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An employee’s true hourly cost is not their wage. It is the base hourly wage plus the employer payroll taxes, workers’ compensation, and overhead you carry for every hour they work — the number known as the loaded labor rate — also called the labor burden rate when it is expressed as a percentage, or the fully loaded cost of an employee when it is expressed in dollars. Add those costs to the wage and you have the rate to bid, budget, and job-cost against. Enter a wage below to see the loaded hourly rate, what it costs per week, and what it costs per year. The payroll tax field starts at 7.65%, the standard employer FICA share and the rate our own job costing content uses; workers’ comp and overhead start empty, because those numbers are yours, not ours.
Calculate a loaded hourly rate
Enter a base wage and the employer costs you carry on top of it. Only the payroll tax field starts with a number in it — 7.65%, the standard employer FICA share.
Workers’ comp and other overhead start empty on purpose. Workers’ compensation rates vary by state and by each employee’s job classification, so there is no default worth prefilling — take the rate off your own policy. “Other overhead” is optional: use it for anything you pay per hour worked that is not the wage or a percentage of it. Leave either field blank and it adds nothing at all.
| Cost component | Rate entered | Cost per hour |
|---|---|---|
| Base hourly wage | — | $20.00 |
| Employer payroll tax | 7.65% of wage | $1.53 |
| Workers’ compensation | Not entered | $0.00 |
| Other overhead | Not entered | $0.00 |
| Loaded hourly rate | 7.65% above the wage | $21.53 |
The annual figure is simply the weekly cost times 52 weeks. It assumes the same hours every week and does not model unpaid weeks, seasonal shutdowns, overtime premiums, or benefits — add anything else you pay per hour worked to the overhead field. To split a week into regular and overtime hours first, use the free time card calculator.
What Is a Labor Burden Rate?
The labor burden is everything an hour of work costs you that is not the wage itself. Two numbers describe it, and they are easy to confuse:
The burden rate is a percentage
Burden ÷ base wage × 100. It answers “how much on top of the wage?” A $20.00 wage carrying only the 7.65% employer payroll tax has a burden rate of 7.65%; add an example 5% workers’ comp rate and $1.00 an hour of overhead and it becomes 17.65%. Because it is a ratio, it travels between wages: the same burden rate applied to a higher wage produces a higher loaded rate.
The fully loaded cost is a dollar figure
Base wage plus the burden — also called the fully burdened cost, the loaded labor rate, or simply the loaded rate. It is the number a bid, a budget, and a job costing report should all be built on, because it is what one hour actually removes from the bank account. Expressed as a multiplier — 1.18× in the worked example below — it is the figure estimators carry in their heads.
What belongs inside the burden splits cleanly into two families, and the calculator gives each one its own field because they behave differently:
| Cost family | Examples | Where it goes |
|---|---|---|
| Costs that scale with the wage | FICA and Medicare, federal and state unemployment tax (FUTA and SUTA), workers’ compensation, liability insurance, and city or county income taxes where they apply — the list our guide to loaded pay rates and true job costs sets out. | A percentage field — pay a dollar more an hour and they rise with it. |
| Costs that are flat per hour worked | A vehicle and its fuel, tools and equipment, uniforms and PPE, a phone or tablet, supplies, and paid time nobody bills for — travel between sites, restocking, briefings. | The overhead field, in dollars per hour. A raise does not change them; an additional hour does. |
The trap is in the second family. Those costs usually arrive as an annual or monthly invoice, so to turn one into dollars per hour, divide it by the hours that person is actually paid for in a year — a 40-hour week over 52 weeks is 2080 hours, and a part-time or seasonal crew member is far fewer. Divide by a number of hours you never worked and every bid built on the result is short.
A Worked Example: $20.00 an Hour
Here is the whole calculation on a $20.00 wage, done in public. Read the inputs carefully: only the 7.65% payroll tax is a real, sourced rate. The 5% workers’ comp rate and the $1.00 per hour of other overhead are example inputs, chosen to keep the arithmetic easy to follow. They are not benchmarks, averages, or recommendations — your rates will differ.
| Cost component | Input | Cost per hour |
|---|---|---|
| Base hourly wage | $20.00 per hour | $20.00 |
| Employer payroll tax | 7.65% of wage (standard FICA share) | $1.53 |
| Workers’ compensation | 5% of wage — example input only | $1.00 |
| Other overhead | $1.00 per hour — example input only | $1.00 |
| Loaded hourly rate | $3.53 above the wage (17.65%) | $23.53 |
| Cost for a 40-hour week | 40 hours × $23.53 | $941.20 |
| Cost for a year | $941.20 × 52 weeks | $48,942.40 |
The $20.00 wage costs $23.53 an hour once it is loaded — 1.18× the base rate, or $7,342.40 a year above wages on a 40-hour week. Quote the $20.00 and that difference comes out of the margin.
Why the Burden Multiplier Varies by Trade
Two people earning the same wage rarely cost the same. Three things move the multiplier, and none of them is under your control at the moment you write a bid:
The workers’ comp classification
Comp is priced per state and per class code, against the injury risk of the work itself. A dispatcher at a desk and a crew on a roof are not in the same neighbourhood, and the gap between them is usually larger than any other line in the burden.
What the person carries per hour
A truck, fuel, a ladder rack, tools, PPE, a phone, consumable supplies. A crew that drives to five sites a night carries a per-hour cost a crew that walks into one building does not.
Paid hours nobody bills for
Travel between sites, restocking, briefings, waiting for site access. Those hours are paid at the loaded rate but earn nothing, so they raise the effective cost of every hour that is billed.
Here is the same $22.00 wage carrying four different burdens. Every workers’ comp rate and overhead figure below is an example input chosen to show the shape of the spread — none of them is a rate for that trade, an average, or a recommendation:
| Example role | Workers’ comp (example) | Per-hour overhead (example) | Loaded rate | Multiplier |
|---|---|---|---|---|
| Office / dispatch | 0.75% | $0.40 | $24.25 | 1.10× |
| Cleaning crew | 4.5% | $1.20 | $25.87 | 1.18× |
| Mobile patrol / service tech | 4.5% | $3.50 | $28.17 | 1.28× |
| High-risk trade (roofing, tree work) | 18% | $2.00 | $29.64 | 1.35× |
Read the spread, not the rows: on one wage the loaded rate ranges from $24.25 to $29.64 an hour — 1.10× against 1.35× — purely because of a high-hazard classification, where comp alone can dwarf the rest. That is why a single company-wide multiplier misprices work in both directions at once. Your comp rates come off your own policy declarations, class code by class code; your per-hour costs come off your own P&L.
Base Wage Plus Employer Payroll Tax
Common base wages carrying the 7.65% employer payroll tax and nothing else — no workers’ comp, no overhead, no assumptions about your business. This is the floor under any loaded rate: your own workers’ comp rate and per-hour overhead go on top of these figures.
| Base wage | Payroll tax (7.65%) | Wage + payroll tax | 40-hour week |
|---|---|---|---|
| $15.00 | $1.15 | $16.15 | $646.00 |
| $20.00 | $1.53 | $21.53 | $861.20 |
| $25.00 | $1.91 | $26.91 | $1,076.40 |
| $30.00 | $2.30 | $32.30 | $1,292.00 |
Every row is the wage plus 7.65% of the wage, rounded to the cent — pure arithmetic, which is why no rate had to be assumed to publish it.
From Base Wage to Quoted Price: One Contract, End to End
A loaded rate is only useful when it reaches a price. Here is a nightly commercial cleaning contract walked all the way through: a crew of 2 at $18.00 an hour, 3 hours a visit, 5 nights a week. As always, only the 7.65% payroll tax is a sourced rate — the workers’ comp rate, the per-hour overhead, the revenue overhead share and the target margin are example inputs, chosen so one contract can be followed end to end. Substitute your own.
1. Load the wage
$18.00 + $1.38 payroll tax + $0.81 workers’ comp (4.5%, example) + $1.20 per-hour overhead (example) = $21.39 an hour, a 1.19× multiplier.
2. Count paid hours, not billable hours
2 cleaners × 3 hours × 5 nights = 30 hours on site, plus 2.5 hours a week of travel and restocking that you pay for and nobody bills = 32.5 paid hours a week. Bids that use only the on-site hours are short before the first shift is worked.
3. Cost the week
32.5 hours × $21.39 = $695.18 a week in burdened labor. The same week looks like $585.00 if you cost it at the bare wage — a gap of $110.18 that is real money leaving the account.
4. Decide what share of the price labor may take
Everything that is not labor has to come out of the same price: supplies, insurance, admin, franchise or royalty fees — the revenue overhead percentage a job budget carries — and then the profit. Allow 10% for revenue overhead and target 20% margin (both example inputs) and labor may occupy 70% of the price.
5. Divide, don’t add
Price = burdened labor cost ÷ labor’s share of revenue: $695.18 ÷ 70% = $993.11 a week, or $4,303.48 a month. Adding 20% to the cost instead of dividing by the share is the classic markup-versus-margin error, and it lands under the number you meant to quote.
6. Check what the wage-only bid would have done
Run the same arithmetic off the $18.00 wage and you quote $835.71 a week. The work still costs $695.18, so labor eats 83.18% of the price and the 20% margin collapses to 6.82% — $8,184.80 a year on this one contract.
| Same contract, two bids | Priced off the bare wage | Priced off the loaded rate |
|---|---|---|
| Hourly rate used | $18.00 | $21.39 |
| Quoted price a week | $835.71 | $993.11 |
| True labor cost (32.5 paid hours) | $695.18 | $695.18 |
| Labor as a percentage of revenue | 83.18% | 70% |
| Margin left after 10% revenue overhead | 6.82% ($56.96) | 20% ($198.62) |
Nothing in the left-hand column is a mistake anyone makes on purpose. It is what happens when the wage is the only number in front of you at the moment the price is written down — which is the argument for pricing from a loaded rate and then checking the finished job against it in job costing reports built on loaded pay rates.
Labor Cost as a Percentage of Revenue
The formula is simple — labor cost ÷ revenue × 100 — and almost every argument about it comes from the two inputs, not the division. In the contract above, $695.18 of burdened labor against a $993.11 price is 70%, because that is the share the bid was built around. Quoted off the bare wage, the same work runs 83.18% — the number did not change, the price did.
For labor-intensive service work the share is high by nature. Our own field service writing puts labor at 55% to 90% of a job contract’s total revenue, and in commercial cleaning labor often runs 70% or more of total costs. A range that wide is a warning about borrowed benchmarks: before comparing your percentage to anyone else’s, check three things.
Which labor number is on top
Bare wages, wages plus taxes, or the fully loaded cost? On the example contract those three produce 58.91%, something in between, and 70% — from identical work. A percentage without its definition is not comparable to anything.
Which revenue is underneath
One contract, one division, or the whole company? A company-wide average is a blended number, and a blend hides the individual contract that is losing money behind the ones that are not.
Whether you are comparing to the bid or to the industry
The benchmark that pays is your own: the share you priced in versus the share the finished job actually consumed. Drift between those two is measurable per job, and it is actionable in a way that an industry average never is.
Measuring it after the fact needs hours you trust as much as the rates. That is what real-time job costing is for — GPS-verified hours costed at loaded pay rates, reported per job while the contract is still running rather than at the end of the quarter.
How to Calculate a Loaded Labor Rate
1. Start with the base hourly wage
Use the wage actually paid for the hour you are costing. If the hour is paid at an overtime or premium rate, load that rate rather than the standard one — the percentages below apply to whatever wage the hour earns.
2. Add the employer payroll tax
Multiply the wage by 7.65%, the standard employer FICA share and the rate used in our job costing content: $20.00 × 7.65% = $1.53 per hour.
3. Add your workers’ comp rate — your real one
Workers’ compensation is a percentage of payroll set by your state and by each employee’s job classification, so it has to come off your own policy. There is no national figure to drop in here, which is why the calculator leaves the field empty rather than guessing.
4. Add anything else you pay per hour, then multiply out
Unemployment taxes, liability insurance, benefits, uniforms, vehicles, tools — anything you can express as dollars per hour worked belongs in the overhead field. The total is your loaded hourly rate; multiply by hours per week for the weekly cost, and by 52 weeks for the annual cost.
5. Turn the rate into a price
Multiply the loaded rate by every paid hour the job needs — including travel and setup nobody bills — then divide by the share of the price labor is allowed to take, once revenue overhead and your target margin are set aside. The worked bid above runs that arithmetic end to end.
Frequently Asked Questions
What is a loaded labor rate?
It is an employee’s true cost for one hour of work, not just their wage. Our guide to small business resolutions lists what belongs on top of the hourly wage to reach a final hourly cost: FICA and Medicare, federal and state unemployment taxes (FUTA and SUTA), workers’ compensation, liability insurance, and city or county income taxes where they apply. A “loaded” pay rate rolls all of that into one number, so job costing tools can show real, not estimated, profit or loss for every job.
What does the 7.65% payroll tax rate cover?
It is the standard employer share of payroll tax on wages — the figure Chronotek Pro’s job costing uses when it loads labor dollars. As our security guard company guide puts the formula: labor dollars are loaded to include “the employee’s base rate + payroll taxes (7.65%) + workers’ comp (?%) + benefits (?%).” That 7.65% covers the employer’s payroll tax on the wage and nothing else. Unemployment taxes, liability insurance, and benefits are separate costs, which is why this calculator gives workers’ comp and overhead their own fields instead of burying them in one percentage.
Why is there no default workers’ comp rate in the calculator?
Because there is no honest one to supply. Workers’ compensation rates vary by state and by each employee’s job classification — the same wage can carry very different premiums for an office role and a field crew. Notice that our own job costing formula writes it as “workers’ comp (?%)”: the question mark is the point. Take the rate from your policy or your carrier’s declaration page and enter it above. The 5% used in the worked example on this page is an example input picked to keep the arithmetic readable, not a benchmark or an average.
Why do loaded rates matter when bidding a job?
Because labor is the largest line in the bid: field service companies see labor costs run 55–90% of a typical job contract’s revenue. Bid off the bare wage and every hour you quoted is missing its payroll tax, workers’ comp, and overhead — a gap that scales with every hour you win. Chronotek Pro’s job costing dashboard reports live labor dollars for every job by day, week, and pay period using loaded pay rates, and lets you add a percentage to employee pay rates that reflects the cost factors in your own business.
How do I lower labor costs without cutting anyone’s pay?
Start with hours you are paying for that nobody worked. One cleaning company owner tested TimeTiles™ with his 50-person staff and found time cards ran 8 minutes shorter per shift once employees had to be on site to clock in instead of clocking in from their cars; across 300 shifts a week at a loaded pay rate of $16.46 an hour, that came to $34,236.80 a year in eliminated waste. Note that the math uses a loaded rate — the bare wage would have understated the savings. For more, how to control labor costs and field service labor cost tracking cover the operational side.
Does overtime change the loaded rate?
The percentages apply to whatever wage you pay for that hour, so an overtime hour paid at a premium carries proportionally more payroll tax and workers’ comp than a regular hour — the loaded rate rises with the wage it is built on. The flat overhead figure normally does not. The practical order is to total the week and split regular from overtime hours first with the time card calculator, then load each wage separately here.
What is a labor burden rate, and how do you calculate it?
The labor burden is everything an hour of work costs you beyond the wage itself — payroll taxes, unemployment taxes, workers’ compensation, insurance, benefits, and the per-hour cost of vehicles, tools, uniforms and devices. The burden rate expresses that total as a percentage of the wage: burden ÷ base wage × 100. A $20 wage carrying $1.53 of payroll tax, $1.00 of workers’ comp and $1.00 of overhead has a $3.53 burden, so the burden rate is 17.65% and the loaded rate is $23.53. Enter your own figures in the calculator above and it reports the burden per hour, the burden rate and the multiplier together.
What is the fully loaded cost of an employee?
It is the same figure as the loaded labor rate, stated in dollars rather than as a percentage: base wage + burden = the fully loaded (or fully burdened) hourly cost of that employee. Annualise it by multiplying by the hours you actually pay for — 2,080 for a 40-hour week across 52 weeks, fewer for part-time or seasonal crews. Costs that arrive as an annual invoice, such as an insurance premium or a phone plan, have to be divided by those same paid hours before they can join the hourly figure. The burden breakdown above separates the costs that scale with the wage from the ones that are flat per hour.
Why is my labor burden higher than another contractor’s?
Usually workers’ compensation. Comp is priced per state and per job classification code, so a desk role and a high-risk trade on identical wages carry very different premiums — and that single line often moves the multiplier more than everything else combined. After that come the per-hour costs the other company may not carry: a vehicle and its fuel, tools, PPE, a device, and paid hours nobody bills, such as travel between sites. It is why a single company-wide multiplier misprices work in both directions, and why the trade comparison above uses one wage with four different burdens rather than publishing a rate for each trade.
How do you turn a fully loaded cost into a bill rate?
Multiply the loaded rate by every paid hour the job needs, including travel and setup nobody bills for, then divide — do not add — by the share of the price labor is allowed to take once revenue overhead and your target margin are set aside. If overhead is 10% of revenue and you want a 20% margin, labor may occupy 70% of the price, so a $695.18 week of burdened labor supports a $993.11 bid. Adding 20% to the cost instead of dividing by 70% is the markup-versus-margin error, and it lands under the number you meant to quote. The worked bid above runs one service contract through every step.
How do you calculate labor cost as a percentage of revenue?
Divide labor cost by revenue and multiply by 100 — per contract, not just company-wide, because a blended average hides the one job that is losing money. The arithmetic is trivial; the inputs are where comparisons go wrong. Use loaded cost rather than bare wages on both sides, and be explicit about which you used, since the same contract can read just under 59% on bare wages and 70% fully loaded. Labor-intensive service work sits high by nature: our guide to true job costs puts labor at 55–90% of a job contract’s revenue, and controlling labor costs notes it often runs 70% or more of total costs in commercial cleaning. The benchmark that pays, though, is your own bid: the share you priced in against the share the finished job consumed.
See loaded labor costs as they happen
A calculator gives you one hour’s true cost. Chronotek Pro’s live job costing dashboards apply loaded pay rates to GPS-verified hours and report labor dollars by employee and job for the day, week, and pay period — then predict where budgets are heading. Start a 30-day free trial, no credit card required.
Related reading: Loaded pay rates and true job costs · How to control labor costs · Field service labor cost tracking · Free time card calculator