Find the true hourly and annual cost of an employee including taxes and benefits.
Please do not make financial decisions based on these results.
What is the Labor Cost Calculator?
Find the true hourly and annual cost of an employee including taxes and benefits. To use the Labor Cost Calculator, enter hourly wage, hours per week, weeks per year, employer payroll taxes, benefits per year, other costs per year; it returns total annual labor cost, fully loaded hourly cost, base wages, burden rate, and shows them instantly as you type.
Where the Labor Cost Calculator fits
Find the true hourly and annual cost of an employee including taxes and benefits. The main figure it returns is the Total annual labor cost, worked out from the values you enter.
It belongs with the other business planning tools. If you are comparing options or checking a result from another angle, try the Cost of Doing Business Calculator, Cost Function Calculator or the Average Fixed Cost Calculator.
How to use the Labor Cost Calculator
- Enter your numbers. The inputs are Hourly wage ($), Hours per week, Weeks per year, Employer payroll taxes (%), Benefits per year ($), Other costs per year ($). Use figures from the same period (same month, quarter or year) for every field. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Total annual labor cost, and the cards below show Fully loaded hourly cost, Base wages, Burden rate. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Labor Cost Calculator using the default values shown in the calculator above:
Inputs
| Hourly wage ($) | 24 |
|---|---|
| Hours per week | 40 |
| Weeks per year | 52 |
| Employer payroll taxes (%) | 7.65 |
| Benefits per year ($) | 7,200 |
| Other costs per year ($) | 1,500 |
Results
| Total annual labor cost | $62,438.88 |
|---|---|
| Fully loaded hourly cost | $30.02 |
| Base wages | $49,920.00 |
| Burden rate | 25.08% |
With these inputs the calculator returns Total annual labor cost: $62,438.88. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Hourly wage ($) from 24 to 28.8 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Total annual labor cost | $62,438.88 | $73,186.66 | +17.2% |
| Fully loaded hourly cost | $30.02 | $35.19 | +17.2% |
| Base wages | $49,920.00 | $59,904.00 | +20% |
| Burden rate | 25.08% | 22.17% | -11.6% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Labor Cost Calculator reports Total annual labor cost, fully loaded hourly cost, base wages and burden rate. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
What is the labor burden?
It is the extra cost on top of wages: employer taxes, insurance, benefits and paid leave.
What is the most important number for a new business?
Cash runway. A profitable plan still fails if cash runs out first, so check burn rate and break-even together.
Can these calculators replace an accountant?
No. They give fast estimates from your inputs. Use an accountant for tax, audited accounts and valuation reports.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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