Labor burden
Employment add-ons on wage. Lives on P3 labor burden.
For contractors
Business owners
Loaded labor
How to Calculate Labor Burden and Loaded Labor Cost
Labor burden is what it costs you on top of base wage to employ someone — payroll taxes, workers’ comp, benefits, PTO, and similar. Loaded labor is wage + burden on a paid-hour basis. Learn the components, then run your numbers in the free calculator. Not for homeowners budgeting a remodel.
Open the labor burden calculatorBurden vs overhead vs billable rate
These three get mixed constantly. Keep them separate so you do not double-count.
Interactive P3 tool — same formula as below
Component checklist (informational — not advice)
Owners commonly stack some mix of:
- Employer payroll taxes (FICA / FUTA / SUTA as they apply to you)
- Workers’ compensation
- Health / retirement / other benefits
- PTO / holidays (as a % of productive paid time)
- Optional: uniforms, training, small tools tied to the worker
BillRateHQ does not tell you “your WC should be X%” or publish a recommended burden %. Enter your costs. Presets on the calculator are editable defaults only.
Step-by-step formula (matches P3)
burden_$ / paid_hr = (payroll_tax% + wc% + benefits% + pto% + other%) × wage
OR benefits as $/hr added separately
loaded_hourly = wage + burden_$ / paid_hr
effective_burden% = (loaded_hourly / wage) − 1
cost_per_billable_hr = loaded_hourly / utilization
P3 does not apply shop overhead or profit margin — those belong on the hourly rate calculator (P1).
The utilization bridge
Loaded $/paid-hour is not yet your labor cost on a billable hour.
If utilization is 60%, each billable hour must carry loaded ÷ 0.60 of labor cost before overhead and profit.
That number is the floor you take into setting a billable rate.
Worked example (fictional tech)
- Wage $25/hr
- Payroll taxes 10% + WC 8% + benefits 6% + PTO 5% → burden 29%
- Loaded = $25 × 1.29 = $32.25/hr
- Utilization 60% → cost per billable = $32.25 / 0.60 = $53.75/hr
That $53.75 is the labor floor before overhead and profit — continue in the hourly rate calculator.
Run this in the labor burden calculator →Common mistakes
- Using raw wage as job labor cost
- Mixing general overhead into burden (or double-counting both places)
- Ignoring PTO
- Dividing by 2080 as if every paid hour were billable
- Stopping at loaded $/hr and never setting a bill rate
FAQ
What is a typical burden %?
It varies widely by trade, state, benefits, and WC class. BillRateHQ does not publish a “should be” percentage — use your costs in the calculator.
Is workers’ comp part of burden or overhead?
Usually modeled as burden (tied to wages/hours). If you put WC in annual overhead instead, do not also include it in burden %.
Does burden include the truck?
Typically no — truck/lease/fuel are overhead (P1 annual OH), not labor burden. Putting both in burden and OH double-counts.
Owner-operator without W-2s?
You may still estimate SE-tax-like and benefit-ish costs as a burden-style % for rate setting — or enter desired owner pay on P1. Not tax advice; enter what matches your books.
How does utilization change loaded cost?
Cost per billable hour = loaded hourly ÷ utilization. Lower utilization raises the labor cost that must be recovered on each billed hour.
Calculate your labor burden
Self-serve math only — no burden audits, consulting, or insurance recommendations in this guide.
Open labor burden calculator →