Ask a contractor what their carpenter costs and most will tell you the wage — "thirty an hour." That number is wrong, and it's wrong in the one direction that hurts: too low. The wage is only the part of labor cost that shows up on the paycheck. Everything else you pay to keep that person on the crew is called labor burden, and leaving it out of your estimates is the single most common reason bids come in under water.
What labor burden actually is
Labor burden is everything you pay to employ someone beyond their base wage. You don't just pay the hourly rate — you also pay the government, the insurance company, and (if you offer them) benefits. Add all of that up and you get the real cost of an hour of that person's time, which for most trades runs 30–50% above the wage.
What's in the burden
Your exact burden depends on your state, your trade, and what benefits you offer, but the components are always the same:
- Payroll taxes. The employer's share of Social Security and Medicare (7.65%), plus federal and state unemployment taxes. These are non-negotiable and apply to every employee.
- Workers' compensation. Priced per $100 of payroll and set by trade risk and your claims history — usually the biggest single piece, and dramatically higher for risky work. This is why a roofer's burden dwarfs a painter's.
- General liability insurance. The portion of your GL policy that scales with payroll.
- Benefits. Health insurance, retirement contributions, paid time off, and any training, tools, uniforms, or vehicle allowance you provide. Optional, but the more you offer, the higher your burden — and the harder it is to keep good people if you don't.
How to calculate your burden rate
You only have to do this once or twice a year. Total your annual burden costs and divide by your annual base wages:
Fully burdened hourly cost = base wage × (1 + burden rate)
So if you paid $200,000 in base wages last year and $70,000 in taxes, comp, insurance, and benefits, your burden rate is $70,000 ÷ $200,000 = 35%. Every $30/hour worker actually costs you $40.50, and you should be estimating labor at that number, not the wage.
A worked example
Here's a $30/hour carpenter, itemized:
| Component | Per hour |
|---|---|
| Base wage | $30.00 |
| Payroll taxes (FICA + unemployment) | $2.90 |
| Workers' compensation | $3.00 |
| General liability (allocated) | $0.75 |
| Benefits (health, PTO, retirement) | $2.35 |
| Fully burdened cost | $39.00 |
That's a 30% burden — and it's on the low end, with modest benefits and mid-range comp. Add richer benefits or a higher-risk trade and you're quickly at 40–50% or beyond. A roofer's workers' comp alone can push total burden past 70%.
Why it's the number-one estimating leak
Because labor is a huge share of a remodel — commonly 35–45% of the job — a burden you forgot to add doesn't nick your margin, it guts it. On a job with 1,000 labor hours, the gap between a $30 wage and a $39 burdened cost is $9,000. On a business that nets around 6%, that one omission can erase the entire profit on the job.
Burden is not overhead
A quick but important distinction: labor burden is a direct job cost — the true cost of the labor on a specific job. Overhead is your company's indirect cost of being in business: office, vehicles, admin, the insurance that isn't tied to a job. Both belong in your price, but they're counted separately, and both get built into a job when you price it properly.
Let the estimate burden your labor for you
Enter your crew at their base wage and the BidSolid Job Estimating & Bid Calculator applies your burden automatically — so every bid is built on the real cost of an hour, not the number on the paycheck. It recovers your overhead and prices on margin in the same sheet.
See the estimator — $149Frequently asked
What is labor burden in construction?
Everything you pay to employ a worker on top of their base wage — payroll taxes, workers' comp, liability insurance, and benefits. It's what an hour of labor really costs your business.
How do you calculate labor burden?
Divide your annual burden costs by your annual base wages to get a burden rate, then multiply a worker's wage by (1 + burden rate). A $30 wage at a 35% burden is a $40.50 cost.
What's a typical labor burden rate?
30–50% for most trades, higher for risky or benefit-rich crews (roofing can top 70%). Workers' comp and benefits are the biggest swing factors.
Is labor burden the same as overhead?
No. Burden is a direct job cost (the true cost of labor on a job); overhead is your indirect company cost. Both go into a price, counted separately.
Sources: labor burden 30–50% of base wage — CFMA / industry; employer FICA 7.65%. Labor as 35–45% of remodel cost — industry. Component amounts are illustrative and vary by state, trade, and benefits; this is not tax advice.