What Does a $28 an Hour Employee Actually Cost?
True cost per billable hour
$44.38
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 pay28 $
- 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$44.38
| Base wage | $28.00 /hr |
|---|---|
| FICA at 7.65% | $2.14 /hr |
| Workers comp at 9% | $2.52 /hr |
| Unemployment at 3% | $0.84 /hr |
| Liability at 2% | $0.56 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $36.06 /hr |
| Only 6.5 of 8 hours are billable | $44.38 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 58.5% |
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 | $48.08 | 71.7% |
| 6.5 of 8 | $44.38 | 58.5% |
| 7 of 8 | $41.21 | 47.2% |
| 8 of 8 | $36.06 | 28.8% |
What else matters here
A $28 an hour tradesman costs $36.06 a paid hour and $44.38 a billable hour. Burden is 58.5 percent of the wage.
At this wage the billable cost has crossed $44, which is above what a lot of small outfits charge for labor on a time and materials ticket. If your rate is $45 an hour and your man is on $28, your margin on labor is 1.4 percent, which is not a margin, it is a rounding error.
Note how the burden percentage falls as the wage rises: 63.4 percent at $18, 58.5 percent here. That is not the taxes changing, it is the flat benefit dollars becoming a smaller share. It is also why a single blanket burden multiplier across a whole crew is always wrong somewhere.
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 $28 an hour employee really cost?
$36.06 per paid hour with burden, and $44.38 per billable hour at 6.5 productive hours in an 8 hour day.
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.
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.