What Does a $15 an Hour Employee Actually Cost?
True cost per billable hour
$24.92
At 9% workers comp, 3% unemployment, 2% liability, $2 an hour of benefits and 6.5 billable hours in an 8 hour day.
How that number is worked out
These are the figures this page was built with and every line the calculator produces from them. Change anything above and all of it moves.
- Base hourly wage you pay15 $
- Workers comp rate9 %
- State and federal unemployment3 %
- General liability, as a payroll percent2 %
- Benefits, per hour2 $
- Productive hours out of every 86.5 hrs
True cost per billable hour$24.92
| Base wage | $15.00 /hr |
|---|---|
| FICA at 7.65% | $1.15 /hr |
| Workers comp at 9% | $1.35 /hr |
| Unemployment at 3% | $0.45 /hr |
| Liability at 2% | $0.30 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $20.25 /hr |
| Only 6.5 of 8 hours are billable | $24.92 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 66.1% |
Billable hours in an 8 hour day compared
The productive hours field is the one everybody skips, and it moves the true cost more than any tax rate does.
| Billable hours in an 8 hour day | True cost per billable hour | Burden over base wage |
|---|---|---|
| 6 of 8 | $27.00 | 80% |
| 6.5 of 8 | $24.92 | 66.1% |
| 7 of 8 | $23.14 | 54.3% |
| 8 of 8 | $20.25 | 35% |
What else matters here
Fifteen dollars an hour burdens out to $20.25 a paid hour and $24.92 a billable hour, which is 66.1 percent over the wage and the highest burden percentage anywhere on this calculator.
The reason to hire at this wage is that the labor is cheap, and the reason it often is not cheap is sitting in the last field on the form. Drop this employee to 6 productive hours out of 8 and the billable cost is $27.00. A $17 an hour employee holding 6.5 costs $27.91. Two dollars of wage difference has almost vanished.
So the comparison between two people is never the wage on its own. It is the wage and the hours they turn into work, and a helper who needs telling twice, who forgets a tool, or who cannot be left on a task alone, is not the cheap option no matter what the payroll line says.
What this calculator assumes
- FICA is fixed at 7.65 percent, the employer half of Social Security and Medicare.
- Workers comp rates are set per trade and per state and swing enormously. Roofing can run over 25 percent where office work is under 1. Use your own rate off your policy.
- The productive hours field is the one everybody skips and it is the one that decides whether the job makes money. Drive time, loading, fuel stops and cleanup are paid and unbilled.
Questions people ask
What does a $15 an hour employee really cost?
$20.25 per paid hour with burden, and $24.92 per billable hour at 6.5 productive hours in an 8 hour day.
Is a cheaper helper always cheaper?
No. At 6 productive hours a $15 employee costs $27.00 a billable hour, and a $17 employee holding 6.5 costs $27.91. The wage gap disappears into the productivity gap.
What counts as a productive hour?
Only the hours you can put on an invoice. Drive time, loading the truck, fuel stops, dump runs and cleanup are all paid and none of them are billable. Six and a half out of eight is a realistic default and plenty of crews are below it.
The labor burden calculator takes any dimensions you like and hands back the same list.