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What Does an Employee Really Cost You?

The wage is just the sticker price. Payroll taxes, workers comp, benefits, and gear ride on top of every hour. Enter your numbers and see the true cost — and what you have to bill them out at.

Workers comp preset (per $100 of payroll)
Typical 2026 figures — your class code, state, and claims history set your real rate. Edit the field below to match your policy.
What you pay them per hour, gross
Paid hours, including shop time
52 minus unpaid time off
From your policy — or pick a preset above
State unemployment — varies by state & history
First $ of wages SUTA applies to — varies by state
Your share of insurance, retirement match, etc.
Training, PPE, phone, small tools
$60,323.50
True annual cost
$30.16
True cost per paid hour
20.6%
Labor burden (extra on top of wages)
$40.22
Break-even bill-out rate at 75% billable utilization
Where the money goes, line by line
Gross wages: $25.00 × 40 hrs × 50 wks$50,000.00
Employer FICA — 7.65% of wages (auto-included)+$3,825.00
FUTA — 0.6% on first $7,000 (auto-included)+$42.00
SUTA — 2.7% on first $9,500+$256.50
Workers comp — $10.00 per $100 of payroll+$5,000.00
Benefits: $0/mo × 12+$0.00
Other (training, PPE, phone…)+$1,200.00
True annual cost$60,323.50
Your $25.00/hr employee really costs $30.16 per paid hour — a 20.6% burden on top of wages. Since only about 75% of paid hours are billable, you must bill them out at $40.22/hr just to break even — before any profit.

Nothing you enter is saved or sent anywhere. The math runs entirely on your device. Estimates for planning, not tax advice — SUTA and workers comp vary by state, trade, and history.

What does an employee really cost? Typically 1.25–1.4× their wage once employer taxes, workers comp, and benefits are added — so a $25/hr employee really costs about $33–$36/hr for most employers, and more in high-risk trades. A labor burden of 30–60% on top of wages is normal in 2026; construction averages about 44%.

Know your real numbers — the rest of the family

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How to use this calculator

  1. Enter the wage and schedule. Gross hourly pay, paid hours per week, and paid weeks per year (50 if they get two weeks unpaid).
  2. Pick a workers comp preset for their trade, then overwrite it with the real rate from your policy — it’s quoted per $100 of payroll.
  3. Set your SUTA rate and wage base. Your state unemployment notice has both. New employers often start around 2–3%.
  4. Add benefits and other costs. Your monthly share of health insurance, plus yearly training, PPE, and phone. FICA and FUTA are added for you automatically.
  5. Read the bill-out rate. That’s the floor for what an hour of their time must sell for — price below it and every billed hour loses money.

Labor burden benchmarks (2026)

Adding up everything beyond wages — employer taxes, workers comp, benefits, gear — a total labor burden of 30–60% of wages is typical, and analysis by constructioncoverage.com puts the construction-industry average near 44% (all private industry around 46%). In plain terms: a $25/hr hire usually costs $33–$36/hr before they swing a hammer, and a roofing crew member can cost more still.

The tax side is fairly fixed: employer FICA is 7.65% of wages, FUTA is 0.6% on the first $7,000, and SUTA commonly runs 1–4% on a state wage base that varies widely. The big swing item is workers comp, usually the largest burden item after taxes: office work runs around $0.30 per $100 of payroll while roofing runs $15–$30+ — a hundred-fold difference for the same dollar of wages. Benefits are the other lever: a $500/mo health plan adds $3 to every hour of a 2,000-hour year all by itself.

The number most owners miss is utilization. You pay for every hour on the clock, but customers only pay for billable ones — drive time, shop time, and rework don’t invoice. At a typical 75% utilization, the break-even bill-out rate is true hourly cost ÷ 0.75. That’s why a $25/hr tech has to go out the door at $40+ before the business earns a dime on them.

Sources: constructioncoverage.com labor burden analysis 2025–26 · published 2026 federal rates (FICA 7.65%, FUTA 0.6% on first $7,000). Typical figures for planning — verify your own state rates, class codes, and policy pricing.

Common questions

How much does an employee really cost per hour?

Typically 1.25–1.4 times their wage once you add employer payroll taxes, workers comp, and benefits. A $25/hr employee really costs about $33–$36/hr for most employers, and more in high-risk trades like roofing where workers comp alone can run $15–$30+ per $100 of payroll.

What is labor burden?

Labor burden is everything an employee costs beyond their gross wages — employer taxes, workers comp, benefits, training, gear — expressed as a percentage of wages. A 30–60% burden is typical in 2026; construction averages about 44% (constructioncoverage.com).

What payroll taxes does an employer pay on top of wages?

Employer-side FICA of 7.65% (Social Security + Medicare) on wages, federal unemployment (FUTA) of 0.6% on the first $7,000, and state unemployment (SUTA) — commonly 1–4% on a state wage base, though rates and bases vary widely by state and by your claims history.

How much does workers comp cost?

It’s priced per $100 of payroll and varies hugely by trade: office/clerical work runs around $0.30, landscaping around $8, general construction around $10, and roofing $15–$30+. After payroll taxes, workers comp is usually the single biggest burden item for the trades.

What rate do I need to bill an employee out at?

Divide their true hourly cost by the share of paid hours they actually bill. Nobody bills 100% — drive time, shop time, and rework aren’t billable. At a typical 75% utilization, break-even is true hourly cost ÷ 0.75, roughly 1.33 times their true cost — and that’s before any profit.

Is this calculator really free, and is it tax advice?

It’s completely free — no signup, and nothing you type leaves your browser. It is not tax or legal advice: rates like SUTA and workers comp vary by state, trade, and history, so verify your own numbers with your accountant or insurer.

More free tools: the full PHIT tools directory, the hourly rate calculator to set the rate that carries this cost, and the lead cost calculator for what each booked job costs you in marketing.

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