Do you know how much your employees cost? It’s more than what you may think. Additional costs associated with having employees - plus their gross pay - is your labor burden.
Simply put, your labor burden is the actual cost of having and maintaining your employees. This cost includes not only their salary but hidden costs outside of their regular pay. These include things like:
For construction and field services, knowing your true labor burden is critical to accurate job costing and estimating. If you don’t know how much your workers cost, you’re much more likely to underbid a job and lose money.
To determine the true cost of your employee, you’ll need to take into account how many hours they work each week and how many weeks they work each year. Add your annual overhead costs such as property and payroll taxes, insurance, equipment or space rentals, supplies, benefits and any other associated costs and divide by the number of employees you have.
Now you’ll add that amount to the employee’s annual salary to calculate the true labor burden of that employee.
1. SUTA rates vary depending on your unemployment claims in different states. 3.0% is an estimate.
2. Actual rates for General Liability vary based on several factors, including claims history, location, and more. They are usually calculated per $1,000 of payroll and we used xx as a general example. The rate is calculated by dividing 10.15 by 1,000 because 10.15% is the usual GI cost for electricians per $1,000 of payroll.
3. Actual rates for Workers Compensation vary based on several factors, including claims history, location, and more. They are usually calculated per $100 of payroll and we used xx as a general example. The rate is calculated by dividing 10.15 by 1,000 because 10.15% is the usual GI cost for electricians per $1,000 of payroll.
Use ClockShark’s free labor burden calculator to help you accurately calculate what your labor burden is. It is extremely helpful to have an accurate time tracking solution so you can avoid underbidding a project and going over budget.
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