How to Calculate Labor Burden for a Field Crew, With a Worked Example
The wage is what the worker sees. The burden is everything you pay on top: payroll taxes, workers' comp, insurance tied to payroll, PTO, small tools. Add it up and the $25 worker typically costs around $31, and if your bids use $25, every bid is quietly wrong. Here's the component list, a worked example you can copy, and the shortcut multiplier at the end.
JULY 14, 2026 · BY THE CLOX TEAM
Labor burden is the gap between what you pay a worker and what that worker costs you. Every employer pays it, but contractors get hurt by it more than most, because contractors bid: a bid built on the wage instead of the burdened rate hardwires a loss into the price before the eventual job even starts.
The calculation is straightforward once, and then it's a number you reuse everywhere: bids, job costs, your labor cost percentage, and the should-we-hire math. Here's how to build it. Your actual rates for taxes, workers' comp, and insurance vary by state, trade, and carrier, so treat the example numbers as illustrations and pull your real ones from your payroll reports and policies, with your CPA as the referee.
01
What goes in the burden
Mandatory employer costs. These come with every W-2 employee:
- Employer FICA: 7.65 percent of wages (Social Security and Medicare; 2026: up to the $184,500 Social Security wage base).
- Federal unemployment (FUTA) and state unemployment (SUTA). FUTA is small and capped; SUTA varies widely by state and your claims history.
- Workers' compensation premium. Priced per $100 of payroll by classification code, so it swings enormously by trade: clerical is pennies, roofing famously is not. This is often the biggest single line for field trades.
Costs tied to employing people, even when not legally required. General liability insurance premiums are usually payroll-based. Paid time off and holidays are hours you pay that produce no billable work. Health insurance contributions, retirement match, bonuses if you pay them.
The quiet ones. Small tools and consumables issued per worker, PPE, phone allowances, and the paid-but-unproductive time you now capture honestly if you read the off-the-clock guide: yard time, loading, toolbox talks. You can fold that last category into burden or handle it as tracked hours; just don't count it zero.
02
The worked example
A carpenter at $25.00 an hour, full time, in a mid-cost state. All the yearly figures below are examples with round numbers, laid out so you can substitute your own.
Start with paid hours per year: 40 hours times 52 weeks is 2,080 paid hours. Of those, say 2 weeks of PTO and holidays, 80 hours, are paid but not worked, leaving about 2,000 working hours.
Now the rate. Divide total cost by hours the worker is actually available to put on jobs, the 2,000, not the 2,080, because PTO hours cost money and produce nothing:
$61,998 divided by 2,000 hours = $31.00 an hour burdened, against the $25.00 wage. That's a burden of $6.00 an hour, or 24 percent, and this example is on the gentle side: bump the comp class to a roofing-like rate or add health insurance and the same worker clears $35 without anything unusual happening.
These are example numbers
Pull your real rates from your payroll reports, your comp policy, and your CPA. Workers' comp classification alone can move the burdened rate by several dollars an hour.
03
The multiplier shortcut
Once you have done the full math for a typical worker, compress it into a multiplier: in the example, $31.00 over $25.00 is 1.24. Rules of thumb in the trades run roughly 1.2 to 1.4, higher with rich benefits or rough comp classes, and your own number is the only one that matters. Then the everyday usage is one multiplication: any wage times your multiplier is the rate that goes into bids and job costs. Revisit the multiplier once a year, or when insurance renews, whichever brings worse news first.
04
What this fixes the moment you use it
Take a 120-hour job bid at the $25 wage with 20 percent markup on labor: you priced the labor at $3,600 believing cost was $3,000. Real cost at $31.00 burdened is $3,720. The job you thought carried $600 of labor margin loses $120 before the first change order, and no one can see why, because the leak is upstream of every report. Multiply by every job in a year and burden is often the difference between a shop that's busy and a shop that's profitable.
Burdened rate times actual hours is also the honest job cost, which is why this number is step one of the job costing method. The other input, hours actually tagged to the job, is what Clox is for: every punch lands on a job and task the moment it happens, so multiplying real hours by the real rate stops being a Friday reconstruction. Clox is free for 14 days with no credit card, with a 30-day money-back guarantee. Start a free trial, compute your multiplier once, and let the next bid be the first one priced at what your crew actually costs.
Reviewed August 2026.