Contractor Finance Glossary
What is Burdened Labor Rate?
Definition reviewed .
Also called: loaded labor rate, fully-loaded labor cost
The burdened labor rate is the hourly cost of an employee on a stated paid-hour or productive-hour basis, including base wage, employer payroll taxes, workers compensation, benefits and other employment costs.
Job costing is only as honest as the labor rate behind it. Costing a technician at their base wage understates job cost and overstates margin, so jobs can look profitable on paper when they are not.
Compute your own annualized burden from employer taxes, actual workers-comp policy rates by class code and applicable experience adjustments, unemployment rates and benefits. Annualized taxes account for wage-base caps; a single month can misstate the annual rate. Do not double-count paid leave already included in annual wages.
Cost per paid hour and cost per productive job hour differ. For an illustrative $30 hourly wage with a 35% burden, paid-hour cost is $40.50. At 70% productive hours, the comparable productive-hour cost is $57.86. Use your own productive-hour records, not an assumed industry utilization.
How it is calculated
Annual loaded labor cost = annual wages plus employer taxes, workers comp and benefits without double-counting. Paid-hour cost = annual loaded cost divided by paid hours. Productive-hour job-cost rate = annual loaded cost divided by job-chargeable hours. A wage-times-(1+burden) shortcut works only when the burden rate is calculated against the matching wages.
Want these numbers for your own company?
Get a free profit audit. We connect your field ops and finance and show where your crew's time turns into margin, and where cash is stuck.
No commitment. Real numbers, not generic advice.