Employee cost planning
Labor Burden Calculator
See what an employee really costs per productive hour—not just what appears on their paycheck.
Cost breakdown
Where the annual cost goes
Values are estimates based on the assumptions above.
- Base hourly wage
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- Annual base wage
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- Payroll taxes
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- Workers’ compensation
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- Benefits and other annual costs
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- Total annual employment cost
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- Labor burden amount
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- Labor burden
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- Annual paid hours
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- Nonproductive paid hours
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- Productive hours per year
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- Cost per paid hour
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- True productive-hour cost
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Productive-time impact
Paid time is not all productive time
—of paid hours are productive under these assumptions. PTO, holidays, and training are already included in annual wages; they reduce productive hours instead of adding wages again.
Hypothetical scenario
What if productive utilization improved by 5 points?
Keeping annual employment cost unchanged, the model increases productive utilization by five percentage points, capped at 100%. This is an illustration, not a recommendation or guaranteed saving.
- Current utilization
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- Hypothetical utilization
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- Hypothetical productive hours
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- Hypothetical cost per productive hour
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- Difference per hour
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Methodology
How the calculator works
Labor burden is the amount above base wages that an employee costs the business. This calculator adds wage-based payroll tax and workers’ compensation assumptions to benefits and other annual employee costs.
Annual base wage = hourly wage × annual paid hours
Total annual employment cost = base wage + payroll taxes + workers’ compensation + annual employee costs
Productive hours = annual paid hours − paid nonproductive hours
True productive-hour cost = total annual employment cost ÷ productive hours
Productive-hour cost can be considerably higher than hourly wage because the same annual cost is spread across fewer hours. PTO, paid holidays, and training are not added to wages a second time.
Payroll tax and workers’ compensation values are editable assumptions. Actual employer costs vary by state, tax treatment, insurance, classification, benefits, and business circumstances. This calculator provides planning and educational information—not tax, legal, accounting, insurance, or financial advice.
FAQ
Labor burden questions
What is included in labor burden?
This estimate includes payroll taxes, workers’ compensation, benefits, tools and uniforms, and other annual employee costs entered above the employee’s base wage.
Why are PTO and paid holidays not added as another cost?
Their wages are already included in annual base wage. Paid nonproductive days reduce the hours available for productive work, which raises the cost per productive hour.
Are the payroll tax and workers’ compensation rates official?
No. They are editable planning assumptions. Applicable rates depend on factors such as location, tax treatment, insurance, and employee classification.