Free business planning calculator
Labor Burden Calculator
Calculate the true hourly cost of an employee including payroll taxes, workers comp, benefits, and overhead. Free labor burden rate calculator for small business owners and contractors.
Enter the minimum numbers needed to get a result.
Updated live as you type.
Planning estimate only. It does not include taxes, overhead allocation, depreciation, discounts, or other business-specific adjustments.
What this calculator means
Labor Burden: Labor burden is the total cost of employing a worker beyond their base wage, including employer payroll taxes, workers' compensation insurance, and benefits. The burden rate typically adds 20-40% above an employee's base pay.
Formula and example
Burdened rate = Base rate × (1 + FICA% + FUTA% + WorkersComp% + Benefits%). Total annual = Burdened rate × hours/week × 52 weeks.
$25/hr, 40hrs/wk, 7.65% FICA, 0.6% FUTA, 2% workers comp, 15% benefits: burden = 25.25% above base. Burdened rate = $31.31/hr. Annual cost = $31.31 × 2080 = $65,125 vs base $52,000.
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Methodology & assumptions
Last updated: 2026-06-19Calculation method
Adds employer-side payroll taxes (FICA 7.65%, FUTA 0.6%) and workers' compensation insurance to base wages, plus benefits expressed as a percentage of wages. Calculates the fully burdened hourly rate and annual cost. Does not include state-specific SUTA rates, general liability insurance, or non-wage overhead like office space.
Data sources
Uses the numbers you enter and standard small-business finance formulas. Benchmark comparisons use HustleFin industry benchmark pages where available.
Limitations
FUTA applies only to first $7K of wages per employee. Workers comp rates vary widely by state and job classification — the default 2% is a general estimate. Does not include SUTA (state unemployment) which adds 0.3-8% depending on state. Benefits percentage is a rough estimate; actual costs depend on plan selection.
Input definitions
- Base hourly rate: The employee's gross hourly pay rate.
- Hours worked per week: Average weekly hours including paid breaks.
- FICA employer match: Social Security 6.2% + Medicare 1.45% employer portion.
- FUTA unemployment tax: Federal unemployment tax. Typically 0.6% on first $7K of wages after credit.
- Workers' compensation: Varies by industry and state. Office: 0.5-1%; Construction: 5-15%.
- Benefits (health, 401k, PTO): Health insurance, retirement matching, paid time off value as % of wages.
Frequently asked questions
What is a typical labor burden rate?+
For most US businesses, labor burden adds 20-30% above base wages. Office workers trend 18-25% (lower workers comp, standard benefits). Construction trades trend 30-45% (higher workers comp 5-15%, often union benefits). The biggest variable is workers' compensation, which ranges from 0.5% (office) to 15%+ (roofing, construction).
What payroll taxes do employers pay?+
Employers pay: (1) FICA matching — 6.2% Social Security (up to $176,200 wage base in 2026) + 1.45% Medicare (no cap) = 7.65% total on all wages. (2) FUTA — 6.0% federal unemployment on first $7K, typically reduced to 0.6% with state credit. (3) SUTA — state unemployment, rates vary 0.3-8% depending on state and experience rating.
Why should I calculate burdened labor cost?+
Knowing your true labor cost is essential for pricing services and bidding on projects. If you quote jobs based on $25/hr but actually pay $31.31/hr burdened, you're losing $6.31 per hour on every job. Contractors and service businesses that don't calculate burden correctly are systematically undercharging.
Does this calculator include general liability insurance?+
No. General liability insurance is typically an overhead expense (not a per-employee cost) and varies by business type. This calculator focuses on per-employee costs: payroll taxes, workers' comp, and benefits. Add general liability separately in your overhead budget.
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