Glossary
Labor burden
Labor burden is the cost an employer pays on top of an hourly wage, such as payroll taxes, workers' compensation and insurance.
By IntelCost Team ·
Labor burden is everything an employer pays for a worker's hour on top of the wage itself. Add it to the wage and you get the burdened, or fully loaded, labor rate that an estimate should carry.
What goes into burden
- Employer payroll taxes: the employer's share of Social Security and Medicare, plus federal and state unemployment.
- Workers' compensation: usually quoted per $100 of payroll, and set by trade.
- General liability: often rated on payroll.
- Company benefits: health insurance, retirement contributions and paid time off, where the company pays them and they are not already counted as fringe.
Some firms also include small tools, safety programs or vehicle costs. Whatever you include, keep it consistent so jobs can be compared.
Burden and fringe benefits
The two are often confused. Fringe benefits are part of the worker's pay package: on a prevailing wage job, the wage determination sets a fringe amount per hour that has to be paid in plans or cash. Burden is the employer's cost of having the worker on payroll. On a public job, the burdened rate is the base wage, plus the fringe, plus the burden on top.
Example
Say a carpenter's base wage is $30.00 per hour (example values throughout):
| Cost | Rate | Per hour |
|---|---|---|
| Employer Social Security and Medicare | 7.65% | $2.30 |
| Federal and state unemployment | 3.6% | $1.08 |
| Workers' compensation | $8.00 per $100 | $2.40 |
| General liability | 1.5% | $0.45 |
| Total burden | $6.23 |
Burdened rate: $30.00 + $6.23 = $36.23 per hour, a burden of about 20.8 percent on the wage.
This example counts payroll taxes and insurance only. Add paid time off, health insurance and retirement, as the fuller example in the burdened vs direct labor rate guide does, and the percentage rises (35.04 percent in that example).
Unemployment taxes stop at a yearly wage base, so the rate above is an average over the year's hours. Check your own payroll records, your insurance policies and your accountant for the real figures.
Burdened or direct pricing
There are two ways to carry burden in an estimate:
- Burdened: every labor line uses the fully loaded rate.
- Direct: labor lines use the payable wage, and burden is added once as its own line.
The bid total should come out the same either way. Burdened pricing keeps each line's cost complete, which makes your own labor easier to compare with a sub's all-in quote; direct pricing keeps burden visible as one line in the summary.
The IntelCost Wage Calculator offers both bases: Burdened (fully loaded), or Direct Labor with the labor burden as its own line in the bid summary. For a full comparison, read burdened vs direct labor rate.