An employee costs far more than their wage. Add payroll taxes, workers’ comp, benefits, and overhead to see the fully-loaded annual and hourly cost — and the burden multiplier you can apply to any pay rate.
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Percentages apply to base wages. Defaults are U.S. ballpark figures (employer FICA is 7.65%); adjust to your jurisdiction and policy. Overhead covers equipment, software, and space.
True cost per hour
$28.78
vs. $22.00 base — a 1.31× burden
Here’s the automated version. BizyClock tracks the real hours behind every fully-loaded cost — so job costing and profitability use actual worked time, not estimates.
Every cost that sits on top of the wage, and the typical range it lands in for a US employer. These are the same components the calculator above models.
| Cost | What it covers | Typical range | Notes |
|---|---|---|---|
| Employer payroll taxes | Social Security + Medicare (FICA); CPP + EI in Canada | 7.65% of wages (US) | Fixed statutory rate |
| Unemployment insurance | FUTA + state SUTA | 0.6%–6% of wages | State rate depends on your claims history |
| Workers' compensation | Injury insurance premium | 0.5%–8% of wages | Office roles at the low end; roofing and framing at the high end |
| Health & retirement benefits | Employer share of premiums and matching | $4,000–$15,000 per year | Largest single variable for salaried staff |
| Paid time off | Vacation, statutory holidays, sick days | 4%–8% of wages | Already inside the salary — it reduces productive hours |
| Overhead | Equipment, software, space, phone | $2,000–$6,000 per year | Lower for field crews, higher for desk roles |
Illustrative ranges for general planning, not quotes. Unemployment and workers' compensation rates are set per state/province and per industry classification — use your own carrier and payroll figures for anything you rely on.
A full-time employee at $25.00/hour and 2,080 hours a year, using the calculator's default add-on assumptions.
| Line item | Basis | Per year | Per hour |
|---|---|---|---|
| Base wages | $25.00/hr × 2,080 hrs | $52,000 | $25.00 |
| Employer payroll tax (7.65%) | FICA | $3,978 | $1.91 |
| Unemployment (2%) | FUTA + SUTA | $1,040 | $0.50 |
| Workers' comp (1.5%) | Insurance premium | $780 | $0.38 |
| Benefits | Health + retirement | $6,000 | $2.88 |
| Overhead | Equipment + software + space | $3,000 | $1.44 |
| Total employer cost | 1.28× the base wage | $66,798 | $32.11 |
A $25.00/hour employee costs about $32.11/hour once burden is included — a 1.28× multiplier. Adjust the inputs above for your own rates.
The salary or hourly rate you agree on is the visible cost of an employee. The real number is larger: employer payroll taxes, unemployment insurance, workers’ compensation, health benefits, paid time off, and the overhead of equipping and housing someone all stack on top. Small businesses that budget on wages alone are consistently surprised by the gap.
Once you know your labor burden — say 1.3× — you can price work fast. A worker paid $25/hour actually costs about $32.50/hour fully loaded. Bake that into bids and billable rates and you stop losing money on every hour sold.
Fully-loaded cost is the honest basis for comparing options: a salaried hire vs. a contractor vs. paying overtime to your existing team. Contractors carry no payroll tax or benefits load but bill a higher rate; overtime avoids benefits but costs 1.5× the wage. Run each through the calculator on the same fully-loaded basis.
A fully-loaded rate still needs accurate hours to turn into real job costs. BizyClock records every clock-in, applies your overtime and break rules, and ties hours to jobs — so profitability reflects what work actually cost, not a guess.
On top of gross wages, employers typically pay payroll taxes (Social Security and Medicare — 7.65% in the U.S., or CPP and EI in Canada), unemployment insurance (FUTA/SUTA), workers’ compensation premiums, and the cost of benefits like health insurance and paid time off. Add overhead such as equipment, software, and workspace and the true cost is usually 1.25 to 1.4 times the base wage.
The burden multiplier is the fully-loaded cost of an employee divided by their base wages. A multiplier of 1.3 means every $1 of wages actually costs you $1.30 once taxes, insurance, benefits, and overhead are included. This calculator shows the multiplier so you can apply it quickly to any wage.
Add base wages, employer payroll taxes, workers’ comp, benefits, and overhead to get the total annual cost, then divide by the number of hours the employee actually works in a year (hours per week times 52). This calculator does that automatically and shows both the annual and the fully-loaded hourly figure.
If you bid jobs or price services using only the base wage, you undercharge on every hour. Using the fully-loaded cost — wages plus taxes, insurance, benefits, and overhead — makes sure billable rates cover what the labor really costs and leaves room for profit.
No. The defaults are ballpark U.S. figures; actual rates vary by state or province, industry, wage base limits, and experience rating for unemployment and workers’ comp. Adjust each percentage to your own numbers, and confirm with your accountant or payroll provider for exact figures.
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