Labor Burden & Employee Cost Calculator
Find what an employee really costs. Enter the wage and the add-ons — payroll taxes, workers' comp, benefits, and paid time off — to get the true hourly cost and the rate you must bill to profit.
Example: with Hourly wage 25 $/hr · Paid hours / year 2080 hrs · Payroll taxes 8% · Workers' comp 3% → True hourly cost: $34.50.
- True annual cost$66,800
- Burden over wage28.5%
- Employer cost above wages$14,800
Computed by the calculator below using its default values. Change any input to see your own numbers.
True hourly cost
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Check it outWhy the wage is only the start
An employee's wage understates their cost. Payroll taxes, workers' comp, benefits, retirement match, and training all add up — and paid time off means you pay for hours that aren't worked, raising the cost of every productive hour. The true hourly cost, divided into a target margin, gives the billable rate you need to charge to make money.
How it’s calculated
True hourly cost = total annual cost (wage + taxes + insurance + benefits) ÷ productive hours (paid hours − PTO hours).
Results update as you type and are estimates, not professional advice — verify important decisions with a qualified professional.
Common mistakes
- Billing off the wage instead of the loaded cost.
- Forgetting PTO reduces productive hours.
Frequently asked questions
What is labor burden percentage?
The extra cost above wages as a share of the base wage. 30–40% is common once taxes, insurance, and benefits are counted.
Why do PTO and holidays raise the hourly cost?
You pay for those days but get no work, so the same total cost is spread over fewer productive hours.
What's the billable rate for?
Service businesses must bill above cost to profit. The suggested rate applies your target margin to the true hourly cost.