# Labor Cost Calculator

> Add each worker with a wage, regular hours and overtime hours. Enter your burden percent for payroll taxes, workers' comp and benefits, and your markup. You get the true cost of the labor, the cost per labor hour and the price to bill. A two-person crew with 85 hours costs $2,484.38.

Canonical: https://receiptscanner.co/tools/labor-cost-calculator
Updated: 2026-10-28 · Sources re-checked by: 2027-10-28

This is a free interactive calculator that runs in the browser. Nothing you type is stored or sent. Results are estimates.

## How it works

Wages = wage × regular hours + wage × overtime multiplier × overtime hours, summed over the crew. Burden = wages × burden percent, which stands for what you pay on top of wages: employer payroll taxes, workers' compensation, insurance and benefits. Labor cost = wages + burden. Cost per labor hour = labor cost ÷ total hours. Bill-out price = labor cost × (1 + markup). The overtime multiplier is 1.5, the US federal rate for non-exempt hours over 40 in a week; check your state and your contract.

**What one $25 hour costs with different burden percents**

| Burden | Cost of one hour | Cost of 40 hours |
| --- | --- | --- |
| 15% | $28.75 | $1,150.00 |
| 20% | $30.00 | $1,200.00 |
| 25% | $31.25 | $1,250.00 |
| 30% | $32.50 | $1,300.00 |
| 40% | $35.00 | $1,400.00 |

**What can make up the burden**

| Item | Notes |
| --- | --- |
| Employer payroll taxes | Your share of Social Security and Medicare, and unemployment taxes |
| Workers' compensation | Often a higher rate for risky trades such as roofing |
| General liability and tools insurance | Spread over the hours your crew works |
| Paid time off and holidays | Wages paid for hours that are not billed |
| Health and retirement benefits | The employer's share |

## Worked example: two workers, one with overtime, a 25% burden and a 30% markup

1. Worker A: $25 × 40 hours = $1,000, plus 5 overtime hours at 1.5 × $25 = $187.50. Total $1,187.50.
2. Worker B: $20 × 40 hours = $800.00.
3. Wages together: $1,987.50. Burden at 25% = $496.88.
4. Labor cost: $2,484.38 over 85 hours is $29.23 an hour.
5. Billed out at a 30% markup: $3,229.69, which leaves $745.31 for overhead and profit.

## FAQ

### What is labor burden?
The extra cost of an employee on top of their wage: employer payroll taxes, workers' compensation, insurance and benefits. It is usually shown as a percentage of wages.

### What burden percentage should I use?
Use your own numbers: add up what you pay on top of wages in a year and divide by total wages. The box starts at 25% as a placeholder, and the true figure depends on your trade, state and benefits.

### How is overtime calculated?
Hours over 40 in a week are paid at one and a half times the regular rate for non-exempt workers under US federal law. Some states have extra rules, so enter your own multiplier if it differs.

### How do I bill labor to a customer?
Take the true labor cost and add your markup for overhead and profit, or charge an hourly rate per worker that already includes both. The bill-out price shows the first method.

### Why is the cost per hour higher than the wage?
Because it includes the burden and the overtime premium. A $25 wage with a 25% burden really costs $31.25 an hour before any overtime.

### Can I use this for one worker?
Yes, add only one row. It works for a single employee, a subcontractor paid by the hour or a whole crew.

## Sources

- [U.S. Department of Labor, overtime pay: time and one-half the regular rate for hours over 40 in a workweek (FLSA)](https://www.dol.gov/agencies/whd/overtime) (checked 2026-10-28)
- [U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation: wages and benefits as parts of labor cost](https://www.bls.gov/news.release/ecec.toc.htm) (checked 2026-10-28)

This calculator is an estimate for planning. It is not payroll, tax or legal advice. Overtime and payroll rules vary by place, so check them before you pay your crew.