What Does a $24 an Hour Employee Actually Cost?
True cost per billable hour
$38.40
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 pay24 $
- 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$38.40
| Base wage | $24.00 /hr |
|---|---|
| FICA at 7.65% | $1.84 /hr |
| Workers comp at 9% | $2.16 /hr |
| Unemployment at 3% | $0.72 /hr |
| Liability at 2% | $0.48 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $31.20 /hr |
| Only 6.5 of 8 hours are billable | $38.40 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 60% |
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 | $41.59 | 73.3% |
| 6.5 of 8 | $38.40 | 60% |
| 7 of 8 | $35.65 | 48.6% |
| 8 of 8 | $31.20 | 30% |
What else matters here
A $24 wage burdens out to $31.20 a paid hour and $38.40 a billable hour, exactly 60 percent over the wage.
None of that covers what it cost to get this person. Advertising the role, the hours spent on applications and interviews, the paperwork, the tools issued, and the weeks at the start where somebody experienced is answering questions instead of working are all real money, and none of it has a line anywhere on this page.
The ramp up is the expensive part and it hides inside the productive hours field. A new hire holding 5 billable hours out of 8 instead of 6.5 costs $49.91 a billable hour rather than $38.40, and that is $11.51 an hour of invisible cost for as long as it lasts. Which is the real argument for paying a good employee more than you think you should: replacing them costs more than the raise, and the cost arrives all at once.
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 $24 an hour employee really cost?
$31.20 per paid hour with burden, and $38.40 per billable hour at 6.5 productive hours in an 8 hour day.
What does turnover cost me?
More than the hiring. A new employee at 5 productive hours instead of 6.5 costs $49.91 a billable hour against $38.40, which is $11.51 an hour of hidden cost until they come up to speed.
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.