Labor burden is the reason a $24-an-hour painter is not a $24-an-hour cost. Add the employer's share of Social Security and Medicare, federal and state unemployment, workers' comp at construction rates, liability insurance driven by payroll, paid holidays and sick days, and the hours between jobs that still get paid, and the number lands between 30% and 50% above the wage for most small contractors. Every bid built on the wage alone underprices labor by that much.
A worked number
Wage $24. Payroll taxes about $2.40, workers' comp about $2.90, insurance and benefits about $1.70, and 10% of paid hours unbillable, which spreads the cost of every hour over fewer billable ones. Burdened rate: roughly $34.50, or 44% over the wage. A 1,600-hour job estimated at $24 is $16,800 short before the first coat.
The mistake it hides
Putting burden in overhead. Some contractors carry taxes and insurance as general overhead and price labor at the wage; the overhead rate then looks alarming and the labor lines look cheap, and neither number is useful for pricing a job. Burden belongs on the job, with the hours that caused it.
In Obra
Record labor on a project at the burdened rate, so the job's cost and margin reflect what the crew really costs. The labor burden calculator works the rate out from your own payroll figures in a few minutes.