Fully Burdened Labor Rate Calculator
Turn a base wage into the true hourly cost of an employee once taxes, benefits and paid time off are added — the number to quote and bill against.
How it works
Burdened rate = wage × (1 + burden%) · Annual cost = burdened rate × paid hours · Effective rate = annual cost ÷ (paid − non-productive hours)
The wage on the offer letter is only part of what an employee costs. Payroll taxes, health insurance, retirement matches and paid leave add a "burden" on top, typically 25–40% of base pay for salaried staff. Dividing the fully loaded annual cost by the hours actually worked (not the hours paid) gives the effective rate you should use when bidding jobs or setting billable rates.
Worked example
At $30/hr with 35% burden, the loaded rate is 30 × 1.35 = $40.50/hr. Over 2,080 paid hours that is $84,240 a year. Subtract 200 non-productive hours and the cost is spread over 1,880 productive hours, giving an effective $44.81/hr.
Frequently asked questions
What is included in labor burden?
The employer share of Social Security and Medicare, federal and state unemployment tax, workers’ compensation, health and dental insurance, retirement contributions, and paid time off. Together these commonly add 25–40% on top of base wages.
Why divide by productive hours instead of paid hours?
You pay for holidays, PTO and training even though no billable work happens then. Spreading the full annual cost over only the hours actually worked reveals the true rate you must recover on real jobs.
How is this different from a simple markup?
A markup is added to the burdened cost to produce profit. Burden is a cost, not profit — it is what you actually spend before you add any margin.
Related calculators
Educational planning estimate, not accounting, tax or HR advice.