Payroll Burden Calculator: What Your Crew Costs Per Hour

That $22-an-hour laborer? He doesn’t cost you $22.

By the time you add up his taxes, his workers comp, his liability coverage, and the days he’s getting paid but not on a jobsite, that number is closer to $29. I learned this the hard way years ago, bidding labor at the raw wage and wondering why a “profitable” job left nothing in the account at the end. The gap between what you pay a worker and what that worker actually costs you is called payroll burden. Ignore it and you’re bidding to lose.

This guide shows you how to calculate your real burdened labor rate, with two worked examples you can copy today.

Quick Answer: What Is Payroll Burden?

Payroll burden is every labor cost beyond the base wage: FICA, unemployment taxes, workers comp, liability insurance, and paid time off. For most construction crews it adds 25% to 40% on top of the hourly wage. A laborer paid $22/hr usually costs $28 to $31/hr fully burdened. To find your rate, add up the burden costs, divide by the base wage, and you get your burden percentage. Want it done for you? Use our Payroll Burden Calculator to plug in your numbers and get a burdened rate in seconds.

Try EstimationPro free and it bakes burdened labor into every estimate automatically, so you stop bidding at the raw wage.

What Goes Into Labor Burden

Burden is the stuff that doesn’t show up on the wage line but hits your bank account every single pay period. Here’s what’s in it.

Burden Component	Typical Rate	Notes
FICA (Social Security + Medicare)	7.65%	Fixed by the IRS. 6.2% + 1.45%.
FUTA (federal unemployment)	0.6% effective	On the first $7,000 of wages.
SUTA (state unemployment)	1% to 6%	Varies by state and your claim history.
Workers compensation	7% to 18%	Trade-rated. Roofers and framers pay the most.
General liability insurance	1% to 3%	Often allocated per labor hour.
Paid time off + holidays	4% to 8%	Pay without production.
Health benefits / retirement	varies	Add as a flat dollar amount per hour.

FICA is the only number that’s the same for everybody. Workers comp is where contractors get crushed. A roofer can pay 18 to 30 cents on the dollar in some states, while a finish carpenter pays a fraction of that. According to BLS data on employer costs, benefits and taxes run roughly 30% of total compensation for construction workers, which lines up with what I see on real payroll.

How to Calculate Your Burdened Labor Rate

Five steps. No spreadsheet gymnastics.

1. Start with the base hourly wage. What the worker actually sees on the check.
2. Add the percentage-based costs. FICA, FUTA, SUTA, workers comp, and liability. Multiply the base wage by each rate and total them.
3. Add the flat-dollar costs. Health insurance, retirement match, or a tool allowance. Convert anything annual to an hourly figure by dividing by ~2,080 working hours.
4. Adjust for non-productive time. If a worker is paid 2,080 hours a year but only billable 1,900, your real cost per billable hour climbs. This is the step almost everybody skips.
5. Divide total burden by base wage to get your burden percentage. Add it back to find the burdened rate.

The Burdened Labor Rate Calculator runs all five steps for you, but do it by hand once so you understand where the money goes.

Worked Example 1: General Laborer at $22/hr

Base wage is $22/hr, the typical construction laborer rate per BLS OEWS data. Here’s the burden stacked on top.

Item	Rate	Cost/hr
FICA	7.65%	$1.68
FUTA + SUTA	3.6%	$0.79
Workers comp	12%	$2.64
General liability	2%	$0.44
PTO + holidays	5%	$1.10
Total burden	30.3%	$6.65

Burdened rate: $22.00 + $6.65 = $28.65/hr.

So when you bid that laborer at $22, you’re eating $6.65 an hour. On a 40-hour week that’s $266 gone before you even talk about overhead or profit. Run that across a crew of four for a month and you’ve quietly given away thousands.

Worked Example 2: Carpenter at $30/hr With Benefits

Now a skilled carpenter at $30/hr, the typical carpenter wage from BLS, but this time we add health coverage at $3.00/hr because you actually want to keep good people.

Item	Rate	Cost/hr
FICA	7.65%	$2.30
FUTA + SUTA	3.6%	$1.08
Workers comp	12%	$3.60
General liability	2%	$0.60
PTO + holidays	6%	$1.80
Health benefit	flat	$3.00
Total burden	41.3%	$12.38

Burdened rate: $30.00 + $12.38 = $42.38/hr.

That carpenter costs you forty-two bucks an hour before a dime of overhead. This is the number you mark up, not the $30. A lot of guys forget that benefits push the burden well past the textbook 30%.

From Burdened Cost to a Bid Price

Burden gets you to your true cost. It does not get you to your price. Once you know the carpenter costs $42.38/hr, you still have to cover overhead and profit.

Say you mark up burdened labor 25% for overhead and profit, which sits right in the standard 15% to 35% O&P range:

• Burdened cost: $42.38/hr
• O&P markup at 25%: $10.60/hr
• Billing rate: $52.98/hr

That’s how a $30 carpenter turns into a roughly $53 line on the proposal. The homeowner who asks “why am I paying $53 when your guy makes $30?” is looking at the wage and missing everything underneath it. Use the Contractor Markup Calculator to test different markup levels against your burdened rate.

How Burden Shifts by State

Two of the biggest burden drivers, workers comp and SUTA, are set at the state level. Same $30 carpenter, very different cost depending on where you swing the hammer.

State signal	Burden impact vs. average	Why
High comp + high SUTA (CA, NY, WA)	+5% to +12%	Steep workers comp rates and unemployment ceilings.
Mid-range (TX, CO, NC)	near average	Moderate comp, mid SUTA.
Low comp states (parts of the South, IN)	-3% to -6%	Cheaper comp classifications.

I’ve worked in the Pacific Northwest, Alaska, and the South, and the comp rates alone can swing burden by ten points. Pull your actual workers comp declaration page and your state unemployment rate. Don’t guess. These numbers change yearly, so verify your rates each January and get a quote from your insurer rather than copying a national average.

Common Mistakes That Wreck Your Margin

• Bidding at the raw wage. The single most expensive habit in this trade. You’re donating 25% to 40% to every client.
• Using one burden rate for every worker. Your laborer and your roofer have wildly different comp classifications. Blend them and you’ll underbid the risky trades.
• Forgetting non-productive hours. Drive time, rain days, training, and cleanup are paid but not billable. They raise your real cost per billable hour.
• Skipping the annual update. Comp rates, SUTA, and the FICA wage base move every year. A burden number from two years ago is a guess.
• Confusing burden with markup. Burden is cost. Markup is profit. Mark up the burdened number, never the raw wage.

FAQ

What is a typical payroll burden rate for contractors? Most construction crews land between 25% and 40% on top of base wages. Light trades with cheap workers comp can sit near 25%, while roofers, framers, and crews with full benefits often clear 40%. Run your own numbers in the Payroll Burden Calculator rather than trusting a single rule of thumb.

How do contractors calculate true labor cost for a bid? Take the base wage, add FICA, unemployment taxes, workers comp, liability, and benefits, then divide non-productive paid hours back in. The result is your burdened cost per billable hour. That’s the figure you mark up. A carpenter at $30 base typically lands around $42 fully burdened.

Is payroll burden the same as overhead? No. Payroll burden is the cost of employing a worker beyond their wage. Overhead is your business cost: office, truck, insurance, software, the phone that rings. Burden attaches to labor hours. Overhead spreads across the whole company. You account for both before adding profit.

Does workers comp really change my burden that much? Yes. Workers comp is trade-rated, so a roofer might pay three to five times what a finish carpenter pays for the same wage. It’s usually the largest single swing in your burden calculation, which is why one blended rate across mixed trades gets dangerous.

How often should I recalculate my burden rate? Once a year minimum, every January when comp and unemployment rates reset. Recalculate immediately if you add benefits, change states, or shift your crew mix. I redo mine alongside the Labor Cost Calculator at the start of each year so my bids start from real numbers.

Stop Bidding at the Wrong Number

If you take one thing from this: the wage on the check is not your cost. Burden is real money, it shows up every pay period, and it’s the difference between a job that pays and a job that just keeps you busy.

Contractors who switch to EstimationPro report cutting estimate time by more than half while finally pricing burdened labor correctly on every bid. Try EstimationPro free. It builds your burdened labor into the estimate, turns that estimate into a professional proposal, follows up with the homeowner automatically so you win more of the bids you already send, and invoices the job when it’s done. Price it right, send it fast, get paid. That’s the whole point.

These figures use 2026 BLS wage data and industry workers comp benchmarks. Prices vary by region and trade, so get local quotes and verify your workers comp, SUTA, and benefit rates with your insurer and state agency before you bid.