Burdened Labor Rate Calculator
Estimate the true hourly cost of labor after payroll taxes, benefits, overhead, paid time off, and productive hours are considered.
Calculate true labor cost
What is a burdened labor rate?
A burdened labor rate represents the true cost of an employee after adding payroll taxes, benefits, paid time off, overhead allocation, supervision, and nonproductive time.
Many businesses quote labor using only payroll wage. This often leads to underpricing, margin compression, and cash flow problems.
Example
An employee earning $25/hour may initially appear to cost a business approximately $52,000 annually.
But after payroll taxes, benefits, insurance, downtime, PTO, and overhead allocation are included, the true labor cost can easily exceed $40/hour.
If customer work is quoted using only payroll wage, the business may quietly lose money despite healthy reported revenue.
Common mistakes
- Using payroll wage instead of true labor cost.
- Ignoring downtime and setup time.
- Failing to allocate supervision or facility overhead.
- Assuming all 40 weekly hours are productive.
- Forgetting payroll taxes, insurance, and PTO.
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