Labor Cost Calculator
Estimate annual fully loaded labor cost from annual base wages, headcount and a labor burden rate that you supply. You can also enter annual revenue to see labor cost as a percentage of revenue. The calculator does not assume that one burden rate or labor-cost percentage is appropriate for every employer.
How to Calculate Fully Loaded Labor Cost
This calculator uses annual base wages and a user-supplied burden percentage. Build the burden from costs that actually apply to your organization rather than copying a generic percentage.
Enter annual base wages and headcount
For each role, multiply annual base wage per employee by the number of employees in that role.
Determine your labor burden
Build a rate from employer-paid costs that apply to you, such as payroll taxes, insurance and benefits. BLS compensation data can provide context, but it is not a substitute for your own payroll and benefit records.
Apply the burden multiplier
For this simplified model: fully loaded cost = base wage bill × (1 + burden rate ÷ 100).
Optionally compare with annual revenue
If you enter revenue, the calculator divides total fully loaded labor cost by annual revenue. Interpret that percentage in the context of your own business model and accounting definitions.
Enter Your Labor Details
Base Wage × Headcount × (1 + Burden Rate)Interactive step-by-step breakdown
- Enter values above to see the calculation unfold step by step.
What Can Be Included in Labor Burden?
Labor burden is not one universal percentage. It depends on the costs an employer includes and the workforce being modeled. Use your payroll, insurance and benefits records for the calculator input.
Employer payroll taxes
IRS Publication 15 explains federal employer obligations including Social Security, Medicare and FUTA. State and local obligations can add other costs.
Employer-paid benefits
BLS Employer Costs for Employee Compensation separates wages and salaries from employer benefit costs. Benefit categories can include paid leave, insurance, retirement and legally required benefits.
Insurance and other employer costs
Workers’ compensation and other employer-paid costs vary by jurisdiction, occupation, claims experience, plan design and accounting method. Use the amounts that actually apply to your organization.
For context, BLS reported that private-industry wages and salaries accounted for 70.0% of employer compensation costs in June 2026. That statistic describes an aggregate population; it is not a recommended burden rate for an individual employer.
Construction Labor Cost: Additional Items to Check
The arithmetic is the same, but construction estimates can involve project-specific wage, fringe, payroll and insurance requirements that should not be replaced by a generic burden preset.
Workers’ compensation and insurance
Use your actual applicable premiums or allocation method. Costs can differ substantially by trade, location and employer.
Davis-Bacon covered work
Covered federal and federally assisted construction can require applicable prevailing wages and fringe benefits. Covered contractors also have certified-payroll obligations. Use the wage determination incorporated into the contract rather than a generic market wage.
Project costs outside this formula
Per diem, travel, overtime, equipment, small tools and other job costs may need separate treatment depending on your estimate and accounting method. This calculator does not automatically add them.
Labor Cost Calculator Examples
These examples use the same simplified formula as the calculator. The burden percentages are illustrative assumptions, not recommended rates.
Five employees on annual salaries
$45,000 × 5 = $225,000 wage bill; $225,000 × 1.28 = $288,000.
Two annual-wage roles
Base wage bill = $260,000. Applying the illustrative 25% burden gives $260,000 × 1.25 = $325,000.
Optional revenue comparison
$360,000 ÷ $1,200,000 × 100 = 30.0%. Whether that is appropriate depends on the business and accounting definitions.
Labor Cost Calculation Mistakes to Avoid
Using a generic burden percentage as if it were universal
Build the rate from costs that actually apply to your workforce and accounting method.
Mixing annual wages with hourly project costs
This calculator’s role inputs are annual base wages per employee. Convert hourly or project labor to a consistent annual basis, or calculate that project separately.
Treating contractors as employees—or vice versa—just to change burden
Worker classification depends on applicable law and facts, not on the desired calculator result. Covered Davis-Bacon work can also impose prevailing-wage requirements regardless of an independent-contractor label.
Comparing unlike revenue definitions
Keep the period and accounting basis consistent: annual labor cost should be compared with annual revenue for the same business scope.
Labor Cost Calculator FAQ
What does fully loaded labor cost mean here?+
What should I include in the burden rate?+
Does BLS publish a universal labor burden rate?+
Can I use this for construction?+
Should contractors automatically use a zero burden rate?+
What does labor cost as a percentage of revenue show?+
How This Labor Cost Calculator Is Maintained
Umer Farooq
Built and maintained by Umer Farooq. The page documents the formula, assumptions and limitations and links directly to primary U.S. government sources for employer compensation, payroll taxes and covered federal construction requirements.
Read the CalcsDone Methodology →