, with exact decimal arithmetic and cent-level rounding. Open “Why this number?” to see the formula, the normalized inputs and the engine version behind your result.

About the example figures

The values loaded in the form are illustrative starting points so the calculator is usable on first visit. They are not benchmarks, averages or recommendations. Tax rates, workers' compensation classifications, benefit plans and realistic productive hours vary by state, trade and company — use the numbers from your own payroll and insurance statements.

Worked example

A $30/hour employee, 10% payroll taxes, 8% workers' compensation, $6000 of benefits and $1200 of other employer-paid costs per year, over 2080 paid hours of which 160 are paid but not billable:

  • Total annual labor cost: $80,832.00
  • Burden percentage: 29.54%
  • Cost per paid hour: $38.86
  • Cost per productive hour: $42.10

These figures come from the same engine as the calculator above, so the example can never drift away from the tool.

Common mistakes

  • Estimating with the raw wage. The wage is the smallest part of what an employee costs.
  • Dividing the annual cost by 2,080 hours. You cannot bill holidays, PTO, training or shop time — divide by the hours you can actually bill.
  • Adding paid time off as a separate dollar amount. Those wages are already inside the annual wage cost; counting them twice inflates the rate.
  • Treating the loaded rate as a selling price. This is cost. Markup or margin comes after.
  • Using one rate for every employee. Workers' comp classes and benefits differ by role.

Related decisions

Learn the method