What Is Labor Burden?
Labor burden includes all the additional costs beyond base wages that an employee incurs:
- Payroll taxes — FICA (7.65%), FUTA, SUTA
- Workers’ compensation insurance — Typically 5–15% of payroll for construction trades
- General liability insurance — Allocated per employee
- Health insurance — Employer-paid portion
- Paid time off (PTO) — Vacation, sick days, holidays
- Small tools allowance — Tool stipends and equipment wear
- Retirement contributions — 401(k) match, if offered
The Labor Burden Formula
Burden Rate % = (Total Burden Costs ÷ Base Wage) × 100
Burdened Rate = Base Wage × (1 + Burden Rate %)Example calculation for a $35/hr carpenter:
- Base wage: $35.00/hr
- FICA (7.65%): $2.68/hr
- Workers comp (8%): $2.80/hr
- Liability insurance (3%): $1.05/hr
- Health insurance: $3.50/hr (employer portion)
- PTO (5 days/yr ÷ 2,080 hrs): $0.84/hr
- Total burden: $10.87/hr
- Burdened Rate: $45.87/hr (31% burden rate)
Burden Rates by Trade
Different trades carry different workers’ comp rates based on injury risk:
| Trade | WC Rate Range | Typical Burden Rate |
|---|---|---|
| Carpenter | 6–10% | 28–34% |
| Electrician | 4–7% | 26–30% |
| Plumber | 5–9% | 27–33% |
| Roofer | 15–30% | 37–52% |
| Painter | 4–7% | 26–30% |
Source: BLS Employer Costs for Employee Compensation, 2025.
How to Apply Labor Burden to Estimates
Once you know your burdened rate, use it in every estimate. Never estimate using bare wages.
Wrong: “This job needs 80 carpenter-hours at $35/hr = $2,800”
Right: “This job needs 80 carpenter-hours at $46/hr burdened = $3,680”
The $880 difference on one trade, across dozens of jobs per year, is the difference between profitability and operating at a loss.