What Does a $55 an Hour Employee Actually Cost?
True cost per billable hour
$84.81
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 pay55 $
- 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$84.81
| Base wage | $55.00 /hr |
|---|---|
| FICA at 7.65% | $4.21 /hr |
| Workers comp at 9% | $4.95 /hr |
| Unemployment at 3% | $1.65 /hr |
| Liability at 2% | $1.10 /hr |
| Benefits | $2.00 /hr |
| Burdened cost, every paid hour | $68.91 /hr |
| Only 6.5 of 8 hours are billable | $84.81 /hrthis is what a billable hour actually costs you |
| Burden over base wage | 54.2% |
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 | $91.88 | 67% |
| 6.5 of 8 | $84.81 | 54.2% |
| 7 of 8 | $78.75 | 43.2% |
| 8 of 8 | $68.91 | 25.3% |
What else matters here
Fifty five an hour costs $68.91 a paid hour and $84.81 a billable hour, 54.2 percent over the wage.
At this cost per hour the estimating mistake that hurts most is not the rate, it is counting the hours wrong. An estimate is written in man hours and a schedule is written in crew hours, and the two are not the same: a three man crew for a five hour day is fifteen man hours, and a task somebody describes as a two day job for the crew is six days of labor to pay for.
Write every labor line as a quantity of man hours multiplied by a cost per hour, then convert to crew days afterwards for the schedule. Doing it the other way round is how a job gets estimated at a third of its labor, and at $84.81 a billable hour that error costs $1,272 for every crew day nobody counted.
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 $55 an hour employee really cost?
$68.91 per paid hour with burden, and $84.81 per billable hour at 6.5 productive hours in an 8 hour day.
What is the difference between man hours and crew hours?
A three man crew working five hours is fifteen man hours. Estimate in man hours and convert to crew days for the schedule, never the reverse, because at $84.81 a billable hour one uncounted crew day is $1,272.
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.