What Does a $17 an Hour Employee Actually Cost?
True cost per billable hour
$27.91
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 pay17 $
- 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$27.91
| Base wage | $17.00 /hr |
|---|---|
| FICA at 7.65% | $1.30 /hr |
| Workers comp at 9% | $1.53 /hr |
| Unemployment at 3% | $0.51 /hr |
| Liability at 2% | $0.34 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $22.68 /hr |
| Only 6.5 of 8 hours are billable | $27.91 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 64.2% |
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 | $30.24 | 77.9% |
| 6.5 of 8 | $27.91 | 64.2% |
| 7 of 8 | $25.92 | 52.5% |
| 8 of 8 | $22.68 | 33.4% |
What else matters here
Seventeen an hour is $22.68 a paid hour and $27.91 a billable hour, 64.2 percent over the wage.
The unemployment field is the one people copy off somebody else's spreadsheet and never look at again. It is two taxes, not one. Federal unemployment is small and applies to a low wage base. State unemployment is the one that moves, and it is experience rated: the rate you pay depends on how much has been claimed against your account, so a business that has laid people off repeatedly pays several times what a stable one pays for exactly the same worker.
New employers are usually assigned an industry average rate for the first few years, and construction is not a favorable industry to be averaged into. Put the rate from your own state notice into the field. At 6 percent instead of 3, this employee's billable cost goes from $27.91 to $28.54, which is small on one hour and is about $980 across a year of 1,560 billable hours.
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 $17 an hour employee really cost?
$22.68 per paid hour with burden, and $27.91 per billable hour at 6.5 productive hours in an 8 hour day.
Why is my unemployment rate different from everyone else's?
State unemployment is experience rated, so your rate reflects claims made against your account, and new employers are usually assigned an industry average. Use the rate on your own state notice rather than a typical figure.
Why is workers comp set at 9 percent here?
Because it is a middle of the road number and the calculator has to open with something. Comp rates are set per trade and per state and they swing enormously, from under 1 percent for office work to over 25 percent for roofing. Put your own rate off your policy into the field.
The labor burden calculator takes any dimensions you like and hands back the same list.