Guides

Fully Burdened Labor Rate in Construction: How to Calculate It (+ Free Calculator)

Updated Jul 12, 2026

Every contractor knows what a carpenter or an electrician gets paid. Far fewer can say, to the penny, what an hour of that person's time costs the company — and the gap between those two numbers is where estimates go quietly wrong. The fully burdened labor rate is that true cost: the wage plus every dollar that follows it — payroll taxes, benefits, insurance, overhead — expressed per hour worked.

Price work from the bare wage and you're subsidizing every hour you bill; the burdens are not a rounding error, they can add half again the wage or more. This guide covers what goes into the burdened rate, gives you a free three-tier calculator that computes it the honest way, and walks the math by hand so you can defend every line of it.

In this guide:

• What "fully burdened" means
• What goes into the rate
• The calculator — your numbers, three honest tiers
• The math, by hand
• Overtime and double time are not multiples
• Union-shop specifics: the Total Package
• Common mistakes
• From cost to billable rate

What "fully burdened" means

A wage is what appears on the employee's check. A burdened wage adds the employer-paid costs that ride along with it — the taxes and insurance the law attaches to payroll. A fully burdened rate goes the rest of the way: benefits, per-hour overhead like small tools and PPE, and anything else the hour genuinely costs you, all divided down to one number per hour worked.

That number has two jobs. Internally, it's your floor — bill below it and you lose money on every hour before profit enters the conversation. Externally, on time-and-materials work, change orders, and service tickets, a marked-up burdened rate becomes the billable rate printed on the contract — which is why the math behind it has to survive an audit, not just a gut check. (The full layer-by-layer discipline is its own topic — see What is a labor rate build-up (LRBU)? — this guide focuses on the burden math inside it.)

What goes into the rate

Four families of cost sit on top of the wage. What varies by company, state, and labor agreement is the numbers — the structure is universal.

1. Statutory payroll burdens — percentages of taxable wages. FICA (6.2%) and Medicare (1.45%) are fixed; federal unemployment (FUTA) is small; state unemployment (SUI) is experience-rated, so use your company's actual rate. The base matters as much as the percentages: these apply to everything that rides the paycheck — the wage and any taxable add-ons — but not to benefits paid into funds.
2. Insurance — percentages, but watch the base. Workers' compensation is rated per craft classification and experience mod; general liability often rides payroll too. The trap: many WC programs rate overtime at its straight-time equivalent, which means the premium portion of OT pay is excluded — your rate math has to mirror your actual policy, or your OT rate quietly inflates.
3. Benefits — usually flat dollars per hour. Health & welfare, retirement, training. In collectively bargained shops these are published per-hour trust-fund contributions; open shop, divide your monthly plan costs down to the hour. Either way they're typically per hour worked — the same dollars at straight time and double time.
4. Per-hour overhead. PPE, small tools, consumables, training time — the costs you incur per labor hour that no invoice line ever names. Companies that skip this layer under-recover it on every T&M ticket they bill.

The calculator — your numbers, three honest tiers

Enter your own wage and burden numbers. The calculator runs the build-up the way a defensible rate sheet does: each tier computed from its own wage, flat layers held flat, percentages applied to the right base, nothing rounded until the end. It starts with a worked example — a $46.28 base wage with a typical union-style package — so you can see the shape before you type.

Percentages here are illustrative defaults — your SUI and WC rates are your own. If your labor agreement publishes true premium wages instead of 1.5×/2× multipliers, use those wages; the principle is the same.

The math, by hand

Using the example numbers above — $46.28 base wage, $1.86/hour paid on the check, $15.93/hour to benefit funds, 13.0% payroll burdens, 9.25% WC+GL on the straight-time base, $0.65 of flat adders — the straight-time hour works out like this:

• Taxable wages: $46.28 + $1.86 = $48.14
• Payroll burdens: 13.0% × $48.14 = $6.26
• WC + GL: 9.25% × $48.14 = $4.45
• Benefits and flat adders: $15.93 + $0.65 = $16.58
• Fully burdened cost: 48.14 + 6.26 + 4.45 + 16.58 = $75.43/hour

Against the $46.28 wage, that's 63% on top — before any profit. Keep the components unrounded until the final figure (rounding every line drifts the total), and date the sheet: the SUI rate resets every January, WC gets re-rated, plans renew, agreements step.

Overtime and double time are not multiples

Run the calculator and read across a row: the wage moved 1.5×, the payroll burdens followed it, and the benefits, insurance (on an ST-rated program), and flat adders did not move at all. That's why the honest OT cost in the example is $101.58 — not $75.43 × 1.5 = $113.15. A burdened rate that multiplies is wrong at every premium tier, in whichever direction your cost structure points. The full argument, with the audit math, is in the LRBU guide — and the other half of overtime pricing, deciding which hours are OT or DT under daily caps, 4×10s, and weekend rules, is worked in Overtime & Double-Time Math.

Union-shop specifics: the Total Package

Collectively bargained agreements make the burden math easier in one way — the benefit contributions are published per hour, no allocation needed — and riskier in another, because the rate sheet lists more numbers than belong in your cost.

• The bolded "Total Package" is wage plus employer contributions. That's the cost side. Employee-side deductions — dues check-off percentages, vacation withheld from the wage, market recovery — come out of the wage and are already inside it. Add them on top and you've double-counted; an auditor who knows the agreement will find it.
• Sort the additions by where they land. Amounts paid on the check (vacation add-ons, supplemental dues paid through payroll) are taxable — payroll burdens apply. Contributions paid to trust funds (H&W, pension, training) are not. Run 13% over the whole package and you've invented roughly $2/hour of phantom burden in this example.
• Premium wages are often published. Many agreements print true OT/DT wages per classification — use them directly instead of multiplying, and quantize the way the sheet does.

Reading the schedule itself — classifications, deduction lines, shift tables, effective-date steps — is covered line by line in Union Schedule A, explained.

Common mistakes

1. Bidding the bare wage plus a guess. The example above carries 63% of real, itemizable cost on top of the wage. A flat "add 30%" convention is wrong for most crews in one direction or the other — run the actual numbers once per craft and you'll never guess again.
2. Taxing the trust funds (or not taxing the check additions). The taxable base is what rides payroll — nothing more, nothing less.
3. Letting WC scale with premium pay when your program rates it at straight time. Mirror the policy you actually have.
4. Stale inputs. SUI resets annually, WC mods move, benefit rates step mid-year under most agreements. A burdened rate without an effective date is a liability.
5. Counting overhead twice. If general overhead is in your per-hour adders, it can't also be a markup line on the estimate — pick one home for it.

From cost to billable rate

The burdened rate is cost. Billing adds your finalize convention — a margin on cost (rate = cost ÷ (1 − margin)) or markup lines — and the difference between those two conventions is real money, so say which one you mean. On T&M work the marked-up, three-tier version of this math is the rate sheet you sign — our rate-sheet guide covers what else belongs on it and includes a free Excel template with these formulas built in.

CrewMix does this end to end: define your burdens and bases once and it prices every craft's ST, OT, and DT from each tier's own wage, with the full breakdown preserved as the audit trail. Wages can come from a union Schedule A (the AI import reads them off the PDF), a prevailing-wage determination, or your own payroll — the build-up editor recomputes every rate live as you type, and estimates snapshot the numbers so signed work never silently reprices.