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Contractor Labor Burden Calculator
See the true fully loaded cost of a field employee — wages plus FICA, workers' comp, health insurance, PTO, and retirement. Know your minimum billable rate before you price another job.
See How We Help Contractors ScaleCalculate Your True Employee Cost
Enter your employee's wage and benefit package. Results include burden rate, loaded hourly cost, and the minimum billing rate to break even.
Roofing: 7–15%. HVAC: 4–8%. Solar: 3–7%.
State unemployment insurance. Check with your state.
Uniforms, tools, training, vehicle allowance, etc.
% of paid hours spent on billable customer work. Typical: 65–80%.
True annual cost
$80,418
Labor burden rate
38.1%
Loaded hourly rate
$38.66/hr
Breakeven bill rate
$53.7/hr
Annual burden breakdown
Estimates only. Workers' comp rates, SUTA rates, and benefit costs vary by state, trade, and claims history. Consult your payroll provider, insurance broker, and accountant for precise numbers for your business.
What Is Labor Burden?
Labor burden = everything beyond the paycheck
Base wages are just the starting point. Employer FICA adds 7.65% immediately. Workers' compensation for a roofer can add another 8–12% of payroll. Health insurance, retirement contributions, and paid time off stack on top. A $28/hr roofer often costs $40–$45/hr in total employment cost.
Workers' comp is the biggest variable by trade
Roofing is one of the highest-risk trades — workers' comp rates run 7–15% of payroll depending on state and claims history. HVAC typically runs 4–8%; solar 3–7%. Your experience modification rate (EMR) can push rates higher (EMR > 1.0) or lower (EMR < 1.0) based on your claims history.
Billable efficiency multiplies the impact
If a tech works 2,080 hours per year but only 70% of those hours are billable customer work, your true cost is spread over 1,456 billable hours — not 2,080. A $40/hr loaded rate becomes a $58/hr breakeven billing rate. This is why your labor billing rate must be higher than your loaded hourly cost.
Use this number in every job estimate
Price every job using the fully loaded hourly rate, then add overhead and profit margin on top. Many contractors lose money because they price at the wage rate and forget burden. The breakeven billing rate in this calculator is the floor — not the target. Add overhead markup and margin above it.
Why Most Contractors Underprice Labor
The wage rate illusion
Most contractors know their employees' wages but don't track total employment cost. Pricing at $28/hr when the true cost is $42/hr erodes margin on every single job — often without the owner realizing where the profit went.
Workers' comp surprises
Many small contractors underestimate workers' comp rates, especially in high-risk trades. A roofing crew's WC at 10% adds $2,800/yr to a $28,000-salary employee — a number that's easy to miss in simple payroll calculations.
PTO is invisible until it hurts
Ten days of paid vacation sounds small — but it's 80 hours of paid non-productive time per employee per year, roughly $2,240 for a $28/hr worker. Multiplied across a crew of five, that's $11,200 in annual cost most owners don't factor into hourly rates.
Billable efficiency gaps
Drive time, callbacks, training, safety meetings, and admin don't generate revenue but they cost real money. A technician who generates 70% billable hours means 30% of their cost needs to be recovered in the 70% of time they're working on customer jobs.
Benefits creep over time
Health insurance costs rise 5–10% per year on average. Workers' comp rates change with claims. 401k contributions compound. The burden rate that was accurate 18 months ago may be significantly understating true cost today.
Subcontractor comparison trap
It's tempting to compare a $60/hr subcontractor to a $28/hr employee and say the employee is cheaper. But the $42/hr fully loaded employee needs consistent work and management attention. For low-volume or specialty work, subs often make more financial sense.
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Labor Burden FAQ
What is labor burden for contractors?
Labor burden is the total cost of employing a worker beyond their base wage: FICA (7.65%), FUTA, SUTA, workers' comp, health insurance, retirement, PTO, and other benefits. A $28/hr technician typically costs $38–$45/hr in total employment cost — a burden rate of 35–60%.
What is a typical labor burden rate for contractors?
Most specialty contractors have burden rates of 30–55% above base wages. Basic packages (no health, minimal PTO) run 25–30%. Comprehensive packages with health, 401k, and generous PTO add 45–55%. Roofing's high workers' comp rate (7–15%) is the biggest driver.
What is included in labor burden?
Labor burden includes: employer FICA (7.65%), FUTA (~$420/employee/year), SUTA (1–5% of wages), workers' comp (3–15% by trade), health insurance, dental/vision, 401k match, paid time off, and other employer-paid benefits like uniforms and tool allowances.
How do I calculate the true cost of an employee?
True cost = base wages + FICA + FUTA + SUTA + workers' comp + health insurance + 401k match + PTO value + other benefits. Divide by total paid hours for the loaded hourly rate. Divide by billable hours for the breakeven billing rate.
What is workers' comp rate for roofing?
Roofing workers' comp typically runs 7–20% of payroll depending on state and claims history. HVAC is 4–8%; solar 3–7%. Your experience modification rate (EMR) adjusts rates up or down based on actual claims vs. industry average.
What is a billable efficiency rate?
The percentage of paid hours spent on billable customer work. The remainder is drive time, admin, training, and callbacks. Typical field service efficiency: 65–80%. At 70% efficiency, a 2,080-hr/yr employee generates only 1,456 billable hours — so your true hourly cost must be spread across fewer revenue-generating hours.
Employee vs. subcontractor — which is cheaper?
Subcontractors typically cost 1.2–1.5× the equivalent employee rate per hour but require no benefits, payroll taxes, or workers' comp. Employees are more cost-effective when consistently fully utilized. Most growing contractors use core employees for consistent volume and subs for overflow.
How does labor burden affect job pricing?
If you price labor at the wage rate ($28/hr) but ignore the $14/hr burden, you underprice every job by 50% of the true labor cost. Always price using the fully loaded hourly rate, then add overhead and profit margin on top. The breakeven billing rate this calculator shows is your floor — your actual price must be higher.
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SubcontractorHub helps roofing, HVAC, and solar contractors track real job costs, build winning proposals, and scale with confidence.
Book a Free DemoAll calculations are estimates. Workers' comp rates, SUTA rates, and benefit costs vary by state, trade, and claims history. Consult your payroll provider and accountant for precise figures.