Labor burden calculator: what an hour of labor really costs

Why the hourly wage isn’t the cost of an hour

A $30 wage costs you more than $30. On top of it come the employer’s share of payroll taxes, workers’ comp and other insurance, and benefits such as health cover. You also pay for hours nobody works, like holidays and vacation. Everything beyond the wage is the labor burden.

• Social Security and Medicare: the employer pays 6.2% and 1.45% of wages, 7.65% in total (IRS Topic 751). Social Security stops at a yearly wage base, $184,500 for 2026.
• Unemployment taxes: FUTA applies only to the first $7,000 of each person’s wages (IRS Topic 759), and state unemployment taxes stop at a yearly wage base set by each state (U.S. Department of Labor). Because of those caps, add their yearly amount per person to the benefits field instead of entering the rates as a percentage of wages.
• Workers’ comp: premiums depend on your state, your insurer and the type of work, so use the rate from your policy.

This is general information, not tax advice. Rates change and state and local rules differ, so check yours with your accountant.

Non-billable time: paid hours no customer pays for

Not every paid hour lands on a job. Driving between sites, loading the van, shop time, estimate visits and callbacks to fix earlier work are all paid, but rarely billed. If 20% of working time goes there, the remaining hours have to carry its cost, so each billable hour costs more than a paid one.

HiVis job costing prices every hour logged on a project at the person’s rate on that date. It doesn’t add burden or overhead to those costs, so use the cost per billable hour from this calculator when you set your prices.

How it’s calculated

The calculator works in yearly totals:

• Annual wages = hourly wage × paid hours per year
• Burden = annual wages × (payroll taxes % + insurance %) + benefits and other yearly costs
• Labor burden, share of wages = burden ÷ annual wages
• Cost per paid hour = (annual wages + burden) ÷ paid hours per year
• Billable hours = (paid hours − paid time off) × (1 − non-billable %)
• Cost per billable hour = (annual wages + burden) ÷ billable hours

Paid time off is already part of the paid hours, so it isn’t added to the cost again. It reduces the hours you can bill instead.

Worked example

The calculator’s starting values, which are example numbers rather than averages: a $30 wage, 52 weeks of 40 hours, 10 days of paid time off and 20% non-billable time.