What labor burden means
Labor burden is everything an employee costs you on top of their wage: payroll taxes, workers' comp, insurance, benefits and paid time off. Dividing the total by the hours they actually work gives your fully burdened labor rate, the minimum you must recover per hour before overhead and profit.
On federal contracts
Service contracts use the Service Contract Act wage determination: a minimum wage per job title plus a health and welfare amount per hour, and set vacation and holidays. Construction uses Davis-Bacon rates plus fringes. Enter those numbers above and you'll see the real cost before you price a bid. Pricing guides: janitorial, security guards, Davis-Bacon.
Questions
How do you calculate labor burden?
Add payroll taxes, insurance, benefits and paid leave to the annual wage, then divide the total by the wage. The percentage above 100% is the labor burden.
What is a fully burdened labor rate?
The total yearly cost of an employee divided by the hours they actually work. It's the true cost per productive hour before overhead and profit.
What is a typical labor burden percentage?
Often 20% to 40% on top of wages for small businesses, depending on benefits, insurance and the state.