Start with wages
Hourly wage multiplied by annual paid hours gives base wages before employer-paid labor costs.
Contractor workforce planning
Contractor Labor Burden Calculator
Estimate the real annual and hourly cost of an employee after employer payroll taxes, workers’ compensation, benefits, paid time off, training, tools, and other labor expenses. Then translate that cost into a sustainable billing rate.
Employee cost inputs
Enter one employee’s wages, employer-paid costs, and expected billable utilization.
Fully burdened labor cost
$53.31 / billable hour
Annual employer cost
$78,363.36
Annual labor burden
$20,123.36
Labor burden rate
34.55%
True cost per paid hour
$37.67
Annual billable hours
1,470
Recommended billing rate
$76.15
Annual cost breakdown
Base wages$58,240.00
Payroll taxes$4,455.36
Workers’ compensation$3,494.40
Unemployment taxes$873.60
Insurance and retirement$8,400.00
Training, tools, and other$2,900.00
Add the burden
Taxes, insurance, benefits, paid leave, tools, and training increase the real cost of employing a worker.
Account for utilization
Only a portion of paid hours may be billable. The calculator spreads total employer cost across estimated billable hours.
Labor burden formulas
Annual employer cost
Base wages + payroll taxes + workers’ compensation + unemployment taxes + benefits + other employee costs
Labor burden rate
Labor burden ÷ base wages × 100
Cost per billable hour
Annual employer cost ÷ annual billable hours
Target-margin billing rate
Cost per billable hour ÷ (1 − target margin)
How to use the result
Use the fully burdened cost—not the wage alone—when estimating project labor. Understating employee cost can make profitable-looking jobs lose money after payroll taxes, insurance, benefits, nonbillable time, and field support costs are paid.
The recommended billing rate uses your target profit margin and expected billable utilization. It is a planning benchmark, not a required market price. Compare it with overhead allocation, job risk, supervision, travel, equipment, and local market conditions before preparing an estimate.
Employment-cost disclaimer
Numeravo provides educational estimates based on the values entered. Results are not payroll, accounting, tax, insurance, employment-law, legal, or pricing advice. Rates and obligations vary by employee classification, state, jurisdiction, insurer, benefit plan, and company. Verify actual costs and requirements with qualified payroll, accounting, insurance, and legal professionals.
Created and maintained by Numeravo Technologies LLC.