👷 Labor Cost Calculator
Calculate total employee labor cost including wages, benefits, payroll taxes, and overhead.
Why True Labor Cost Is Always Higher Than Salary
The "labor burden" — the difference between salary and total cost — typically adds 25–40% to base salary. For a $65,000 salary, total labor cost is commonly $82,000–$91,000. Businesses that price services based on salary alone undercharge and erode margins. The fully-loaded hourly rate is what you should use for project pricing, bid calculation, and hiring ROI analysis.
Common Labor Burden Benchmarks
Small businesses: 20–30% burden above salary. Mid-size companies: 30–40%. Enterprises with generous benefits: 40–60%. The key components: employer FICA (7.65%), health insurance ($500–$1,500/month employer cost), 401k match (3–6%), PTO (assuming 15 days = 6% of working days), and workspace/equipment overhead.
People Also Ask
Most businesses carry a 25–40% labor burden above base salary. At 35%: a $70,000 salaried employee costs $94,500 all-in. This is why hourly contractors often command 40–70% more than equivalent salaried employees — companies save on benefits and overhead.
Rule of thumb: if you need someone 30+ hours/week consistently, an employee is typically cheaper long-term. Below 20 hours/week, or for specialized project work, contractors save money. Factor in: recruiting cost, training time, management overhead, and the risk/flexibility difference.