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How to Calculate True Labor Cost per Hour

The wage is just the visible part of labor cost. Employer taxes, insurance, benefits, paid time off and non-billable hours push the real cost 20-40% higher — and pricing jobs on the bare wage quietly loses money on every hour. This guide works out the true, loaded cost of an hour of labor.

Step by step

  1. Open the Labor Cost Calculator.
  2. Enter the number of employees, their hourly wage and hours per week.
  3. Add the burden percent — employer taxes, insurance and benefits as a percentage of wages (20-30% is a common starting estimate).
  4. Read the true cost per hour and the total weekly and annual labor cost.
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Open the Labor Cost Calculator tool

Tips for better results

Frequently asked questions

What is a labor burden rate?

All employer costs beyond the wage — payroll taxes, workers' comp, insurance, benefits, paid leave — expressed as a percentage of wages. 20-40% is the usual range.

How do I cost a job's labor?

Loaded hourly rate × the hours the job will really take (include setup, travel and cleanup), then add your margin via the Markup Calculator.

Does this include salaried staff?

Convert salary to an hourly figure first (salary ÷ yearly working hours) and apply the same burden logic.