Labor burden is everything you pay to have a worker on the job beyond the base wage. Typical components include employer payroll taxes (Social Security and Medicare at 7.65% combined up to the wage base, plus federal and state unemployment), workers’ compensation insurance (rates vary sharply by trade and state), general liability tied to payroll, health insurance, retirement contributions, paid time off and union fringes where applicable.
Why it matters
Burden is often 25% to 50% or more of base wage, depending on trade, location and benefits. If job cost only shows raw wages, every self-performed cost code is understated and estimates built from that history will be light. Workers’ comp alone can vary several-fold between a carpenter and a clerical worker, so one blended rate across all trades can mislead.
Worked example
Illustrative: a carpenter earns $38.00 an hour.
- Payroll taxes: 7.65% FICA plus about 2% unemployment = $3.67
- Workers’ comp at an illustrative $6.50 per $100 of payroll = $2.47
- Health and retirement: $6.20
- Total burden: $12.34, or about 32%
- Burdened rate: $50.34 an hour
On 2,000 hours of carpentry, burden adds $24,680 to job cost.
Common mistakes
- Using one burden percentage for all trades.
- Applying burden to overtime premium the same way as straight time, when some components (like workers’ comp in many states) are calculated differently.
- Never updating burden when insurance renews.
How os.construction handles it
We’re building job cost so burden is applied to each approved timecard by worker classification, giving PMs fully loaded labor costs as hours are approved.