What Does a $26 an Hour Employee Actually Cost?
True cost per billable hour
$41.39
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 pay26 $
- 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$41.39
| Base wage | $26.00 /hr |
|---|---|
| FICA at 7.65% | $1.99 /hr |
| Workers comp at 9% | $2.34 /hr |
| Unemployment at 3% | $0.78 /hr |
| Liability at 2% | $0.52 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $33.63 /hr |
| Only 6.5 of 8 hours are billable | $41.39 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 59.2% |
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 | $44.84 | 72.5% |
| 6.5 of 8 | $41.39 | 59.2% |
| 7 of 8 | $38.43 | 47.8% |
| 8 of 8 | $33.63 | 29.3% |
What else matters here
Twenty six an hour is $33.63 a paid hour and $41.39 a billable hour, 59.2 percent over the wage.
There is one cost this calculator does not show at all, and it is paid time that produces nothing. If you give two weeks of vacation and six paid holidays, the employee is paid for 2,080 hours a year and available for 1,952, and every hour of burden on this page has to be recovered across the smaller number.
That is another 6.6 percent on top of everything here, and it applies to the paid cost as well as the billable one. It is also the least visible of all the burden items, because it never appears as a separate charge anywhere: it simply shows up as weeks in the year when the payroll went out and no invoice did. Either add it to the benefits field as an hourly figure or take it off the productive hours, but do not leave it out twice.
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 $26 an hour employee really cost?
$33.63 per paid hour with burden, and $41.39 per billable hour at 6.5 productive hours in an 8 hour day.
How do I account for paid vacation and holidays?
Two weeks of vacation and six holidays means paying 2,080 hours for 1,952 of availability, which adds about 6.6 percent to every figure here. Put it in the benefits field as an hourly amount or take it out of the productive hours.
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.