An employee costs far more than their wage. This fully burdened labor rate calculator adds the employer’s real costs — FICA (7.65%), FUTA, SUTA, workers’ comp, benefits, and overhead — on top of base pay to show your true cost per employee and the labor burden rate. Enter a salary or hourly wage and your cost assumptions below to get the loaded annual cost and the real hourly rate you should use when pricing jobs or bids.
The labor burden is everything you pay on top of the wage to employ someone. The big buckets:
| Cost | Typical amount | Source |
|---|---|---|
| Employer FICA | 7.65% of wages (6.2% SS to $184,500 + 1.45% Medicare) | IRS Pub 15 |
| FUTA | 0.6% on first $7,000 (after full credit) | IRS Form 940 |
| SUTA | ~0.5%–6%+ of a state wage base | State agency |
| Workers’ comp | 0.1%–25%+ by class code | Carrier/NCCI |
| Benefits | Health, retirement, PTO, etc. | Your plans |
| Overhead | Space, equipment, software, admin | Your books |
The burden rate is total cost ÷ base wage − 1. A burden of 30% means each $1 of wage costs you $1.30 all-in. For hourly costing, divide the total by productive hours — not 2,080, because PTO, holidays, and downtime shrink billable time.
Take a $60,000 salary with 3.5% combined FUTA/SUTA, 2% workers’ comp, $9,000 of benefits, $6,000 overhead, and 1,800 productive hours:
So a worker you think of as costing about $28.85/hour (the $60,000 ÷ 2,080 wage) actually costs you $46.05/hour to put on a job. Bidding at the wage rate guarantees a loss.
A full-time year is 2,080 paid hours, but nobody bills all of them. Subtract two weeks of PTO (80 hrs), 6 holidays (48 hrs), some sick time, training, and idle time, and a realistic productive total is ~1,750–1,850 hours. Because you still pay the full salary and benefits across fewer billable hours, dividing by productive hours raises the true hourly cost. Using 2,080 understates your cost and erodes margins on every quote.
Service and construction firms multiply the fully burdened rate by a markup to set the billing rate. If your burdened cost is $46.05/hour and you target a 35% gross margin, you bill about $46.05 ÷ (1 − 0.35) = $70.85/hour. Knowing the true number prevents the classic small-business mistake of pricing off the wage and discovering at year-end that "busy" did not mean "profitable." Pair this with our FUTA/SUTA calculator to nail the tax piece.
Even a few points off the burden rate compounds across a whole crew over a year.
The fully burdened labor rate is the total hourly cost of an employee — base wage plus employer FICA, FUTA, SUTA, workers' comp, benefits, and overhead — divided by productive (billable) hours. It reflects what a worker truly costs you per hour, which is typically 25%-40%+ above the bare wage.
Add the base wage, employer payroll taxes (7.65% FICA plus FUTA, SUTA, and workers' comp), benefit costs, and allocated overhead. Divide that total by the employee's productive hours per year for the fully burdened hourly rate. A $60,000 salary commonly costs $80,000-$90,000 all-in.
Labor burden — costs over and above wages — commonly runs about 25% to 40% of base pay for office roles and can exceed 50% in high-workers'-comp trades or with rich benefits. The exact figure depends on your state SUTA rate, workers' comp class code, and benefit package.
Because you pay full salary and benefits but only bill a fraction of paid time. After PTO, holidays, training, and idle time, productive hours are usually 1,750-1,850 per year. Dividing the loaded cost by that smaller number gives the true hourly cost; using 2,080 understates it and squeezes margins.
Yes. Employers pay a matching 7.65% FICA (6.2% Social Security up to the $184,500 wage base plus 1.45% Medicare) on top of the employee's own withholding. That match is a direct employer cost and a core part of the labor burden.