What This Calculator Does
The contractor labor cost calculator shows the true cost of a crew hour — not just the wage you pay, but wages plus labor burden (payroll taxes, workers comp, insurance, and benefits). Enter your crew size, hourly wage, and hours worked to see your weekly, monthly, and yearly labor costs.
Use the true hourly rate this calculator produces when bidding jobs, so your pricing reflects what labor actually costs your business — not just what shows up on a paycheck.
What Is Labor Burden?
Labor burden is every cost of employing a worker beyond their base wage: employer payroll taxes (Social Security, Medicare, unemployment), workers' compensation insurance, general liability allocation, health benefits, paid time off, and training. For most trades, labor burden adds 20–35% on top of wages.
A worker paid $28/hour with a 25% burden actually costs the business $35/hour. Contractors who price jobs off the base wage alone consistently underbid labor-heavy work.
What Drives Labor Costs Up or Down
- Trade and skill level: Licensed trades (electrical, plumbing, HVAC) command higher wages and often higher workers comp rates.
- Workers' comp classification: Roofing and structural work carry much higher comp rates than interior finish trades.
- Overtime: Hours beyond 40/week typically cost 1.5x wages, which compounds quickly on tight schedules.
- Benefits offered: Health insurance, retirement matching, and paid leave all add to burden but improve retention.
- State and local taxes: Unemployment insurance rates and local payroll taxes vary significantly by state.
Frequently Asked Questions
What is labor burden?
Labor burden is the cost of employing a worker beyond their hourly wage — payroll taxes, workers comp, insurance, and benefits. It typically adds 20-35% on top of base wages.
How do I calculate my true hourly labor cost?
Add your labor burden percentage to the base wage: true hourly cost = wage x (1 + burden%). This calculator does that math automatically across your whole crew.
Why does my crew cost more than the wages I pay?
Because payroll taxes, workers compensation insurance, and benefits are real costs on top of wages. Ignoring labor burden is one of the most common reasons contractors underbid jobs.
Should I use base wage or true labor cost when pricing a job?
Always use your true labor cost (wage plus burden) when pricing jobs, or you will systematically underprice labor-heavy work and erode your profit margin.
Related Calculators
These tools work best when used together with this calculator.
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