Labor Burden Explained: What a $30.67 Tech Really Costs

What labor burden includes

Labor burden is what it costs to employ someone beyond their gross pay, shown here as a percentage of gross pay. It has six parts: employer Social Security, employer Medicare, federal unemployment tax (FUTA), state unemployment tax (SUTA), workers' compensation insurance and benefits such as health insurance and retirement contributions.

Two things are deliberately left out. Paid time off is already inside gross pay (the tech is paid for 2,080 hours), so it shows up as hours that can't be billed rather than as a burden percentage. Counting it both ways double-counts it. Overtime premium is pay, not burden; it belongs in gross pay.

That's one reason published burden figures don't line up. BLS, for example, counts paid leave as a benefit, so its benefits share of total compensation is a different measure from burden over gross pay.

Tax and insurance figures here are general information, not tax or insurance advice. Your payroll provider, insurance agent or accountant can confirm what applies to your shop.

The worked example: one plumber at $30.67

Gross pay is $30.67 × 2,080 hours = $63,793.60. State unemployment uses Texas's new-employer rate as an example state (other states below); workers' comp and benefits use our calculator's defaults, explained below.

Burden adds $16,597.02 a year, or $7.98 for every paid hour. The wage caps matter: FUTA and SUTA stop once wages reach $7,000 and $9,000, which this tech passes within the first eight weeks of the year, so they are small percentages of a full-time wage.

Payroll taxes, line by line

Social Security and Medicare

The employer pays 6.2% for Social Security and 1.45% for Medicare, matching what's withheld from the employee (IRS Topic 751). Together that's 7.65%, or $4,880.21 on this tech. Social Security stops at $184,500 of wages for 2026, so the most a shop pays for one employee is $11,439.00. Medicare has no wage cap. The extra 0.9% Additional Medicare Tax on wages over $200,000 is withheld from the employee, with no employer match.

FUTA

The federal unemployment tax is 6.0% of the first $7,000 of each employee's wages, but employers who pay state unemployment tax get a credit of up to 5.4%, leaving 0.6% (IRS Topic 759). That's $42.00 per employee per year.

The exception is a credit reduction state, where the state has an outstanding federal unemployment loan and employers lose part of the credit. For 2025, California employers lost 1.2 points, so FUTA was 1.8%, or $126.00 per employee; the U.S. Virgin Islands lost 4.5 points (DOL). For 2026, DOL lists California and the Virgin Islands as potential credit reduction states; California's estimated total is 5.3 points. That becomes final only if the loans are not repaid by November 10, 2026. If the full estimate held, California FUTA would be $413.00 per employee.

SUTA

Every state sets its own taxable wage base and rates. Established employers get an experience-based rate; in Georgia, for example, it reflects the employer's past contributions, the benefits paid to its former workers, payroll growth and statewide conditions (Georgia DOL). The Labor Department's July 2026 table lists the wage base, the rate range and the new-employer rate for every state, DC, Puerto Rico and the Virgin Islands (DOL); the site's labor rate calculator and state table use the same edition. Here is the same tech at the new-employer rate in eight of them:

The wage base can matter as much as the rate. North Carolina's 1.00% costs more on this tech than Florida's 2.70%, because it applies to the first $34,200 of pay instead of the first $7,000. Washington's base is above this tech's whole year of pay, and the table gives its new-employer rate as an industry average. Texas shows why the range is only a guide: DOL's July 2026 table gives 0.00% to 6.00%, while the Texas Workforce Commission gives 0.32% to 6.32% as the 2026 minimum and maximum (TWC). TWC's effective rate is the sum of five components, one of them the Employment and Training Investment Assessment; DOL's note on what its rates leave out follows.

DOL's notes say the new-employer rate is a base rate, that higher rates may apply depending on industry classification and other factors in state law, and that the rates leave out surtaxes, penalties, surcharges and non-UI taxes. Two examples: Georgia assigns new employers a total rate of 2.70% (Georgia DOL FAQ), and its employer brochure (revised 2016) tells employers to use the total rate, including the Administrative Assessment portion (Georgia DOL); at 2.70% on $9,500 the line is $256.50 and burden 26.04%. California adds a 0.1% Employment Training Tax on the same first $7,000, or $7.00 a year, and shows both rates on one notice (EDD).

In these eight states, SUTA moves burden by less than one point. Use the rate and wage base on your own state's notice; DOL keeps a directory of state unemployment tax contacts.

Workers' comp: per $100 of payroll, by class code and state

Workers' comp is the line that varies most. For private employers it runs through state systems (U.S. Department of Labor), and rates are set per $100 of payroll for each class code. Florida's construction class rule, for example, titles class 5183 "Plumbing NOC and Drivers" (Fla. Admin. Code R. 69L-6.021).

Here is the same tech under three different rates for class 5183:

Ohio's figure excludes the state's DWRF assessments (Ohio BWC). Alabama's table applies only to assigned-risk policies, and it doesn't print the unit (Alabama DOI); we read it as per $100 of payroll, the unit Ohio's and Oregon's documents state, so confirm the unit with your carrier. Don't read either as typical; together they show how far one class code can range. The last column runs each rate through the full example shop in the labor rate guide.

The manual rate also isn't your premium. Oregon's state comparison notes that what an employer pays is changed by experience modification, premium discounts, deductibles, retrospective rating and dividends (Oregon DCBS). Our calculator applies the rate to all gross pay as a simplification; the payroll your insurer audits is defined by your policy. Take the rate from your declarations page.

Benefits, and a cross-check against BLS

The 15.25% benefits default is our arithmetic on BLS's June 2026 Employer Costs for Employee Compensation for the construction industry (BLS Table 4). Employers there spent $3.90 per hour worked on insurance and $2.39 on retirement, against $41.25 of gross pay (wages $36.13, paid leave $2.63, supplemental pay $2.49). That gives $6.29 ÷ $41.25 = 15.25%. The workers' comp default comes from the same survey: $1.10 per hour worked in construction (BLS series CMU2272300000000D), and $1.10 ÷ $41.25 = 2.67%.

BLS averages include workers who don't get the benefit (BLS technical note), so they aren't a quote for a health plan. If you offer insurance or a retirement match, use what you actually pay. BLS also says it will remove workers' comp from this data starting with December 2026 figures (BLS).

The same BLS data makes a useful check. Construction total compensation of $51.96 per hour worked is 25.96% over gross pay of $41.25. Legally required benefits of $4.42 are 10.72% of gross pay; in the example, the five tax and insurance lines come to 10.77%. The example sits close to the national construction average, which is what a default should do. Your shop may not.

From burden to the cost of a billable hour

Burden is not the biggest jump in the cost of labor. The $80,390.62 works out to $38.65 per paid hour and $42.94 per worked hour (after 208 hours of paid time off). But at 65% billable efficiency, only 1,216.8 hours get billed, so each billable hour carries $66.07: $52.43 of wages, $5.64 of payroll taxes and workers' comp, and $8.00 of benefits.

In other words, paid time off and non-billable time turn a $30.67 wage into $52.43 of wages per billable hour before burden adds anything. The billable efficiency guide shows how that share moves your rate.

Next step

Pull four documents: last year's payroll register, your state unemployment rate notice, your workers' comp declarations page and your benefits invoices. Enter those lines in the labor rate calculator in place of the defaults and see what your burden really is.