What Does a $50 an Hour Employee Actually Cost?
True cost per billable hour
$77.32
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 pay50 $
- 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$77.32
| Base wage | $50.00 /hr |
|---|---|
| FICA at 7.65% | $3.83 /hr |
| Workers comp at 9% | $4.50 /hr |
| Unemployment at 3% | $1.50 /hr |
| Liability at 2% | $1.00 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $62.83 /hr |
| Only 6.5 of 8 hours are billable | $77.32 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 54.6% |
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 | $83.77 | 67.5% |
| 6.5 of 8 | $77.32 | 54.6% |
| 7 of 8 | $71.80 | 43.6% |
| 8 of 8 | $62.83 | 25.6% |
What else matters here
A $50 wage is $62.83 a paid hour and $77.32 a billable hour, 54.6 percent over the wage.
Wages at this level are usually part of a package rather than a number on their own. A union agreement sets a base rate plus fringe contributions for health, pension, annuity, training and industry funds, all quoted per hour worked, and the fringe on a skilled classification can be a third to a half of the base again.
The calculator handles it through the benefits field, which is the only per hour dollar input on the page. Put $22 an hour of fringe against a $50 base and the billable cost is $101.94 rather than $77.32. Estimating that work off the base rate alone understates the labor by almost a quarter, which on a job with a few thousand man hours is not a rounding error, it is the job.
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 $50 an hour employee really cost?
$62.83 per paid hour with burden, and $77.32 per billable hour at 6.5 productive hours in an 8 hour day.
How do I include union fringe benefits?
Put the hourly fringe into the benefits field. A $50 base with $22 an hour of fringe costs $101.94 a billable hour rather than $77.32, so estimating off the base rate alone understates labor by almost a quarter.
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.