Labor Burden Calculator: Fully Burdened Rate for Bids

Short answer: A fully burdened labor rate is the base wage plus every cost that comes with it: employer payroll taxes, unemployment taxes, workers' comp, and benefits. Add those costs for one worker for a year, then divide by the hours your crew actually works on jobs. With the defaults below, a $40 wage costs $54.40 per paid hour and $57.73 per productive hour.

Key takeaways

• Labor burden is the yearly cost of taxes, insurance, and benefits on a worker's pay, spread over hours.
• For 2026, the employer pays 6.2% Social Security on wages up to $184,500 and 1.45% Medicare on all wages.
• FUTA is 0.6% on the first $7,000 of each worker's pay when your state earns the full credit.
• State unemployment and workers' comp rates vary by state, by class code, and by your own claims history.
• Price a bid with the rate per productive hour, then add overhead and profit as a markup.

What is a fully burdened labor rate?

A fully burdened labor rate is what one hour of a worker's labor costs your company, not what the worker sees on the paycheck. The base wage is the starting point. The burden is everything the wage drags along with it.

The burden has two parts. Statutory costs are the ones the law requires: Social Security, Medicare, federal and state unemployment tax, and workers' comp. Benefits are the ones you choose or your labor agreement requires: health insurance, retirement, and paid time off.

Overhead and profit are not part of the burden. Your office rent, trucks, and estimator salaries belong in the markup you add later.

How does the calculator work?

You enter ten numbers. The first four describe the worker. The last six are tax and insurance figures, and their defaults are an example, not your rates.

The calculator finds the yearly wage first: base hourly wage times paid hours per year. Then it adds six yearly costs:

1. Social Security is 6.2% of the yearly wage, up to the Social Security wage base.
2. Medicare is 1.45% of the whole yearly wage.
3. FUTA is the FUTA rate times the yearly wage, up to $7,000.
4. State unemployment is the state rate times the yearly wage, up to the state wage base.
5. Workers' comp is the yearly wage divided by 100, times the rate per $100, times the experience mod.
6. Benefits are the benefits per paid hour times paid hours per year.

The total of the six is the yearly burden. The calculator returns five figures from it:

• Burden per paid hour is the yearly burden divided by paid hours per year.
• Fully burdened rate per paid hour is the base wage plus the burden per paid hour.
• Burden as a percent of base wage is the burden per paid hour divided by the base wage, times 100.
• Fully burdened rate per productive hour is the yearly cost per worker divided by paid hours minus paid hours not worked.
• Yearly cost per worker is the yearly wage plus the yearly burden.

Enter percents as whole numbers (6.2, not 0.062). Social Security and Medicare rates sit inside the formula because the law fixes them for every employer.

Worked example: a $40 an hour journeyman

The calculator opens with this example. A drywall subcontractor pays a journeyman $40 an hour for 2,080 hours a year. That covers 52 weeks of 40 hours. The worker takes 120 paid hours off, such as 6 holidays, 5 vacation days, and 4 days of sick leave or training.

• Yearly wage: $40 × 2,080 = $83,200.
• Social Security: $83,200 is under the $184,500 wage base, so 6.2% × $83,200 = $5,158.40.
• Medicare: 1.45% × $83,200 = $1,206.40.
• FUTA: 0.6% × $7,000 = $42.00.
• State unemployment: 2.7% × $9,000 = $243.00.
• Workers' comp: $83,200 ÷ 100 × $8.00 × 1.00 = $6,656.00.
• Benefits: $8.00 × 2,080 = $16,640.00.
• Yearly burden: $5,158.40 + $1,206.40 + $42.00 + $243.00 + $6,656.00 + $16,640.00 = $29,945.80.

From the yearly burden, the five outputs follow:

• Burden per paid hour: $29,945.80 ÷ 2,080 = $14.40.
• Fully burdened rate per paid hour: $40 + $14.40 = $54.40.
• Burden as a percent of base wage: $14.397 ÷ $40 × 100 = 35.99%.
• Yearly cost per worker: $83,200 + $29,945.80 = $113,145.80.
• Fully burdened rate per productive hour: $113,145.80 ÷ (2,080 − 120) = $113,145.80 ÷ 1,960 = $57.73.

The table splits the same burden by cost, per paid hour. Rounded cents add up to $14.40.

Why price a bid with the rate per productive hour?

Your estimate counts hours your crew spends on the job, so the rate must recover a full year's cost from those hours alone. In the example, you pay for 2,080 hours but bill only 1,960. The $54.40 paid-hour rate times 1,960 hours recovers $106,624, which is $6,521.80 short of the $113,145.80 the worker costs.

The productive-hour rate fixes that shortfall. It spreads holiday, vacation, sick, and training pay over the hours you can charge to a job. Add any other paid time your crew spends off the job, such as shop time or weather days, to paid hours not worked.

Where do the 2026 tax rates come from?

The federal rates are the same for every employer. Use the 2026 figures for work your crew does in 2026.

• Social Security. The IRS sets the employer share at 6.2%. The Social Security Administration sets the 2026 wage base at $184,500, so a worker's pay above that owes no Social Security tax. For 2027 the base rises to $192,300, so enter that figure for work your crew does in 2027.
• Medicare. The IRS sets the employer share at 1.45% with no wage base. The 0.9% Additional Medicare Tax on wages over $200,000 has no employer match.
• FUTA. The IRS sets FUTA at 6.0% of the first $7,000 of each worker's wages. Paying your state unemployment tax in full earns a credit of up to 5.4%, which leaves 0.6%, or $42 a worker.

A state that has not repaid federal loans for unemployment benefits becomes a credit reduction state, and its employers get a smaller credit. The Department of Labor names those states and sets each year's final reductions in November. If you pay wages in one, raise the FUTA rate in the calculator.

How do you find your state unemployment rate?

Your state unemployment agency assigns your rate each year from your claims history. New employers get a set rate until they build a history. The default here, 2.7% on the first $9,000, is an example only.

The spread between states is wide. In the Department of Labor's July 2026 table, state taxable wage bases run from $7,000 to $78,200 a year. The table also notes that a new employer can pay more than the base rate, depending on its industry. Enter the rate and wage base on your latest state notice.

How does a workers' comp rate per $100 of payroll work?

In most states, your carrier charges workers' comp as a rate per $100 of payroll for each class code, then multiplies by your experience mod. The NCCI's guide to experience rating shows the math. Its example roofing company pays $63.171 per $100 for roofers and $0.75 per $100 for clerical staff.

Rates vary that much by trade and by state, so the $8.00 default is an example. Take the rate for your crew's class code from your policy. The mod compares your claims with the average employer in your class codes. A mod of 1.00 is average, below 1.00 is a credit, and above 1.00 is a debit.

The mod moves the burdened rate. At a 1.25 mod, the example's workers' comp rises from $3.20 to $4.00 per paid hour. The rate per productive hour rises from $57.73 to $58.58. Add any other insurance your carrier rates on payroll to the rate per $100.

How do prevailing wage and union fringes fit in?

On Davis-Bacon work, the wage determination in the contract sets a base rate and a fringe rate per hour. The Department of Labor lets you pay the fringe in cash, into bona fide benefit plans, or both. If you pay the fringe in cash, add it to the base wage, because it is wage.

Taxes do not count toward the fringe. The DOL's Davis-Bacon FAQ says payments the law requires for Social Security, unemployment, and workers' comp are not fringe benefits. 29 CFR 5.29 also excludes benefits that other law requires. So the calculator adds those taxes on top of the wage determination's fringe.

The DOL also limits your fringe credit to the plan's hourly cost spread over all hours. That spread counts your crew's hours on private jobs too. So enter the plan's yearly cost divided by all paid hours as benefits per paid hour.

On union work, your collective bargaining agreement sets the fringe contributions per hour. Enter their total as benefits per paid hour. If your company pays no wages for hours off, set paid hours not worked to zero.

How does the burdened rate feed a bid?

Multiply the labor hours in your estimate by the rate per productive hour, then add overhead and profit. Take a package with 1,000 field hours for the example journeyman. At $57.73 an hour, labor costs $57,730. A 10% markup brings the labor line to $63,503.

The burdened rate is cost, not price. Use the markup and margin calculator to turn the labor cost into a sell price, and to see what margin your markup leaves. Had you priced the same 1,000 hours at the paid-hour rate of $54.40, the labor line would miss $3,330 before markup.

How can a general contractor sanity-check a sub's labor price?

A general contractor can check a sub's labor rates against a floor: the base wage plus the taxes and workers' comp the law requires. In the example, those statutory costs alone add $6.40 to each paid hour. A time-and-material rate near the bare wage leaves nothing for benefits, overhead, or profit.

Read the qualifications next. A bid priced on straight time only, or one that excludes overtime or after-hours work, can look lower than it is. Overtime or after-hours work appears among the common exclusions in subcontractor bids. On public work, confirm the bid carries the wage determination's base rate and fringe.

When a bid leaves labor scope out, price the gap yourself. In Consight, you add a plug at your own number for each missing or unclear item, and Connie, Consight's assistant, does not invent a plug value. See how to compare subcontractor bids for the full method.

Frequently asked questions

What is a fully burdened labor rate?

A fully burdened labor rate is a worker's base wage plus payroll taxes, unemployment taxes, workers' comp, and benefits, per hour. For bidding, divide the yearly total by the hours the worker spends on jobs.

What is a typical labor burden percentage in construction?

No single percentage fits every company. In the Bureau of Labor Statistics' June 2026 figures, construction employers paid $36.13 in wages and $15.84 in benefits per hour worked. The benefits equal 44% of the wages. The BLS counts paid leave, overtime premiums, insurance, retirement, and required taxes as benefits.

Does labor burden include overhead?

No. Labor burden covers costs tied to a worker's pay. Office staff, rent, vehicles, and profit go in the markup you add to the burdened labor cost.

Why does the Social Security wage base matter for most crews?

The wage base matters only for workers who earn more than $184,500 in 2026. A foreman with heavy overtime can pass it. For pay above the base, the employer's 6.2% stops, so the calculator caps it.