Labor Burden Calculator: True Hourly Cost & Billable Rate

Turn a crew member's wage into their true hourly cost — taxes, insurance, PTO, downtime — and the billable rate that covers overhead and profit.

Base hourly wage

Paid hours per year

40 h × 52 weeks.

Paid non-billable hours

PTO, holidays, training, rain days.

Editable assumptions

FICA (Social Security + Medicare)

Federal unemployment (FUTA)

The real FUTA rate applies only to the first $7,000 of each worker's wages; it is treated as a flat rate here.

State unemployment (SUTA)

Varies by state.

Workers' comp

Varies by class code.

General liability insurance

Benefits per year

Health, retirement, tools, phone.

Price labor for a

Target margin Target markup

Target

True hourly cost

$37.92

Burden over wage

35.4%

Billable rate to hit the target

$54.17

A year of this worker

Gross wages $58,240

Payroll taxes $6,261

Workers' comp $4,659

Liability insurance $1,165

Benefits $4,000

Annual cost $74,325

Productive hours 1,960

Obra tracks every recorded labor and material cost against each project's contract, so you can see whether the rate you bill actually holds up on the job.

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How it works

Labor burden is everything a worker costs you beyond the wage on the paycheck: payroll taxes, workers' comp, liability insurance, and benefits. Add the hours you pay for but can't bill — holidays, training, rain days — and a $28 wage quietly becomes a $38 hour.

true hourly cost = annual cost ÷ productive hours

The annual cost is gross wages plus every tax, premium, and benefit for the year. The productive hours are the hours you paid for minus the ones you couldn't put on a job. Dividing the whole cost by only the working hours is the point: those non-billable hours don't disappear, they get spread over the hours that earn.

From cost to billable rate

billable rate = true hourly cost ÷ (1 − target margin)

To keep a 30% margin on labor, divide the true cost by 0.70 — don't multiply by 1.30. Multiplying gives a 30% markup, which is only a 23% margin. If you think in markup, switch the target above and the calculator multiplies instead.

As a rule of thumb, burden for field labor tends to land somewhere between 25% and 40% over the wage, but your own number depends on your state, your class code, and what you offer your crew. Put in your real rates; the defaults are only a starting point.

Questions

01 What is labor burden? +

Labor burden is the cost of employing someone on top of their wage: payroll taxes, workers' comp, liability insurance, and benefits, plus the paid hours they can't bill. Expressed as a percentage over the wage, it tells you what an hour of work really costs.

02 What is a typical labor burden percentage for contractors? +

As a rule of thumb, somewhere between 25% and 40% over the base wage. Workers' comp is the swing factor — a roofer's class code costs far more than a painter's — so run your own rates rather than borrowing a number.

03 Should I use markup or margin when pricing labor? +

Either works if you use it consistently, but they are not the same number. A 30% markup on a $37.92 cost bills at $49.30; a 30% margin bills at $54.17. If your overhead and profit targets are stated as a share of revenue, price labor with margin.

04 Do owner hours count as labor burden? +

If you swing a hammer on jobs, yes — put yourself in at the wage you would pay someone to do the same work, with the same taxes and insurance. Your time running the business belongs in overhead instead, as an owner salary.

Free download

Not ready for an app? Start with our free Excel template.

A ready-made spreadsheet to track costs and income per project — with categories and the totals already set up.