Free HR calculator
Labor Burden Rate Calculator
The wage is not what a role costs. On top of salary you pay payroll taxes, benefits, workers comp, paid time off, training, and overhead. This calculator adds it all up and shows you the fully burdened hourly rate. That is the number to use for project costing, pricing, and staffing decisions.
Before you start
What you will need. Annual salary, Productive hours per year
The role
Fully burdened hourly rate
The method
What the labor burden rate is and why it matters
The wage or salary you post is not what someone costs to employ. On top of base pay, you carry a set of mandatory and discretionary costs that most managers only partially track. Together these are called the labor burden. The labor burden rate expresses those costs as a percentage of base salary. The fully burdened hourly rate is the all-in cost of one hour of that person’s work.
How this is calculated
What makes up the burden
The mandatory piece includes payroll taxes. The employer share of FICA runs 7.65% (Social Security at 6.2% and Medicare at 1.45%). Federal unemployment (FUTA) adds 0.6% to 6% on the first $7,000 of wages, and state unemployment (SUTA) rates vary widely by state and claims history. Together these usually land between 8% and 12% of salary.
The discretionary piece varies by company. Health insurance, dental, and vision premiums are the largest driver for most salaried roles. A company paying a meaningful share of family coverage can see this component alone run 12% to 20%. Retirement contributions, paid time off cost, training budgets, equipment, and overhead allocation make up the rest.
Typical burden ranges by industry
Professional services with standard benefits typically see a total burden of 28% to 40%. Manufacturing and healthcare tend to run higher, 35% to 50%, because of workers compensation premiums and richer benefit structures. Skilled trades and construction can reach 45% to 65% given high workers comp costs. Retail and hospitality often land lower, 20% to 35%, because of leaner benefit programs, though high turnover can push training costs up.
How to use the fully burdened rate
Project costing. Say a project requires 100 hours of a $75,000-a-year manager, and that role carries a 41% burden. The true cost is 100 hours at $50.66, not $36.06. The difference is $1,460 on a single project.
Service pricing: any business billing out time should price from the burdened rate, not the wage. Pricing below the burdened rate means you are subsidizing clients out of margin.
Hiring decisions: when comparing overtime versus a new hire, or a contractor versus an employee, the burdened rate is what makes the comparison honest. A contractor at $65 per hour may cost less than a $55,000 employee once burden is added.
Carry this into the decision
Compare roles and run scenarios
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Put your own numbers in and read the result on screen.
Put your own numbers in and read the result on screen.
This tool estimates from the figures you enter. It is general information rather than legal, tax, or accounting advice, so check the result against your own records before you rely on it.